Market update
UST sys sharply lower/steeper, Tsy futures underperforming on high volume with 435K Sep 10Y contracts traded so far this session. BOE Unch, Bank of Korea Unch. EGBS sharply lower, stocks up nicely highlighted by a 0.95% gain in the Nikkei, 0.90% gain in Eurostoxx and 1.25% improvement in DAX. USD lower vs most majors though higher vs JPY which was last 105.64. Commodities are mixed, energies up with WTI and Brent up 1.88% and 2.16%, respectivelyTsys started to decline headed into the London open with 10Y opened London at 1.4929%, rising all the way to 1.5326%. Fast money was said to be the big seller on the London to NY crossover. Traders were also focused on the FTSE Italia All Share Banks Index, which was up sharply, UniCredit Chair says to Consider Raising Capital according to Reuters. Tsys receded a bit lower, after selling spurred by higher than expected 0.5% June PPI and 0.4% core PPI and steady initial weekly jobless claims; but then dip buying quickly came in.
News headlines
- Stocks Rise as Talk of Helicopter Money Sinks Yen; Pound Jumps(Bloomberg) Stocks climbed with U.S. equity-index futures as commodities gained and better-than-estimated earnings pointed to resilience in the economy. The yen slumped on speculation Prime Minister Shinzo Abe is contemplating so-called helicopter money to revive Japan. European shares rose to a three-week high and emerging-market equities advanced for a sixth day. South Africa’s rand and Russia’s ruble were among the biggest gainers against the yen after a gauge of metal prices climbed to a nine-month high and oil rebounded from a two-month low.
- Bank of England Signals August Stimulus as Rate Kept at 0.5% (Bloomberg) The Bank of England left its key interest rate at a record low and signaled it’s readying stimulus for August as the economy reels from Britain’s decision to quit the European Union. The nine-member Monetary Policy Committee, led by Governor Mark Carney, voted 8-1 to keep the benchmark at 0.5 percent, with only Gertjan Vlieghe saying the outlook justified an immediate reduction. The decision is likely to shock investors, who had priced in more than an 80 percent chance the rate would be lowered. While policy makers discussed what measures could help the economy, they stopped short of detailing what those might be.
- Oil bounces after big losses but glut persists (Reuters) Oil prices rallied from sharp losses on Thursday but brokers said the downtrend could resume soon as record-high stocks and worries over slowing economic growth dampened sentiment. Brent crude oil was up 60 cents at $46.86 a barrel by 1015 GMT. U.S. crude was up 60 cents at $45.35. “The oil market is oversupplied, OPEC production is on the rise and we had a rather bearish weekly U.S. oil stats report,” said Tamas Varga at London brokerage PVM Oil Associates.
- Fed’s Harker now sees just up to two rate hikes this year (Reuters) The Federal Reserve could hike interest rates up to two times before year end, a top U.S. central banker said on Wednesday, slightly downgrading his expectations for monetary tightening even though he said the economy is on “fairly firm footing.” Philadelphia Fed President Patrick Harker, when he last spoke publicly in late May, predicted two to three rate increases this year. Since then U.S. jobs growth plunged one month and then shot back up the next, while Britons voted to leave the European Union.
- Hammond Pledges ‘Whatever Measures’ Needed for U.K. Economy (Bloomberg) Philip Hammond, the U.K.’s newly appointed chancellor of the exchequer, said that the vote to leave the European Union had “rattled confidence” and he will take “whatever measures” needed to shore up the British economy. “The number one challenge is to stabilize the economy, send signals of confidence about the future, the plans we have for the future to the markets, to business, to international investors,” Hammond said in a Sky News interview on Thursday.
- JPMorgan Profit Beats Estimates on Bond Trading, Loan Growth (Bloomberg) JPMorgan Chase & Co., the biggest U.S. bank by assets, said second-quarter profit fell 1.4 percent, beating analysts’ estimates as fixed-income trading revenue and loan growth jumped. Net income dropped to $6.2 billion, or $1.55 a share, from $6.29 billion, or $1.54, a year earlier, the New York-based company said Thursday in a statement. Excluding an accounting adjustment and a legal benefit, earnings were $1.46 a share, 3 cents higher than analysts’ average estimate in a Bloomberg survey. Shares of the company rose 2.3 percent to $64.40 at 8:04 a.m. in New York.
- Bombardier Inc ‘certain’ to announce more CSeries orders this year, executive says (Financial Post) More airlines are expressing interest in Bombardier Inc.’s CSeries and the company is “certain” to announce more orders for the aircraft this year, according to a senior executive in the company’s commercial aircraft division. The aerospace industry’s most important trade event of the year is underway in the U.K. this week and it has been “very successful” for Bombardier even though the company hasn’t announced any new CSeries orders, said Ross Mitchell, Bombardier’s vice-president of commercial operations.
Overnight markets
- Overview: US 10yr note futures are down -0.4% at 132-10, S&P 500 futures are up 0.79% at 2163, Crude oil futures are up 1.79% at $45.55, Gold futures are down -1.49% at $1323.6, DXY is down -0.18% at 96.047.
US Economic Data
- 8:30 AM: Initial Jobless Claims, July 9, 254k, est. 265k, (prior 254k)
- Continuing Claims, July 2, 2149k, est. 2130k (prior 2124k, revised 2117k)
- PPI Final Demand, m/m, June, 0.5%,est. 0.3% (prior 0.4%)
- PPI Ex Food and Energy, m/m, June, 0.4%, est. 0.1% (prior 0.3%)
- PPI Final Demand, y/y, June, 0.3%, est. 0.0% (prior -0.1%)
- PPI Ex Food and Energy, y/y, June, 1.3%, est.1.0% (prior 1.2%)
- 9:45 AM: Bloomberg Consumer Comfort Index, July 10, (prior 43.5)
Canadian Economic Data
- 8:30 AM: New Housing Price Index, m/m, May, 0.7%, est. 0.2% (prior 0.3%)
- New Housing Price Index, y/y, May, 2.7%, est. 2.2% (prior 2.1%)
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