Market update
US tsys drifting lower at NA , pressured by gains on overseas equity mkts, higher commodities – US 10Y back over 2.0%. No tier1 data today so tsys will likely follow stocks lead, US stock futs are small lower after yest aft rally brought the S&P back to the highest lvls since August. Thursday saw the US tsy curve bear flatten in reaction to stronger core CPI with longs outperforming ~4bps. TIPs breakevens bounced briefly but were unable to retain any momentum – 30Y brkevens are ~1bp lower this morning @ 165. GOCs are higher after better than exp Manuf Sales, longs well bid on the curve for a second day, yest saw 2bp narrowing in 10/30 curve despite long end provi & corp supply. Ontario spds opening unch after trading up yest aft, Ont 46 111/110 , whats even more remarkable five yr CMBs are 10bps off the wides of last week@ 51/50 making 5Y Onts @ 68.5 look cheap.
News headlines
- Investors lurch backwards on US rate rise expectations (FT) The US economy may be slowing, a top Federal Reserve policymaker conceded, as investors have ratcheted back bets on when the US central bank will finally begin to tighten monetary policy.
- GE posts earnings beat; revenue misses (CNBC) General Electric on Friday delivered quarterly earnings that surpassed analysts’ expectations, as its businesses producing jet engines and power turbines offset declines in its oil and gas segment, but revenue fell short of estimates.
- Banks’ Record Treasuries Stockpile Boosts Case for Fed to Hold (Bloomberg) U.S. banks are gorging on Treasuries in the latest sign investors expect the Federal Reserve to postpone raising interest rates. Commercial lenders boosted their holdings to a record $2.15 trillion at the end of last month, based on Fed data. The stake is almost double the amount owned by China, the biggest U.S. foreign creditor.
- S. Posts Smallest Annual Budget Deficit Since 2007 (WSJ) A strengthening economy drove the nation’s budget deficit to the lowest level of Barack Obama’s presidency, but the improvement has done little to ease the latest fight over federal spending.
Overnight markets
- Overview: IG24 5Y 77.973/78.617 (-0.250), US 10yr note futures are up +0.05% at 129-06, S&P 500 futures are down -0.1% at 2017.0, Crude oil futures are up +0.86% at 46.78, Gold futures are down -0.46% at $1182.0, DXY is up +0.29% at 94.645.
US Economic Data
- Industrial production is expected at -1.0% MoM in September compared to August 1.7%.
- Capacity utilization is forecast at 77.3% in September, 0.3% lower than previous month.
- Manufacturing production is expected at -0.2% MoM in September compared to -0.5% in August.
- JOLTs job openings are forecast at 5580 in August compared to July 5753.
- University of Michigan confidence (P) is expected at 89.0 in October 0.8 point higher than previous month.
- Net long-term TIC flows for August will be release at 16:00.
Canadian Economic Data
- Int’l securities transactions for August came in at 3.11B, lower than previous month (-10.09B).
- Manufacturing sales decreased -0.2% MoM in August compared to 1.7% for previous month.
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