Market Update
- US Treasuries open NY higher and flatter, 10-year note. 1.659%. TOKYO saw mkt supported as WSJ/Hilsenrath said Sept. rate hike unlikely. Intermediates Tsys bought early, while Asian banks bought 10Y notes. Japanese insurers did Tsy flatteners. Fast money and Asian real money also did Tsy 5/30Y flatteners, and fast money also did 10/30Y flatteners. Today’s 30Y auction mops up the last of the week’s coupon auctions after Monday’s unusual combo of 3Y and 10Y auction done at the same moment.
News headlines
- Global stocks dip as Fed view only partly soothes markets (Reuters) Stocks dipped and the dollar edged up on Tuesday after a Federal Reserve official’s remarks appearing to make a near-term rise in U.S. interest rates less likely only partially calmed investor nerves before a speech from ECB chief Mario Draghi. Fed Governor Lael Brainard on Monday cautioned against removing support for the U.S. economy too quickly. Her words weakened the dollar and sent U.S. stocks soaring.
- IEA Changes View on Oil Glut, Sees Surplus Enduring in 2017 (Bloomberg) The surplus in global oil markets will last for longer than previously thought, persisting into late 2017 as demand growth slumps and supply proves resilient, the International Energy Agency said.
- Fed looks unlikely to hike next week after Brainard warning (Reuters) The Federal Reserve should avoid removing support for the U.S. economy too quickly, Fed Governor Lael Brainard said on Monday in comments that solidified the view the central bank would leave interest rates unchanged next week.
- China’s economy perks up in August, thanks to housing boom, gov’t spending (Reuters) China’s factory output and retail sales grew faster than expected in August as a strong housing market and a government infrastructure spending spree underpinned growth in the world’s second-largest economy. Industrial output grew the fastest in five months as demand for products from coal to cars rebounded, though analysts warned the outlook is clouded by weakness in manufacturing investment and a lack of spending by private firms.
- UK consumer inflation holds steady despite Brexit pressure (Reuters) British inflation unexpectedly held steady in August, keeping the chance of another Bank of England rate cut on track despite a big rise in raw material costs after June’s vote to leave the European Union. The annual rate of consumer price inflation was unchanged at 0.6 percent in August, compared with economists’ forecast for it to increase to 0.7 percent, the Office for National Statistics said on Tuesday.
- Bank of England to Start Corporate-Bond Purchases on Sept. 27 (Bloomberg) The Bank of England will begin a 10 billion-pound ($13 billion) corporate-bond buying program on Sept. 27 as it seeks to bolster the U.K. economy. The central bank will hold reverse auctions to buy notes on Tuesdays, Wednesdays and Fridays, it said in a statement detailing plans first announced last month. The 18-month program will cover sterling bonds from investment-grade non-financial issuers based in the U.K. or with sizable operations in the country.
- Libor’s Reaching Point of Pain for Companies With Big Debt Loads (Bloomberg) Short-term borrowing rates are rising to the point where some heavily indebted U.S. companies can no longer ignore them. A benchmark for near-term borrowing, the three-month U.S. dollar London interbank offered rate, has risen above 0.75 percentage point. That’s a key threshold for junk-rated companies with about $230 billion of loans outstanding according to data compiled by Bloomberg — with Libor above that level, the borrowers will have to pay more interest over time. The increase so far could amount to about an extra $250 million of total interest expense annually for the companies.
Overnight markets
- Overview: US 10yr note futures are down 0% at 130-16, S&P 500 futures are down -0.8% at 2134.75, Crude oil futures are down -2.53% at $45.12, Gold futures are up 0.14% at $1327.5, DXY is up 0.24% at 95.323.
US Economic Data
- Monthly Budget Statement, August, est. -107.0b (prior -64.4b)
Canadian Economic Data
- There is no major economic data for today
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230