Market update
US tsys opening lower , curve ~2 bps flatter US 10Y 2.16 (+3bps). Oil fell below $35 on supply worries as Iran expected to boost exports (see above). Global stocks weaker, except Shanghai comp which rose 2.5%. Short end of US tsy curve under pressure, WSJ article by Fed watcher Hilsenrath saying FOMC expected to raise rates this Wed, thou lack of inflation & poss of recession could force Fed to backtrack. Core Euro bonds lower, 10Y bunds ~3bps higher thou bund futures got a boost as oil continued to slide in early NY trading. GOCs trading lower, yields ~1bp higher across the curve , outperforming tsys , Cda/US at 5 mnth lows. Provis wider, 10Y Ont 99.5/98.5 (+1bp), Ont 46/25 bx unch @ 11, Qc/Ont 45 5.5/5.0 (unch).
News headlines
- Cooking the books: Government officials in China’s ‘rust belt’ falsified economic figures (SCMP) Provincial government officials in the northeast of China have admitted seriously falsifying economic data for years, leading to distorted policy decisions and fomenting corruption in the region, according to report by the state-run news agency Xinhua. The officials admitted falsifying statistics after the Communist Party’s graft watchdog examined inflated figures issued by cadres, the report said.
- Oil Sinks to Lowest in Almost 7 Years as Iran Vows More Supply (Bloomberg) Oil extended declines from the lowest price since February 2009 as Iran pledged to boost crude exports, bolstering speculation OPEC members will exacerbate the global oversupply.
- Natural Gas Falls to Lowest Since 2002 on Mild Weather Outlook (Bloomberg) U.S. natural gas tumbled to the lowest intraday level since January 2002 amid forecasts that mild weather will persist through the end of the month. January futures fell as much as 5.6 percent to $1.879 a million British thermal units on the New York Mercantile Exchange and traded at $1.881 at 12:14 p.m. London time. Gas is down 35 percent this year, headed for its second annual decline.
- Fed Officials Worry Interest Rates Will Go Up, Only to Come Back Down (WSJ) Federal Reserve officials are likely to raise their benchmark short-term interest rate from near zero Wednesday, expecting to slowly ratchet it higher to above 3% in three years.
- The Mystery of Missing Inflation Weighs on Fed Rate Move (WSJ) Federal Reserve officials this week are expected to raise interest rates for the first time in nine years on the expectation that employment and inflation will hit targets reflecting a healthy U.S. economy.
- Wells Fargo warns of ‘stresses’ in its energy portfolio (FT) The head of corporate banking at Wells Fargo, the biggest bank in the world by market capitalisation, has warned of “stresses” in its energy portfolio, as the ongoing slump in the price of oil begins to weigh heavily on servicers and producers.
- Lucidus Has Liquidated $900 Million Credit Funds, Plans to Shut (Bloomberg) Lucidus Capital Partners, a high-yield credit fund founded in 2009 by former employees of Bruce Kovner’s Caxton Associates, has liquidated its entire portfolio and plans to return the $900 million it has under management to investors next month, according to a statement Monday from the London-based company.
- Ottawa forces homeowners to save more for down payment, reducing its risk in housing market (FinancialPost) The governing political party has changed but the general housing message is still the same — reducing Ottawa’s exposure to the housing market.
- India Wholesale Prices Fall 1.99% in November (WSJ) India’s wholesale price index fell for the 13th month in a row in November, though the pace of decline slowed as costs of pulses and vegetables continued to rise, government data showed Monday.
Overnight markets
- Overview: IG25 5Y 96.419/97.057 (+0.413), US 10yr note futures are down -0.21% at 126-28+, S&P 500 futures are down -0.16% at 1998.0, Crude oil futures are down -2.47% at 34.74$, Gold futures are down -0.44% at $1071.0, DXY is up +0.18% at 97.739.
US Economic Data
- There is no major economic data today.
Canadian Economic Data
- Teranet/National bank housing price index for the month of November came in at 0.2% MoM and 6.1% YoY.
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230