Market update
US tsys higher, 10Y 2.093 (-1bp), curve 2bps steeper led by 5Y, maintain gains after i. US yields briefly touched yest post Beige book lows before stocks reversed higher. Core Euro bonds also higher with flight to quality bid as crude fell to new lows o/n (brent @ 29.73). Bunds also supported by lower stocks led by industrials with ~11% fall in Renault shares. US auctions $13bln in 30Y bonds at 1:00ESt after a solid 3& 10Y. GOCs higher with ‘risk off’ theme, provis unch after some early buying, Ont 46s trading up @ 116, Ont 25 @ 105.5, ~11bps wider since y/e.
News headlines
- JPMorgan profits jump as costs reined in (FT) JPMorgan Chase saw the US banks’ fourth-quarter earnings season off to a solid start with a 10 per cent rise in net income, after cost cuts compensated for sluggish results from the investment banking arm and a near-50 per cent jump in bad loan provisions. The biggest US bank by assets is often seen as a barometer for an industry still grappling with tougher post-crisis rules on capital and liquidity, patchy client activity and near-zero interest rates. By that token, the results were encouraging, showing a slight lift in net revenues across the group and a 7 per cent fall in non-interest expenses.
- Bank of England votes 8-1 to hold rates at 0.5% (BBC) UK interest rates have been left unchanged again at 0.5% by the Bank of England’s rate-setters. Eight of the nine rate-setters on the Monetary Policy Committee (MPC) voted for no change, with one voting for a rise. The Bank rate has been at the record low of 0.5% since March 2009. A number of economists have been pushing their expectations of the first UK interest rate rise from the end of 2016 into the start of 2017.
- Bank of Indonesia Cuts Rates to 7.25% (Bloomberg) Indonesia’s central bank cut its main interest rate for the first time in 11 months, prioritizing a boost to flagging economic growth over concern looser policy could trigger more currency weakness. Bonds rose and stocks pared losses incurred earlier due to deadly attacks in Jakarta.
- Bank of Korea sets new 3-yr inflation target at 2 pct, drops band (Reuters) South Korea’s central bank said on Wednesday it was setting its new three-year inflation target at 2 percent, scrapping its current policy of using a targeted band for consumer prices. The target band is now 2.5 to 3.5 percent and will expire at the end of this year. Before the current target, South Korea used a midpoint of 3.0 percent within a range of 2.0 to 4.0 percent. The new target will be used from 2016 to 2018.
- Brent hits new 12-year oil below $30 in Asian trading (CNBC) Brent oil prices dipped below $30 in Asian hours Thursday, underscoring weakness in the energy market amid a continued increase in the supply of the commodity. U.S. WTI light sweet crude fell as much as 0.7 percent and was last at $30.66 a barrel while Brent oil fell as much as 1.9 percent to $29.73–its lowest level since February 2004–and was last at $30.05 a barrel.
Overnight markets
- Overview: US 10yr note futures are down -0.11% at 127-29+, S&P 500 futures are up +0.54% at 1891.75, Crude oil futures are up +1.12% at 30.83$, Gold futures are down -0.33% at $1083.5, DXY is down +0.02% at 98.910..
US Economic Data
- Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended Jan. 9. Economists polled by Reuters had forecast claims slipping to 275,000 in the latest week.
- The four-week moving average of claims, considered a better measure of labour market trends as it strips out week-to-week volatility, rose 3,000 to 278,750 last week.
- Continuing claims rose 29,000 to 2.26 million in the week ended Jan. 2. The four-week moving average of the so-called continuing claims increased 5,250 to 2.22 million.
- S. Import prices fell 0.5% in November, revised from a 0.4% decline.
Canadian Economic Data
- New home prices rose by 0.2 percent in November from October, pushed up by strength in the major regions of Toronto and Vancouver
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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230