Market update

US tsys higher, curve flatter on light volume, 10Y 2.18%. European equities rebounding from o/n losses, as Chinese stocks fell another 3.5%. Crude is higher, gold slightly lower. JGBs lower as BOJ did not add to stimulus as some had expected, hawkish comments from Kuroda. Core Euro bonds lower led by 10Y bunds despite weaker German ZEW ,UK gilts lower as CPI fell to 0.0% matching estimates. In Canada, GOCs are lower led by 5s (~1.5bps),a flurry of corp deals yest weighing on Cda/US. After $1.7bln in NIs yest, still expecting more deals today in front of the FOMC decision Wednesday. Provis unch after widening ~1bp yest on corp supply – Ont 46 101/100.5, Ont45/25 11.2/10.9 – .5bps tighter wk/wk.

News headlines

  • U.S. retail sales rise 0.2% in August; gas spending falls (Marketwatch) Sales at U.S. retailers rose a modest 0.2% in August, with consumers spending far less on gasoline but more on new cars and trucks. That matched the forecast of economists polled by MarketWatch. Sales minus autos rose 0.1%, but they were up a healthier 0.4% excluding gasoline, the Commerce Department said Tuesday.
  • Bank of Japan stands firm on easing (FT) The Bank of Japan kept monetary policy on hold on Tuesday and stuck with a bullish message about growth despite deteriorating data on the Japanese economy. Haruhiko Kuroda, the BoJ governor, insisted Japan’s economy was still enjoying a moderate recovery and claimed there was a widening trend towards higher prices.
  • Federal Reserve sharpens tools for lift-off (FT) Engineering the great escape from near-zero interest rates will present the Federal Reserve with a universe of challenges. A key one is ensuring short-term market interest rates obediently head where the Fed wants to see them.
  • Oil Patch Braces for Financial Reckoning (WSJ) U.S. energy companies have defied financial gravity for more than a year, borrowing and spending billions of dollars to pump oil, even as crude prices plummeted. Until now.

Overnight markets 

  • Overview: IG24 5Y 79.5/80 (+0), US 10yr note futures are down -0.05% at 127-15+, S&P 500 futures are up +0.06% at 1945.25, Crude oil futures are up +0.98% at 44.43, Gold futures are down -0.09% at $1106.7, DXY is down -0.07% at 95.184.
  • US BANK CDS (5yr): BAC 74/78 (+0), GS 90/94 (+0), MS 82/86 (+0), C 82/86 (+0), JPM 75/79 (+0), WFC 56/60 (+0)

US Economic Data

  • Retail sales increased 0.2% MoM in August, below expectations, after increasing 0.7% the previous month.
  • Retail sales excluding automobiles increased 0.1% in August, compared to consensus of a 0.2% gain, and a revised 0.6% increase in July.
  • Empire manufacturing increased to -14.67 in September from a reading of -14.92 in August. Analysts had expected the index to rise to -0.5.
  • Industrial production is expected at -0.2% MoM in August compared to July 0.6%.
  • Capacity utilization is forecast at 77.8% in August, 0.2% lower than previous month.
  • Manufacturing production is expected at -0.3% MoM in August compared to 0.8% in July.
  • Business inventories are forecast to increase 0.1% MoM in July, lower than the 0.8% increase the previous month.

Canadian Economic Data 

  • Existing home sales for August will be release at 9:00.


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