Market update
US Tsys modestly mixed/steeper on slightly better than avg volume. EGBs lower, global stocks mixed, highlighted by Nikkei up 0.68%, Europe almost entirely lower, DAX off 0.11%, Eurostoxx down 0.33%, US futures showing tiny gains headed into NY. USD mixed, higher vs JPY last 105.77 and commodities mostly lower including metals, gold off 0.07%, grains lower, while energies see mild gains. Real money sold intermediates and the long end while credit players also sold longer dated issues.
News headlines
- European Stocks Trim Week’s Gain as China Lifts Emerging Markets(Bloomberg) European stocks halted this week’s rally, weighed down by company earnings and a deadly terror attack in France. Equities in emerging markets gained for a seventh day after Chinese economic data beat estimates, while the yen and gold fell as demand for havens waned. Travel and leisure shares were among the worst performers in Europe after the attack in Nice while a slump in profit for Swatch Group AG dragged luxury-goods makers lower. In developing nations, shares rose in the longest rally since April amid signs of stabilization in the world’s second-largest economy. Japan’s currency extended its biggest weekly drop since 1999 and gold headed for its first weekly loss since May. The pound was poised for its biggest weekly rally since 2009.
- UK can make demands about EU market access, we have demands too: Germany (Reuters) Germany’s finance minister believes it is reasonable for Britain to demand access to the EU market for London’s banks, but Berlin will also make demands in talks on Britain’s future relationship with the bloc, a ministry spokesman said. The spokesman was clarifying comments made on Thursday by Finance Minister Wolfgang Schaeuble, who said it was “very reasonable” of his British counterpart to want access to the EU single market for financial institutions in London.
- Bank of England’s chief economist says UK needs prompt, muscular stimulus (Reuters) The Bank of England needs to act “promptly as well as muscularly” to stimulate the economy and boost confidence, its chief economist said on Friday, a day after the central bank upset markets by not cutting rates. In his first speech since Britain voted last month to leave the European Union, Andrew Haldane said the BoE needed to come up with a “package of mutually-complementary monetary policy easing measures” in time for a rate-setting meeting on Aug. 4.
- China Growth Steadies on Consumer, Dimming Stimulus Expectations (Bloomberg) China’s growth stabilized as lending and consumer spending picked up, suggesting the economy is responding to stepped up policy support. Gross domestic product rose 6.7 percent in the second quarter from a year earlier, compared with 6.6 percent seen by economists Bloomberg surveyed and in line with the government’s growth target of at least 6.5 percent for the full year. Industrial output and retail data for June beat estimates, investment slowed, and a report from the central bank showed the broadest measure of new credit beat all 29 analyst forecasts.
- Japan may be on route for a “soft” form of helicopter money (Reuters) Japanese policymakers, who won’t go as far as funding government spending through direct debt monetization, might pursue a mix of aggressive fiscal and monetary expansion to battle deflation, say sources familiar with the matter. In the past week, Japanese markets have seen hyped-up speculation that the government will resort to using what’s called “helicopter money”, where a central bank directly finances budget stimulus through programs such as perpetual bonds.
- Consumer Prices in U.S. Increased in June as Fuel, Rents Climbed (Reuters) The cost of living in the U.S. rose in June, propelled by a rebound in fuel prices and sustained gains in rents that is driving inflation closer to the Federal Reserve’s goal. The consumer-price index climbed 0.2 percent for a second month, Labor Department figures showed Friday in Washington. A second consecutive decrease in food costs held it below the median forecast of 82 economists surveyed by Bloomberg, which called for a 0.3 percent advance.
Overnight markets
- Overview: US 10yr note futures are down -0.2478% at 132-2, S&P 500 futures are up 0.09% at 2159.25, Crude oil futures are up 1.09% at $46.18, Gold futures are down -0.13% at $1330.5, DXY is up 0.05% at 96.129.
US Economic Data
- 8:30 AM: Retail Sales Advance, m/m, June, 0.60% , est. 0.10% (prior 0.50%, revised 0.20%)
- Retail Sales Ex Auto, m/m, June, 0.70%, est. 0.40% (prior 0.40%)
- CPI, m/m, June, 0.20%, est. 0.30% (prior 0.20%)
- CPI Ex Food and Energy, m/m, 0.20%, est. 0.20% (prior 0.20%)
- CPI, y/y, June, 1.00%, est. 1.10% (prior 1.00%)
- CPI Ex Food and Energy, y/y, June, 2.30%, est. 2.20% (prior 2.20%)
- Empire Manufacturing, July, 0.55, est. 5 (prior 6.01)
- 9:15 AM: Industrial Production, m/m, June, est. 0.30% (prior -0.40%)
- Capacity Utilization, June, est. 75.10% (prior 74.90%)
- 10:00 AM: University of Michigan Sentiment, July P, est. 93.5 (prior 93.5)
Canadian Economic Data
- 8:30 AM: Manufacturing Sales, m/m, May, -1.00%, est. -0.80% (prior 1.00%)
- 9:00 AM: Existing Home Sales, m/m, June, (prior -2.80%)
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