Market Update

US tsys slightly lower, 10Y 2.275 (+0.5bps), TY futures in narrow 5 tick range on avg. volume. Equities firmer (eminis +4),  gold lower for third day, crude 47.70 +0.30% after API reported US crude inventories fell 9.2mln bbls. Core Euro bonds lower, underperforming tsys by 2.5-3bps in 10s. UK gilt curve 2bps steeper, 10Y 1.12%. UK employment came in stronger, unemployment fell to 4.4% and wages rose 2.1% still lagging inflation by 0.5%. Bunds lower, 10Y 0.454% (+2.6bps), giving back the brief bounce after Draghi was said not to deliver any policy changes at the upcoming Jackson Hole symposium. GOCs lower in line with tsys, curve unch, longs lagging with $1.2bln long bond auction at noon,  what should be the last reopening of the Dec 48s considering outstanding will reach $14.5bln. Provis closed relatively unch on no issuance, CMB 10Y pricing this morning ~44.5, WI 44.4/43.5. Apple (Moody’s Aa1) priced its inaugural maple issue yest – $2.5bln 7Y with orders in excess of $3.5bln, spd 81.4, opened 82/80.

News headlines 

Growth Outlook Boosts Europe Stocks; Dollar Steady: Markets Wrap (Bloomberg) European stocks advanced amid growing optimism over the region’s economy. The dollar and Treasuries were largely steady as investors tread water before the release of the latest Federal Reserve minutes.

Oil edges up on falling U.S. crude stocks (Reuters) Oil prices edged up on Wednesday, lifted by declining U.S. crude inventories, although markets were still restrained by excess supply.

UK unemployment falls again to lowest since 1975, wage growth still muted (Reuters) Britain’s labor market outperformed tepid growth in the rest of the economy in the second quarter as the unemployment rate unexpectedly fell to its lowest since 1975, official data showed on Wednesday.

Euro zone Q2 annual growth estimate upgraded (Reuters) The economy in the 19 countries sharing the euro currency expanded by more than previously forecast in the second quarter compared to the same quarter in 2016, the European Union’s statistics office Eurostat said on Wednesday.

IMF warns China over ‘dangerous’ growth in debt (TheGuardian) China’s credit-fuelled economic strategy has been branded as dangerous by the International Monetary Fund in a strongly-worded statement warning that its approach risks financial turmoil.

Metro warns of price hikes as labour costs rise (TheGlobeAndMail) Grocers could be forced to raise their prices next year as a result of Ontario’s plan to boost minimum wages, the head of Metro Inc. warns. Montreal-based Metro will work hard to offset the rise in labour costs, but that may not be enough to prevent supermarkets from raising prices, chief executive officer Eric La Flèche said on Tuesday.

Overnight markets 

Overview: US 10yr note futures are down -0.05% at 126-03, S&P 500 futures are up 0.19% at 2468.5, Crude oil futures are up 0.15% at $47.62, Gold futures are down -0.15% at $1277.8, DXY is up 0.09% at 93.938, CAD/USD is down -0.2% at 0.7855.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.239% 2 Year 1.346%
5 Year 1.513% 5 Year 1.825%
10 Year 1.909% 10 Year 2.271%
30 Year 2.355% 30 Year 2.85%

US Economic Data

7:00 AM MBA Mortgage Applications, Aug 11, 0.1% (prior 3.0%)
8:30 AM Housing Starts, Jul, 1155k, est. 1220k (prior 1215k, revised 1213k)
Housing Starts, m/m, Jul, -4.8%,  est. 0.4% (prior 8.3%, revised 7.4%)
Building Permits, Jul, 1223k, est. 1250k (prior 1254k, revised 1275k)
Building Permits, m/m, Jul, -4.1%, est. -2.0% (prior 7.4%, revised 9.2%)
2:00 PM FOMC Minutes from July 25-26 meeting

Canadian Economic Data

8:30 AM Int’l Securities Transactions, Jun, -0.92, prior (29.46b, revised 29.44b)


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