Market Update
Tsys higher, yields 1-2bps lower, curve flatter, 10Y 2.606% (-2bps), S&P futures lower and crude below $48 on news OPEC raised output above 10mln bbls/day in Feb. Bund yields lower after the 10Y briefly went above 0.50% for the first time since January of last yr, now 0.477%. Gilt yields not reacting much to Brexit news or BOE Hogg resignation, thou the pound fell to an eight-week low vs the USD. GOCs higher, with the 10Y back below 1.85% on bid in tsys, lower crude …CMB 5Y pricing this morning – new June 2022 ~45 bps over 5s – the deal is well spoken for. Provis better bid to start the week on higher GOC yields, 10Y BC still rumoured with the BC/Ont 26 roll unch -8/-8.5.
News headlines
Stocks Drop Before Fed as Pound Slumps on Brexit: Markets Wrap (Bloomberg) Most European stocks retreated as signs of caution started to show in markets before this week’s packed schedule of events, which includes a U.S. interest rate decision. The pound tumbled as the British Prime Minister won permission to trigger the country’s departure from the EU.
Canada Missed Ultra-Long Opportunity Before Trump Yield Spike (Bloomberg) Officials discouraged Canada’s finance minister from selling further ultra-long maturity debt, and potentially locking in near-record low borrowing costs for a generation, just ahead of a surge in yields spurred by the election of U.S. President Donald Trump.
Oil edges off three-month lows, eyes on U.S. inventory (Reuters) Oil prices recovered modestly from three-month lows on Tuesday, with concerns persisting about rising U.S. inventories and few clear signs that OPEC will extend supply curbs beyond June. The immediate focus for investors is Tuesday’s data from the American Petroleum Institute (API) about U.S. crude and product stockpiles after a bigger-than-expected climb in last week’s report. Analysts see a further, albeit smaller, rise this time.
Ackman’s Pershing Square sells Valeant stake, takes $3 billion loss (Reuters) Billionaire investor William Ackman walked away from Valeant Pharmaceuticals International Inc (VRX.TO) on Monday with a loss of more than $3 billion as he sold his entire stake in the struggling drug company after trying to rescue it for some 18 months.
China’s industrial output picking up in 2017 (Market Watch) Industrial production in China expanded 6.3% in the first two months of 2017 from a year earlier, accelerating from 6.0% growth in December, data from the National Bureau of Statistics showed Tuesday.
UK PM May’s hand moves closer to Brexit trigger (Reuters) British Prime Minister Theresa May cleared the final hurdle standing between her and the start of Brexit negotiations on Monday after parliament passed legislation giving her the power to start the EU exit process. Members of the lower house of parliament voted to throw out changes to the bill made by the upper house earlier this month, after the government argued it needed freedom to operate without restriction to get a good deal.
Overnight markets
Overview: US 10yr note futures are up 0.025% at 122-27, S&P 500 futures are down -0.34% at 2363.75, Crude oil futures are down -1.51% at $47.67, Gold futures are up 0.1% at $1204.3, DXY is up 0.32% at 101.63, CAD/USD is up 0.26% at 0.7418.
US Economic Data
| 6:00 AM | NFIB Small Business Optimism, Feb, 105.3, est. 105.6, (prior 105.9) |
| 8:30 AM | PPI Final Demand, m/m, Feb, 0.3%, est. 0.1% (prior 0.6%) |
| PPI Ex Food and Energy, m/m, 0.3%, est. 0.2% (prior 0.4%) | |
| PPI Ex Food , Energy, Trade, m/m, 0.3%, est. 0.2% (prior 0.2%) | |
| PPI Final Demand, y/y, Feb, 2.2.%, est. 1.9% (prior 1.6%) | |
| PPI Ex Food and Energy, y/y, Feb, 1.5%, est. 1.5% (prior 1.2%) | |
| PPI Ex Food, Energy, Trade, y/y, Feb, 1.8%, (prior 1.6%) |
Canadian Economic Data
| 8:30 AM | Teranet/National Bank House Price Index, m/m, 1.0%, (prior 0.5%) |
| Teranet/National Bank House Price Index, y/y, 13.4%, (prior 13.0%) |
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