US tsys opening lower after in line Retail Sales & overnite ‘risk on’ session, US 10Y 2.18 (+3.0bps). PBOC tried to calm nerves over Yuan devaluation, saying China has ample reserves, strong economy . US auctions $16bln in 30Y bonds at 1:00EST after a poorly received 10Y yest. Core Euro bond yields sharply higher led by ~6bps in UK gilts. In Canada, GOCs are lower led by the belly of the curve. Provis opening tighter after closing ~2-2.5bps wider yest.
- China central bank tries to soothe global markets, says no reason for yuan to fall further (Reuters) China’s central bank said on Thursday there was no reason for the yuan to fall further given the country’s strong economic fundamentals, in a bid to reassure jittery global markets after it devalued the currency earlier in the week.
- China puts September Fed rate lift-off in doubt (FT) It was nearly a century ago during the battle of the Marne that the French marshal Ferdinand Foch messaged his superiors: “My centre is giving way, my right is in retreat. Situation excellent. I shall attack.”
- Who’s Crazy Now? Yuan Bears Vindicated by Tumble See More Pain (Bloomberg) Sue Trinh had to defend her sanity. Albert Edwards almost got kicked out of meetings. Kevin Lai was ignored by clients for an entire year.Once ridiculed for their bearish forecasts on China’s currency, the analysts who predicted this week’s devaluation don’t look so crazy now.
- Greek Economy Grows Unexpectedly in Second Quarter (WSJ) Greece’s economy grew unexpectedly in the second quarter of the year on the back of a strong start to the tourism season and resilient consumption, data from the Greek statistics agency showed Thursday.
- Gold demand plunges to 6-year low as Asian buyers retreat (CNBC) Global gold demand slumped to a six-year low in the second quarter as consumers in China and India continued to pull back on purchases of gold jewelry, coins and bars despite bullion’s multi-year low prices.
- Canada Prime Minister Stephen Harper vows limit on foreign home buyers if needed (FP) Prime Minister Stephen Harper promised new measures to track foreign home ownership in Canada and even hinted at restrictions on buying, during a press conference in Canada’s most expensive housing market.
- Overview: IG24 5Y 75.5/76 (-0.2), US 10yr note futures are down -0.31% at 127-18+, S&P 500 futures are down -0.10% at 2082.25, Crude oil futures are down -1.09% at 42.83, Gold futures are down -0.81% at $1114.5, DXY is up +0.50% at 96.740.
US Economic Data
- Retail sales increased 0.6% MoM in July, equal to expectations, after decreasing -0.3% the previous month.
- Retail sales excluding automobiles increased 0.4% in July, compared to consensus of a 0.4% gain, and a revised 0.4% increase in June.
- Initial jobless claims came in at 274K for the week ending August 8, higher than expected (270K) and prior week (269K).
- Continuing claims increased to 2273K from 2258K and higher than expected (2245K).
- Import price index came in at -0.9% MoM (-10.4% YoY) in July versus June -0.1% MoM (-9.9% YoY).
- Business inventories are forecast to increase 0.3% MoM in June, equal to previous month.
Canadian Economic Data
- New housing price index increased 0.3% MoM (+1.3% YoY) in June compared to May 0.2% MoM (1.2% YoY).
Disclosure and Disclaimer
The following sources of information have been, or may have been, used partially or in their entirety to compile the herein provided CTI Capital Securities Inc. (“CTI Capital”) ‘Morning Comments.’ CTI Capital believes these sources to be generally reliable, however, as said sources are varied and from third parties, CTI Capital cannot guarantee the accuracy or completeness of said information: Canadian Press (CP); Bloomberg News (BN); Wall Street Journal (WSJ); Stone & McCarthy Research Associates (SMRA); New York Times (NYT); Financial Times (FT); Market News International (MNI); Globe and Mail; Associated Press (AP); CNW Group (CNW); Reuters; Business News Network (BNN); Market Watch; and others.
Ivan Greenstein, Stephan Buu, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240