16/02/2018

Market Update Tsys trading higher, near top of o/n range, despite higher global stocks, 10Y 2.88% (-2.9bps), modest volume in TY futures (275k). Tsys off the highs after a strong rise in Jan Housing Starts  to 1.326mln rate the highest since October 2016,  + 9.7% m/m vs 3.5% exp.  Tsys are bid despite higher stocks thou S&P futures are well off the highs +3.5vs +12 earlier.  Tsy curve ~4bps flatter with long end outperforming, similar to bull flattening in gilts & bunds – the only data being weak UK retail sales. Citi recommended buying European debt and Barclays recommends going long tsys, according to MNI.  GOCs higher, in line with tsys, provis unch with supply unlikey given half day.

News headlines

U.S. Housing Starts Reach Highest Level in More Than a Year (Bloomberg) U.S. new-home construction rose in January to the highest level since October 2016, helped by a surge in apartment building, as momentum in the housing market continues into 2018, government figures showed Friday.

U.K. Retail Sales Barely Grow as Consumers Subdued by Inflation (Bloomberg) U.K. retail sales barely grew in January, more evidence consumers are reluctant to splash out amid a squeeze from rising prices.Sales increased 0.1 percent from December, far below the 0.5 percent gain forecast by economists in a Bloomberg survey. From a year earlier, sales rose 1.6 percent, the weakest for a January in four years 

World shares set for best week since 2011, dollar hits lowest since 2014 (Reuters) World shares were set to post their best week of gains in six years on Friday after two consecutive weeks spent in the red, shrugging off a rise in global borrowing costs while the dollar hit its lowest level since 2014. 

Trudeau ratchets up pipeline pressure on British Columbia (TheGlobeandMail) Prime Minister Justin Trudeau has increased the pressure on British Columbia in the dispute over the Kinder Morgan pipeline expansion, saying the province’s proposal to block the project risks alienating Alberta and derailing any consensus on Canada’s climate-change plan. 

S.E.C. Blocks Chinese Takeover of Chicago Stock Exchange (NYTimes) A federal securities regulator on Thursday struck down the proposed $20 million acquisition of a Chicago-based trading hub, the Chicago Stock Exchange, by a Chinese-owned company. The Securities and Exchange Commission said it blocked the deal because of a lack of transparency in the details, including an inability to identify who exactly would control the exchange.

Cracks Appear in Credit Funds as Investors Head for the Exit (Bloomberg) Global bond funds saw the fifth-largest week of redemptions ever last week, amid expectations of higher interest rates, according to Bank of America Merrill Lynch, citing EPFR Global fund flow data.

 Overnight markets

Overview: US 10yr note futures are up 0.117% at 120-19, S&P 500 futures are up 0.01% at 2734.25, Crude oil futures are up 0.05% at $61.37, Gold futures are up 0.21% at $1358.1, DXY is up 0.34% at 88.895, CAD/USD is up 0.34% at 0.7986. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.841% 2 Year 2.19%
5 Year 2.138% 5 Year 2.629%
10 Year 2.339% 10 Year 2.871%
30 Year 2.475% 30 Year 3.12%

US Economic Data

8:30 AM Housing Starts, Jan 1326k est 1234k (1192k prior)
Housing Starts MoM, Jan 9.7% est 3.5% (-8.2% prior)
Building Permits, Jan 1396 est 1300k (1302k prior)
Building Permits MoM, Jan 7.4% est 0.0% -0.1% prior)
10:00 AM U. of Michigan Sentiment, Jan est 95.4 (95.7 prior)

Canadian Economic Data

8:30 AM Manufacturing Sales MoM, Dec -0.3% est 0.3% (3.4% prior)

 

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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230