Market Update
Tsys drifting lower after firmer 8:30 US data , 10Y 2.584(-1.6bps) – Feb retail sales came in as exp but large upward revision to Jan, CPI 0.1% vs 0.0% exp., stronger Empire Man. Modest volume in TY futures overnite as mkt awaits FOMC decision this aft. Core European bonds higher, bund curve continues to flatten , gilts higher as UK avg weekly earnings came in much weaker than expected. GOCs higher, off the highs as tsys pullback post data, curve unch, 10Y 1.83%. Of note, longs have performed well on the curve in the selloff, 10s30s flatter for a seventh day yest, opening at 64.5. The belly of the curve looks relatively cheap, 2s5s bearing the brunt of the selloff.
News headlines
Europe Stocks, Oil Rise as Bonds Steady Before Fed: Markets Wrap (Bloomberg) Crude prices were once again a dominant story in markets, with oil’s rebound helping underpin European stocks as investors wait for Wednesday’s expected U.S. interest rate increase. The British pound pared a rebound and metals climbed.
U.S. Retail Sales in February Post Smallest Gain in Six Months (Bloomberg) U.S. retail sales in February posted the smallest gain in six months, indicating a tempering of the consumer spending that’s been carrying the economy. Purchases rose 0.1 percent, matching the Bloomberg survey median estimate, after a 0.6 percent increase in the prior month that was stronger than previously reported, Commerce Department figures showed Wednesday. Just four of the 13 major retail categories saw gains in February sales.
Oil jumps off lows, IEA sees H1 deficit after OPEC cuts (Reuters) Oil prices climbed more than $1 on Wednesday, lifted by a surprise drawdown in U.S. inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.
Fed expected to raise rates as U.S. economy flexes muscle (Reuters) The Federal Reserve is expected to raise interest rates for the second time in three months on Wednesday, encouraged by strong monthly job gains and confidence that inflation is finally rising to its target.
UK wage growth weakens but jobless rate lowest since 2005 (Reuters) Inflation gnawed away at British pay growth in the three months to January, an unpromising sign for the economy ahead of its divorce from the European Union even as the unemployment rate fell to its lowest level since 2005.
Quebecor swings to $123.3-million profit in fourth quarter (TheGlobeAndMail) Quebecor Inc. is reporting a profitable fourth quarter, erasing a loss that the media and telecommunications company experienced in the final quarter of 2015. The Montreal-based company had $123.3-million of net income for shareholders in the three months ended Dec. 31.
Overnight markets
Overview: US 10yr note futures are up 0.102% at 123-00, S&P 500 futures are up 0.22% at 2368.25, Crude oil futures are up 1.89% at $48.62, Gold futures are down -0.3% at $1199, DXY is down -0.11% at 101.59, CAD/USD is down -0.12% at 0.7428.
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Mar 10, est. 3.1% (prior 3.3%) |
| 8:30 AM | Empire Manufacturing, Mar, 16.4, est. 15.0 (prior 18.7) |
| CPI, m/m, Feb, 0.1%, est. 0.0% (prior 0.6%) | |
| CPI Ex Food and Energy, m/m, Feb, 0.2%, est. 0.2% (prior 0.3%) | |
| CPI, y/y, Feb, 2.7%, est. 2.7% (prior 2.5%) | |
| CPI Ex Food and Energy, y/y, Feb, 2.2%, est. 2.2% (prior 2.3%) | |
| Retail Sales Advance, m/m, Feb, 0.1%, est. 0.1% (prior 0.4%, revised 0.6%) | |
| Retail Sales Ex Auto, m/m, Feb, 0.2%, est. 0.1% (prior 0.8%, revised 1.2%) | |
| Retail Sales Ex Auto and Gas, 0.2%, Feb est. 0.2% (prior 0.7%, revised 1.1%) | |
| 10:00 AM | Business Inventories, Jan, est. 0.3% (prior 0.4%) |
| 14:00 AM | FOMC Rate Decision, Mar 15, est. (0.75-1.00%), (prior 0.50-0.75%) |
Canadian Economic Data
| 9:00 AM | Existing Home Sales, m/m, Feb, (prior -1.3%) |
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