Market Update
US tsys drifting lower since the late afternoon spike yest, which saw the 10Y yield fall to the lowest since August 2016 below 1.50%, currently 1.525% (unch), volume in TY futures closer to avg (383k). EGBs mixed 10Y bund yield new lows @ -0.73%, UK gilt curve bear flattening, 2Y gilt yields +7bps, GBP higher for second day. US money market fund assets have surged to the highest since 2009 according to ICI, with net inflows in 16 out of the last 17 weeks. In Canada, GOCs lower, yields 1-3bps higher with the 10Y 1.11%, after making new low yest 1.08%. Long outperformance main theme over the past week, 10s30s 5bps flatter, similar to move in the US. Sask reopened their 2050 issue @ 91.5 yest, (Ontario +7), spreads unch this morning. AIMCo Realty tapped their 10Y issue @ 115, the tighter end of guidance, issue closed 2bps tighter.
News headlines
U.S. Futures Rise to End Volatile Week; Bonds Dip: Markets Wrap (Bloomberg) U.S. equity futures climbed with European stocks and most Asian shares posted modest gains, as a tumultuous week of trade uncertainty and fears over global growth nears its end. Treasuries pared some of Thursday’s advance.
TSX futures gain on higher oil prices (Reuters) Futures for Canada’s main stock index were up on Friday as crude oil prices rebounded after positive U.S. retail sales data helped ease concerns of a recession in the world’s largest economy.
Oil Heads for Weekly Gain as Trade War Headlines Whipsaw Market (Bloomberg) Oil headed for a weekly increase as hopes that the U.S. and China could resume negotiations to resolve their trade dispute capped a week of volatile trading.
Exclusive: China-owned oil tanker changes name in apparent effort to evade U.S. sanctions (Reuters) While in the Indian Ocean heading toward the Strait of Malacca, the very large crude carrier (VLCC) Pacific Bravo went dark on June 5, shutting off the transponder that signals its position and direction to other ships, ship-tracking data showed.
Powell expected to seek another cut despite strong spending (BNN) The U.S. data pouring in supports Federal Reserve Chairman Jerome Powell’s forecast of solid economic growth and higher inflation. Still, economists remain confident that Powell will cut interest rates again next month as insurance against a global slowdown.
Trump says China talks ‘productive’; Beijing vows tariff retaliation (Reuters) U.S. President Donald Trump said on Thursday that U.S. and Chinese negotiators were holding “productive” trade talks and expected them to meet in September despite U.S. tariffs on over $125 billion worth of Chinese imports taking effect Sept 1.
Brazil’s foreign exchange move paves way to reduce $385 billion reserve stash (Reuters) Brazil’s decision to sell dollars on the spot market for the first time in a decade is a sign the central bank is finally willing to reduce its $385 billion pile of foreign exchange reserves, analysts said.
Market Overview: US 10yr note futures are down -0.024% at 130-30, S&P 500 futures are up 0.85% at 2872.75, Crude oil futures are up 0.51% at $54.75, Gold futures are down -0.5% at $1523.6, DXY is up 0.13% at 98.27, CAD/USD is down -0.12% at 0.752.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.316% | 2 Year | 1.495% |
| 5 Year | 1.161% | 5 Year | 1.42% |
| 10 Year | 1.112% | 10 Year | 1.529% |
| 30 Year | 1.321% | 30 Year | 1.983% |
US Economic Data
| 08:30 AM | Housing Starts, Jul Survey: 1256k Actual: 1191k Prior: 1253k |
| Housing Starts MoM, Jul Survey: 0.20% Actual: -4.00% Prior: -0.90% | |
| Building Permits, Jul Survey: 1270k Actual: 1336k Prior: 1220k | |
| Building Permits MoM, Jul Survey: 3.10% Actual: 8.4% Prior: -6.10% | |
| 10:00 AM | U. of Mich. Sentiment, Aug P Survey: 97.00 Prior: 98.40 |
Canadian Economic Data
| 08:30 AM | Int’l Securities Transactions, Jun Survey: — Actual: -3.98b Prior: 10.20b |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230