Market update
US tsys slightly higher after CPI came in as exp, prices unable to rebound despite Tues sharp selloff, US 10Y 2.28 (-0.3bps). Core Euro bonds lower with bunds extending losses after uncovered 20Y bund auction, UK jobs data. 10Y gilt/bund spd ~3bps wider on UK labor mkt data, with wages rising at the fastest pace in six yrs. JGBs higher despite S&P downgrade of Japan to A+ from AA- (see above). GOCs lower, spds another ~1bp wider vs tsys – yesterday’s tsy selloff failed to move GOC/tsy spds with Cdn corp/provi supply a factor once again – QC, Ont & Alberta rumoured as possible candidates today.
News headlines
- Standard & Poor’s downgrades Japan from AA- to A+ (CNBC) U.S. ratings agency Standard & Poor’s downgraded Wednesday its credit rating for Japan from AA- to A+, but has revised its outlook for the world’s third-largest economy from negative to stable.
- Investors Look Beyond Fed Meeting, See Low Rates (WSJ) Investors may be mixed on what the Federal Reserve will do with interest rates this week. But they are more aligned on what they expect to happen next with rates: not much.
- Eurozone inflation falls unexpectedly in August (Marketwatch) Inflation across the eurozone unexpectedly weakened in August, a development likely to fuel speculation that the European Central Bank may have to expand its bond-buying program.
- Stocks higher as Fed verdict looms (FT) European shares are following Asia and Wall Street higher in the penultimate session before the US Federal Reserve is set to deliver its decision on interest rates.
- Eurozone races to restructure Greek banks as bail-in looms (FT) Eurozone officials are racing to restructure Greece’s banking system before new rules kick in that could wipe out corporate deposits with potentially disastrous effects for the Greek economy.
Overnight markets
- Overview: IG24 5Y 78.9/79.25 (+0.33), US 10yr note futures are down -0.06% at 126-20, S&P 500 futures are down -0.08% at 1968.5, Crude oil futures are up +1.70% at 45.35, Gold futures are up +0.42% at $1107.02, DXY is up +0.15% at 95.744.
- US BANK CDS (5yr): BAC 74/78 (+0), GS 90/94 (+0), MS 81/85 (-1), C 82/86 (+0), JPM 75/79 (+0), WFC 55/59 (+0)
US Economic Data
- MBA mortgage applications came in this morning at -7.0% for the week ending September 11th, versus prior week -6.2% increase.
- CPI decrease -0.1% MoM (+0.2% YoY) in August (-0.1% MoM and 0.2% YoY Expec) versus July 0.1% MoM (0.2% YoY).
- CPI core came in at 0.1% MoM (1.8% YoY) in August (0.1% MoM and 1.9% YoY Expec) compared to previous month 0.1% MoM (1.8% YoY).
- NAHB housing market index is forecast at 61.0 in September equal to August.
- Net long-term TIC flows for July will be release at 16:00.
Canadian Economic Data
- Int’l securities transactions for July came in at 8.51B, lower than previous month (8.51B).
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230