Market Update
- Tsys trading higher since mix of 8:30 data, US 10Y 1.675 (-2.4bps). Core PPI 0.3% vs unch exp, while retail sales -0.3% weaker than exp. Prices off the lows since Europe after BOE left rates as well as its gilt purchase program unch. Core Euro bond curves steeper, as the BOE left the door open for a rate cut in Nov while acknowledging the improvement in recent data since Brexit. GOCs lower, spds wider vs tsys as GOCs resist steepening in the US. Provi supply rumoured this morn (Ont, QC), CMB 5Y pricing as well. In corps, quiet yest in terms of domestic issuance thou Telus issued USD $600mln 10Y @ 120 bps – 30 bps tighter than IPT! Which led to narrowing in CAD telco. Ventas Realty (Baa1/BBB+) returned to the mkt for the second time this yr with $300mln in 10Y notes at 158 or 25 bps inside of IPT. The USD 10Y swaps back to CAD at GOCs + ~150, making the domestic VTR 3.3 22 look relatively cheap at ~160.
News headlines
- Global stocks struggle for footing after bond slip (Reuters) World stocks steadied at two-month lows on Thursday though bond markets stayed firmly in the red, as eight years on from the collapse of Lehman Brothers two of Europe’s top central banks prepared to keep their interest rates pointing down. Europe’s main stock markets in London .FTSE, Frankfurt .GDAXI and Paris .FCHI dipped in and out of positive territory as the region struggled to pull out of a five-day losing streak.
- Bank of England signals new rate cut despite Brexit bounceback (Reuters) The Bank of England said it was still likely to cut interest rates to just above zero later this year, even though the initial Brexit hit to Britain’s economy would be less severe than it expected only last month. The Bank said on Thursday its nine rate-setters were unanimous in their decision to keep Bank Rate at its new record low of 0.25 percent, the lowest in the BoE’s 322-year history.
- Volatility Erupts in Currencies as Stimulus Appetite Seen Waning (Bloomberg) Volatility has reawakened in the $5.1 trillion foreign-exchange market, as traders start to imagine life without ultra-easy monetary policy. The impact is greatest in the currencies with most at stake from an end to years where stimulus only got more generous — the so-called high yielders. A gauge of expected swings in emerging-market currencies has surged above an equivalent measure for developed markets by the most since May.
- Swiss National Bank keeps expansive policy to check overvalued franc (Reuters) Switzerland’s central bank on Thursday kept its expansive monetary policy intact, holding its negative interest rates at record low levels despite mounting criticism of the policy that has hurt banks and pensions.
- Canadian homes are still cheap, at least in foreign currency: Bank of America (Financial Post) A major U.S. financial institution is telling clients that the Canadian housing market is still cheap — especially if you’re not using loonies to buy. Bank of America Merrill Lynch Global Research on Wednesday launched coverage of Canada’s mortgage finance system, policy infrastructure and securitization channels and one of its findings, which may shock some Canadians in Toronto and Vancouver, is that the market is not all that pricey.
- Amaya CEO maintains innocence after investigator admits no direct proof in insider trading case (The Globe And Mail) Former Amaya Inc. chief executive officer David Baazov maintains that he’s innocent on charges of illegal insider trading following the admission by an investigator for Quebec’s securities watchdog that it has no direct proof of privileged information being shared over the phone about several corporate takeovers.
Overnight markets
- Overview: US 10yr note futures are down -0.0599% at 130-12, S&P 500 futures are up 0.17% at 2116.75, Crude oil futures are up 0.32% at $43.72, Gold futures are down -0.17% at $1323.8, DXY is up 0.06% at 95.385.
US Economic Data
- 8:30 AM: Empire Manufacturing, Sep, -1.99, est. -1 (prior -4.21)
- Current Account Balance, 2Q, est. -121.0b (prior -124.7b, revised -131.8b)
- Retail Sales Advance, m/m, Aug, -0.3%,est. -0.10% (prior 0.0%, revised 0.1%)
- Retail Sales Ex Auto, m/m, -0.1%, est. 0.20% (prior -0.30%, revised -0.4%)
- Initial Jobless Claims, Sep-10, 260k, est. 265k, (prior 259k)
- Continuing Claims, Sep-3, est. 2150k, (prior 2144k, 2142k)
- PPI Final Demand, y/y, Aug, 0.0%, est. 0.10% (prior -0.30%)
- PPI Final Demand Ex Food & Energy, y/y, Aug, 1.00%, est. 1.00% (prior 0.70%)
- Philadelphia Fed Business Index, Sep, 12.8, est. 1.0 (prior 2.0)
- 9:15 AM: Industrial Production, m/m, Aug, est. -0.20% (prior 0.70%)
- Capacity Utilization, Aug, est. 75.70% (prior 75.90%)
- 10:00 AM: Business Inventories, Jul, est. 0.10% (prior 0.20%)
Canadian Economic Data
- 9:00 AM: Existing Home Sales, m/m, Aug, (prior -1.30%)
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