Market Update
Tsys slightly weaker off the lows after May housing starts fell 5.5% vs 4.1% increase exp to the lowest pace since Sep 2016, US 10Y 2.165%. Euro equities higher, S&P futures +1.25, crude bouncing off the lows 44.85. Core Euro bonds lower led by longs, bunds reversing flattening trend, curve ~2bps steeper. Peripherals mixed, Italy & Spain yields higher, Greece 20bps lower after securing E8.5bln in bailout funding. GOCs lower in line with tsys, curve 0.5 bps steeper, 10Y 1.54%. Provis opening softer, long Ontarios traded down at 84.5 earlier, Ont 48/27 box 0.3bps steeper. Quebec reopened 10Y yest @ 74.5 saw solid demand, now 75.5/74.5.
News headlines
Shares End Week Stronger as Havens Yen, Bonds Fade: Markets Wrap (Bloomberg) Global stocks bounced back from the previous session’s losses as shares in Europe were buoyed by corporate news. Havens including the yen and bonds declined while oil rose with metals.
BOJ upgrades view on consumption, rules out early exit from stimulus (Reuters) The Bank of Japan kept monetary policy steady on Friday and upgraded its assessment of private consumption for the first time in six months, signaling its confidence in an export-driven economic recovery that is gaining momentum.
Oil prices bounce but stuck near 2017 lows on supply overhang (Reuters) Oil prices edged up from 2017 lows on Friday but remained on track for a fourth consecutive week of losses because of excess supplies despite OPEC-led production cuts. Brent crude futures were up 43 cents at $47.35 per barrel by 1026 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $44.70 per barrel, up 24 cents.
ECB needs ‘more clarity’ on debt relief to buy Greek bonds: source (Reuters) The European Central Bank needs more clarity on what kind of debt relief Greece will get from its international creditors if it is to buy Greek government bonds as part of its monetary stimulus program, a source close to the matter said.
Yen hits two-week low after BOJ stays pat on policy (Reuters) The yen fell to two-week lows on Friday after the Bank of Japan kept interest rates steady and signaled it was in no hurry to follow the Fed’s example in tightening its ultra-loose monetary policy.
Poloz Talk Leads Investors to Price in 2017 Rate Hike (Bloomberg) It’s been a pivotal week for Bank of Canada watchers. Investors and economists are recalibrating rate forecasts after the central bank’s surprise talk of tightening this week signaled a policy move could come sooner rather than later.
Oilsands production to rise by 500,000-bpd over next two years, exceeded only by U.S. shale: HIS (Financial Post) Oilsands production growth will slow in the coming years as expansion projects currently underway wrap up and new projects are sanctioned at a more measured pace, according to a new report from IHS Markit.
Overnight markets
Overview: US 10yr note futures are up 0.074% at 126-24, S&P 500 futures are down 0% at 2432, Crude oil futures are up 0.83% at $44.83, Gold futures are up 0.21% at $1257.2, DXY is down -0.1% at 97.339, CAD/USD is down -0.21% at 0.7553.
US Economic Data
| 8:30 AM | Housing Starts, May, 1092k, est. 1220k (prior 1172k, revised 1156k) |
| Housing Starts, m/m, May, -5.5%, est. 4.1% (prior -2.6%, revised -2.8%) | |
| Building Permits, May, 1168k, est. 1249k (prior 1229k, revised 1228k) | |
| Building Permits, m/m, May, -4.9%, est. 1.7% (prior -2.5%, revised -2.5%) | |
| 10:00 AM | Labor Market Conditions Index, May, est. 3.0 (prior 3.5) |
| University of Michigan Sentiment, Jun P, est. 97.0 (prior 97.1) |
Canadian Economic Data
| 8:30 AM | Int’l Securities Transactions, Apr, 10.60b, (prior 15.13b, revised 15.05b) |
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