cti2015header-morning comments web

Market Update

US tsys slightly lower, 10Y 2.44% , little reaction to stronger than exp PPI. Mkt awaits 10am Fed Yellen semi annual testimony.  Narrow three tick range in Ty1 on low volume (250k). Last nite Dallas Fed Kaplan advocated removing accommodation sooner rather than later as well as reducing the size of the Fed’s balance sheet. Data out of China reinforced bearish bias – new credit rose to a record 2.74trln yuan in Jan vs 3trln exp.  Crude 1.0% higher at 53.40, the USD is lower for the first day in ten, marginally thou.  Gilts trading lower following mixed inflation data – CPI 1.8% in Jan from 1.6% but lower than 1.9% exp. Yellen expected to convey the view the US economy remains strong, inflation close to Fed’s 2.0% goals yet slack remains. The mkt will be closely watching for clues regarding a near term rate hike in March. GOCs lower in line with tsys, Shaw in the mkt with a #300mln 10Y deal ~198 bps. Quiet in provis, CMB 10Y deal expected.

News headlines 

Stocks, Dollar Falter as Investors Await Yellen: Markets Wrap (Bloomberg) A global rally that sent U.S. benchmarks surging to a fresh round of records stalled as markets turned their attention to Janet Yellen for clues on how quickly she’ll tighten monetary policy amid expected pro-growth measures by the White House. Treasuries steadied.

Oil rises as OPEC-led output cuts trim oversupply (Reuters) Oil strengthened slightly on Tuesday, supported by an OPEC-led effort to cut output while rising production elsewhere kept prices within the narrow ranges that have contained them so far this year. Brent crude LCOc1 was 55 cents higher at $56.14 a barrel by 1220 GMT. U.S. light crude oil CLc1 was up 45 cents at $53.38.

Fed has limited view on Trump economic policies as Yellen heads to Congress (Reuters) Federal Reserve Chair Janet Yellen goes to Congress on Tuesday for the first time since Republicans took control of the White House and both houses of the legislature with less clarity on the direction of U.S. economic policy than at any time of her three-year tenure.

China Factory Prices Surge Most Since 2011, Boosting Reflation (Bloomberg) China’s producer prices increased the most since 2011, with the world’s biggest exporter further lifting the outlook for global inflation.

Euro zone Q4 growth revised down to 0.4 pct, Dec industry output drops (Reuters) The euro zone economy grew less than initially estimated in the last quarter of last year as industrial output recorded the worst fall in more than 4 years in December, estimates from the European Union’s statistics office Eurostat showed on Tuesday.

Nafta ‘Tweak’ Aside, Trudeau Gets What He Wants From Trump Visit (Bloomberg) As Justin Trudeau praised U.S. ties in his debut remarks at Donald Trump’s White House, the Canadian prime minister’s top diplomat nodded along in the front row with barely a glance at her boss.

Overnight markets 

Overview: US 10yr note futures are down -0.0125% at 124-19, S&P 500 futures are down -0.02% at 2325.75, Crude oil futures are up 0.55% at $53.22, Gold futures are up 0.76% at $1235.1, DXY is down -0.14% at 100.82, CAD/USD is down -0.3% at 0.7673.

US Economic Data

6:00 AM NFIB Small Business Optimism, Jan,  105.9, est. 105.9, (prior 105.8)
8:30 AM PPI Final Demand, m/m, Jan, 0.6%, est. 0.3% (prior 0.3%, revised 0.2%)
PPI Ex Food and Energy, m/m, Jan, 0.4%, est. 0.2% (prior 0.2%, revised 0.1%)
PPI Final Demand, y/y, Jan,  1.6%, est. 1.5% (prior 1.6%)
PPI Ex Food and Energy, y/y, Jan, 1.2%, est. 1.1% (prior 1.6%)

Canadian Economic Data

8:30 AM Teranet/National Bank HPI, m/m, Jan,  0.5% (prior 0.3%)
Teranet/National Bank HPI, y/y, Jan,  13.0%  (prior 12.3%)


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