cti2015header-morning comments web

Market Update

  • US tsys trading lower after CPI came in above exp (core 2.3% vs 2.2% exp), unwinding gains after ‘risk off’ o/n session and follow thru buying after yest weak US retail sales data. Core European bonds higher, curves flatter, the 10Y bund close to zero from high of 0.07% Tuesday.  Euro stoxx down 1.25% on ~8.0% plunge in Deutsche Bank – the WSJ reporting the Bank may have to pay as much as $14bln in fines related to its sale of mortgage backed securities. DB had set aside ~$5bln for legal costs so this latest demand from the US govt is a real shocker. GOCs higher led by the 10Y sector in a directional move, 5s10s ~2bps flatter after steepening ~11bps since the end of August. Provis opening firm after closing 1bp tighter yest despite $1.225 bln in supply and CMB 5Y.  Cominar Reit in the news yest after  $200mln equity financing in bought deal with proceeds to pay down debt – spds in 20-30 bps.

 News headlines                                                                                     

  • Stocks Weighed Down by Deutsche Bank, Oil; Russian Bonds Drop (Bloomberg) European shares slid as a $14 billion U.S. Justice Department claim against Deutsche Bank AG and weakening oil prices dragged lenders and energy companies lower. All but two of the 19 industry groups on the Stoxx Europe 600 Index declined and S&P 500 Index futures also fell. Russia’s ruble and bonds slipped after its central bank cut interest rates and said the move would be its last of the year. U.S. crude traded below $44 a barrel amid concern rising exports from Nigeria and Libya will add to a glut. A rally government bonds sent German’s 10-year yields below zero for the first time in a week. The pound fell versus all its major peers.
  • Oil hits two-week lows as growing supplies stoke glut concerns (Reuters) Oil prices fell to roughly two-week lows on Friday as news of rising Iranian exports and returning supplies from Libya and Nigeria fueled concerns that the global glut will persist. Benchmark Brent crude futures fell below the $46-a-barrel mark, trading down 1.7 percent at $45.79 a barrel, down 80 cents, at 1045 GMT. U.S. West Texas Intermediate futures were down 73 cents, or 1.7 percent, at $43.18 a barrel, a two-week low.
  • Deutsche Bank to fight $14 billion demand from U.S. authorities (Reuters) Deutsche Bank (DBKGn.DE) said it would fight a $14 billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany’s largest lender. The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank’s expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).
  • Bank of England aims to revamp interbank payment system by 2020 (Reuters) The Bank of England said on Friday it aimed to revamp Britain’s interbank payment system by 2020, and that future users would pay for this through a temporary increase in charges. The BoE’s real-time gross settlement system (RTGS) suffered a major outage in October 2014, and in June BoE Governor Mark Carney said he wanted to make it easier for smaller financial firms to access the system directly rather than going through large incumbent banks.
  • Ottawa making housing fix a top priority, minister says (The Globe And Mail) The minister responsible for drawing up a national housing strategy says he and other senior cabinet members are having extensive discussions about how Ottawa should act to bring Canada’s housing market under control. Jean-Yves Duclos said he is “in direct and intense contact over those issues” with Finance Minister Bill Morneau and Revenue Minister Diane Lebouthillier as the government prepares for Monday’s return of Parliament.
  • Johnson Said to Tell Italy Exit Talks Likely to Start Early 2017 (Bloomberg) Foreign Secretary Boris Johnson told his Italian counterpart that the U.K. will likely begin formal Brexit negotiations early next year, according to an official briefed on the conversation. Johnson, who campaigned for Britain to leave the European Union, met with Paolo Gentiloni  in Florence on Thursday, telling reporters afterward that the U.K. “must supply clarity, certainty” on its plans. Gentiloni said, “We need certainty on timings for Brexit.”

Overnight markets

  • Overview: US 10yr note futures are up 0.1318% at 130-20, S&P 500 futures are down -0.12% at 2135.5, Crude oil futures are down -2.16% at $42.96, Gold futures are down -0.36% at $1313.3, DXY is up 0.51% at 95.774.

US Economic Data

  • 8:30 AM: CPI, m/m, Aug, 0.2%, est. 0.1% (prior 0.0%)
    •    CPI Ex Food and Energy, m/m, Aug, 0.3%, est. 0.2% (prior 0.1%)
    •    CPI, y/y, Aug, 1.1%, est. 1.0% (prior 0.8%)
    •    CPI Ex Food and Energy, y/y, Aug, 2.3%, est. 2.2% (prior 2.2%)
  • 10:00 AM: University of Michigan, Sep P,  est. 90.6 (prior 89.8)
  • 16:00 AM:  Total Net TIC Flows, Jul, (prior -202.8b)
    •      Net Long-term TIC Flows, Jul, (prior -3.6b)

Canadian Economic Data

  • 8:30 AM : Manufacturing Sales, m/m, July, 0.1%, est. 1.0% (prior 0.8%)
  • Int’l Securities Transactions, July,  5.23b (prior 9.02b)


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