Market Update

Tsys open NY weaker after Wed post-FOMC rally. FOMC lifted rates by 25bps. However, the Fed dot plot projections showed forecasts for 2017 and 2018 were unchanged from December. Tsys near low end of range, cued by lower Bunds and Gilts. Overnight rates move lower, partly due to hedge unwinds vs. Dutch election concerns; French and Spanish debt issuance also weighed. US swaps, running mildly wider; mild rate and spd paying from specs and fast$ in 2s and 5s, some deal-tied hedging in intermediates. Eurodollar futures mostly lower; LIBOR sets higher. US corporate bond issuance could see Scentre Grp 10Y, APA Grp long 10Y. Following yesterday’s Fed rate hike, the overnight hold from the Bank of Japan and rate increase from the People’s Bank of China, it is the turn of European central banks to announce their decisions today.

News headlines 

Dovish Fed, Dutch Vote Spur Stocks as Oil Advances: Markets Wrap (Bloomberg) Stocks advanced with commodities as the U.S. Federal Reserve’s dovish message continued to feed into markets, and as pro-Europe parties claimed victory in the Netherlands election. The euro and Treasuries gave up some of Wednesday’s advance.

Europe Gets Reprieve in Dutch Election, But the Center Fragments (Bloomberg) When Donald Trump was elected U.S. president in November his Dutch equivalent, Geert Wilders celebrated the arrival of a “Patriotic Spring” that would lift anti-immigrant nationalists to power across Europe. That uprising failed to materialize in the Netherlands.

BOJ sets high hurdles for tapering, rate hike in wake of Fed move (TheGlobeAndMail) Bank of Japan Governor Haruhiko Kuroda said an uptick in inflation towards 1 per cent won’t immediately trigger an interest rate hike, signalling that Japan will stick to its ultra-easy policy even as other major economies eye withdrawing stimulus.

Oil extends gains as dollar and U.S. inventories fall (Reuters) Oil prices rose for a second day on Thursday, supported by U.S. data showing crude inventories had dipped after rising for nine weeks and a weaker dollar after the U.S. Federal Reserve signaled it would not hike rates faster than expected. Brent crude oil was up 38 cents at $52.19 a barrel by 1050 GMT, recovering from Tuesday’s slide to $50.25, its lowest level since Nov. 30 when the Organization of the Petroleum Exporting Countries announced plans to cut supplies.

Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy (Bloomberg) Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation. Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshooting its 2 percent goal and that it intended to keep its policy accommodative for “some time.”

Household debt hits fresh record, with Canadians owing $2 trillion by the end of 2016 (Financial Post) Canadian household debt as a share of income rose to a fresh record in the fourth quarter, data from Statistics Canada showed on Wednesday in a report likely to underscore concerns consumers are becoming overly indebted. The ratio of debt to disposable income rose to 167.3 per cent from an adjusted 166.8 per cent in the third quarter. That meant Canadians owed $1.67 for every dollar of disposable income.

Overnight markets 

Overview: US 10yr note futures are down -0.152% at 123-18, S&P 500 futures are up 0.13% at 2383.5, Crude oil futures are up 0.55% at $49.13, Gold futures are up 2.57% at $1231.6, DXY is down -0.24% at 100.5, CAD/USD is down -0.03% at 0.7518.

US Economic Data

8:30 AM Housing Starts, Feb, 1288k, est. 1264k, (prior 1246k, revised 1251k)
  Housing Starts, m/m, Feb, 3.0%, est. 1.4% (prior -2.6%, revised -1.9%)
  Building Permits, Feb, 1213k , est. 1268k, (prior 1285k, revised 1293k)
  Building Permits, m/m, -6.2%, est. -1.9% (prior 4.6%, revised 5.3%)
  Initial Jobless Claims, Mar 11, 241k, est. 240k, (prior 243k)
  Continuing Claims, Mar 4, 2030k, est. 2050k (prior 2058k, revised 2060k)
  Philadelphia Fed Business Outlook, Mar, 32.8, est. 30.0 (prior 43.3)
9:45 AM Bloomberg Consumer Confidence Index, Mar 12, (prior 50.6)

Canadian Economic Data

8:30 AM Int’l Securities Transactions, Jan, , (prior 10.23b)


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