Market update
US tsys trading higher, flatter after weaker than exp NY Empire index. USD higher, crude higher, Euro stocks maintaining gains, after dropping initially in response to Paris attacks. Nikkei lower on Japan recession news. Core Euro bonds higher led by 10Y gilts (-3bps) while German bund yields are ~1bp lower. GOCs are higher, ~1bp tighter vs tsys, 10s/30s in steeping mode for 2nd day after reaching flattest level (68bps) on Fri.Provi spds are opening with a bid tone after widening out ~2bps Fri.
News headlines
- European bourses resilient after Paris attacks (FT) European equities are turning round from losses in a resilient reaction in the region to Friday’s terrorist attacks on Paris, while the euro is also holding off day-lows and oil prices are rising.
- Euro softens as investors look to ECB (FT) The Paris attacks weighed on investor sentiment towards the euro, with a weaker single currency reflecting worries about the terrorism threat on the outlook for Eurozone growth.
- Don’t Fight the Fed: It’s Lower for Longer for Bond Yields (WSJ) Bond investors aren’t fighting the Fed, but they aren’t panicking about higher interest rates, either. Futures-market bets on rising U.S. interest rates have reached a six-month high, reflecting expectations that the Federal Reserve will raise short-term rates next month for the first time since 2006.
- Why Japan Keeps Falling Into Recession (WSJ) Japan is once again in recession. The situation isn’t dire, but weak corporate investment is an important warning sign that investors should heed.
- Lenders tighten screws on Canadian energy companies as ‘vicious cycle’ of cost-cutting unravels (FP) Lenders tighten screws on Canadian energy companies as ‘vicious cycle’ of cost-cutting unravels.
- Mind the Gap as Currency Markets Shrivel for All But Biggest Few (Bloomberg) Even the world’s biggest financial market can’t escape the global liquidity drought. Currency traders accustomed to shifting billions of dollars around the globe are starting to suffer as dealers retrench.
Overnight markets
- Overview: IG24 5Y 82.240/82.990 (+0.899), US 10yr note futures are up +0.19% at 126-24+, S&P 500 futures are down -0.04% at 2017.75, Crude oil futures are up +0.15% at 40.80$, Gold futures are up +0.56% at $1087.0, DXY is up +0.05% at 99.047.
US Economic Data
- Empire manufacturing increased to -10.74 in November from a reading of -11.36 in October. Analysts had expected the index to rise to -6.5.
Canadian Economic Data
- Int’l securities transactions for September came in at 3.35B, lower than previous month (5.78B).
- Manufacturing sales decreased -1.5% MoM in September compared to -0.6% for previous month.
- Existing home sales for September will be release at 9:00.
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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