Market update
Treasuries see some more mild buying. US stock index futures remain weak, echoing overnight global trend. Treasuries gain on short-covering spurred by low CPI but then tsys sink as NY Fed Pres. Dudley said on Fox Biz Network that a Sept. rate hike is possible; 10-yr note 1.549%.
News headlines
- World stocks edge away from one-year peak, dollar on defensive (Reuters) World stocks markets edged away from one-year peaks on Tuesday as a stellar rally stalled, while the dollar hit a one-month low against the yen as recent weak U.S. economic data was seen limiting the scope for a near-term rate hike. Asian shares rose to a one-year peak, lifted by a rise in U.S. stocks to record highs a day earlier and expectations that monetary policy around the world will remain lower for longer than anticipated to support growth
- Oil Trades Near $46 a Barrel as Nigeria Sees OPEC Cuts Unlikely (Bloomberg) Oil traded near $46 a barrel after the biggest three-day gain since April as Nigeria’s oil minister signaled the prospect of production cuts from OPEC was unlikely. Futures added 0.6 percent in New York, reversing an earlier loss of 0.9 percent as the dollar weakened, making commodities more attractive. Prices climbed 9.7 percent the previous three sessions following comments by Saudi Arabia’s energy minister that it’s prepared to discuss stabilizing the market. Nigerian Minister of State for Petroleum Emmanuel Kachikwu said he has “sparse” optimism that OPEC will trim output.
- Sterling boosted by above-forecast UK inflation data (Reuters) Sterling slightly strengthened on Tuesday, rising from three-year lows against the euro and pulling further away from a five-week trough against the dollar, after slightly higher than expected inflation data. Consumer price rises gathered speed, up 0.6 percent in July compared with a year earlier, their biggest rise since the end of 2014. Economists in a Reuters poll had expected a 0.5 percent rise.
- German ZEW economic sentiment misses expectations (Market Watch) German economic sentiment picked up in August, but the mood among financial analysts remained relatively subdued, a sign that Europe’s largest economy will stay on its modest growth path. Germany’s ZEW think-tank said Tuesday that its measure of economic expectations rose to 0.5 points in August from minus 6.8 points in July, but remained well below its long-term average of 24.2 points. Economists polled by The Wall Street Journal had forecast an increase to 2.0 points.
- Alberta’s oilsands cap could mean billions worth of lost production, limited impact on emissions: report (FinancialPost) As Alberta’s NDP government rushes ahead with implementation of its climate change plan, a new study provides another measure of its exorbitant cost – a proposed cap on oilsands emissions would leave oil worth hundreds of billions in the ground, while doing little to reduce global greenhouse gases. According to the Fraser Institute study by Ken Green and Taylor Jackson, How Alberta’s Carbon Emission Cap Will Reduce Oil Sands Growth, the provincial government’s proposed cap of 100 megatonnes of emissions annually for the oilsands sector would reduce its production potential by more than three billion barrels between 2025 and 2040, costing the Canadian economy more than $250 billion in lost production and resulting in a “meager” 0.035 per cent reduction in global greenhouse gas emissions by 2040.
- The World’s Worst Currency Is in a Record Slide (Bloomberg) Mongolia’s tugrik, the world’s worst-performing currency in August, is in its longest losing streak on record as the nation’s government seeks ways to stabilize an economy it says is in the grip of a crisis. The currency weakened a 22nd day to 2,243.50 per dollar as of 5:05 p.m. in the capital Ulaanbaatar, the lowest level in Bloomberg data going back to 1993. The tugrik’s 7.8 percent drop this month is the biggest among 154 currencies tracked by Bloomberg, taking its decline in 2016 to more than 11 percent.
- BHP Says Price Freefall Is Over Following Record Net Loss (Bloomberg) BHP Billiton Ltd., the world’s biggest mining company, flagged it’s emerging from the worst commodities price collapse in a generation with renewed impetus after reporting a record full-year loss. “There is some sense that prices have stopped falling as opposed to being in freefall,” Chief Executive Officer Andrew Mackenzie told reporters Tuesday on an earnings call. “We start this new financial year with real momentum.”
Overnight markets
- Overview: US 10yr note futures are up 0.0236% at 132-9, S&P 500 futures are down -0.25% at 2180.5, Crude oil futures are down -0.13% at $45.68, Gold futures are up 0.55% at $1354.9, DXY is down -0.83% at 94.832.
US Economic Data
- 8:30 AM: Housing Starts, July, 1211k, est. 1180k (prior 1189k, revised 1186k)
- Housing Starts, m/m, July, 2.1%, est. -0.80% (prior 4.80%, revised 5.1%)
- Building Permits, July, 1152k, est. 1160k, (prior 1153k)
- Building Permits, m/m, July, -0.1%, est. 0.60% (prior 1.50%)
- CPI, m/m, July, 0.00%, est. 0.00% (prior 0.20%)
- CPI Ex Food and Energy, m/m, July, 0.10%, est. 0.20% (prior 0.20%)
- CPI, y/y, July, 0.80%, est. 0.90% (prior 1.00%)
- CPI Ex Food and Energy, y/y, July, 2.20 %, est. 2.30% (prior 2.30%)
- 9:15 AM: Industrial Production, m/m, July, est. 0.30% (prior 0.60%)
- Capacity Utilization, July, est. 75.60% (prior 75.40%)
Canadian Economic Data
- 8:30 AM: Manufacturing Sales, m/m, June, est. 0.50% (prior -1.00%)
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