Market Update

US tsys weaker, just off lows on moderate volume (254k)  as tensions between the US & North Korea ease, US 10Y  2.217% (+2.8bps). European equities up 1.0%, crude -0.50%, gold weaker (-6,1288). Core Euro bonds lower , German bund curve ~5bps steeper , 10Y 0.42%, giving back 3bps of last week’s 8bp rally. Italian debt well bid spds vs bunds ~4bps narrower on report Italian banks NPLs declining due to rapid sales. GOCs lower, underperforming tsys by 0.5bps, 10Y 1.886% (+3.6bps). The data calendar is relatively clear this week, July CPI the highlight on Friday. Provi spreads closed the week 1-2bps wider led by longer maturities with no new issuance, spds opening unch, Ont 27s 70/69 , Ont 48s 81/80.

News headlines 

Stocks Bounce and Havens Drop as Korea Fears Abate: Markets Wrap (Bloomberg) The risk-off mood that gripped markets last week showed signs of easing, with shares in Europe following Asian equities higher and American stock futures advancing as the prospect of a war between the U.S. and North Korea receded. Havens including gold, Treasuries and the yen fell.

Japan second-quarter GDP blows past expectations on robust domestic demand (Reuters) Japan’s economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at the fastest in more than three years, highlighting stronger domestic demand.

Robust China economic growth shows signs of fading in July (Reuters) China’s strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree.

Oil prices slip on Chinese demand concerns, rising U.S. activity (Reuters) Oil prices fell on Monday as a slowdown in Chinese refining raised concerns about demand in the world’s second-biggest consumer, while an increase in U.S. drilling capacity could deepen a global supply glut.

Toronto Has More Housing Than You Thought (Bloomberg) When it comes to Toronto’s runaway housing prices, the most important question remains the extent to which speculation is driving demand. Ideally, fundamentals such as demographics and employment are at play, and the price gains reflect natural household growth getting ahead of supply. If that’s true, the market should eventually stabilize once new supply kicks in.

Delta Memo Signals Plan for New Bombardier Jet in L.A., New York (Bloomberg) Delta Air Lines Inc. is eyeing New York and Los Angeles as the main bases for Bombardier Inc.’s new jetliner next year, offering a glimpse of how carriers can add service economically with the midsize aircraft.

Overnight markets 

Overview: US 10yr note futures are down -0.197% at 126-18, S&P 500 futures are up 0.56% at 2453.75, Crude oil futures are down -0.45% at $48.6, Gold futures are down -0.42% at $1288.6, DXY is up 0.26% at 93.308, CAD/USD is up 0.17% at 0.7874.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.232% 2 Year 1.306%
5 Year 1.502% 5 Year 1.766%
10 Year 1.89% 10 Year 2.215%
30 Year 2.327% 30 Year 2.809%

US Economic Data

There is no major economic data release for today.

Canadian Economic Data

8:30 AM Teranet/National Bank HPI, m/m, Jul, 2.0%, (prior 2.6%)
Teranet/National Bank HPI, y/y, Jul, 14.2%, (prior 14.2%)
10:00 AM Bloomberg Nanos Confidence, Aug 11, (prior 60.5)


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