17/07/2018

Market Update US tsys slightly higher, near top of overnite range on avg volume in TY futures (~240k), 10Y 2.85% (-0.7bps). Focus on Fed Powell semi-annual testimony at 10:00ET. Equities weaker (S&P fut -3, Nasdaq -7)  after Netflix, Goldman Sachs earnings. GS stock slightly lower despite Q2 eps $5.98 way ahead of exp $4.66, revenues +19% at $9.40bln vs $8.74bln est.  Core EGBs higher, outperforming tsys – gilt yields ~2bps lower , avg weekly earnings 2.7% below 2.8% exp, better than exp rise in 3mnth employment of 137k. GOCs higher, ~0.5bps tighter vs tsys. 

News headlines

BOE’s Carney Nudged Step Closer to Rate Hike by Jobs Numbers (Bloomberg) U.K. employment rose to a record high in the three months through May and wage pressures showed few signs of abating, keeping the Bank of England on course for an interest-rate increase next month. The number of people in work rose by 137,000, more than forecast, taking the employment rate to 75.7 percent, the highest since records began in 1971. While headline measures of wage growth eased modestly, an underlying gauge climbed to the highest since January.

Trump’s Defense of Putin Proves Too Much for Some Republicans (Bloomberg) President Donald Trump’s equivocation on U.S. intelligence agencies during a news conference with Russian leader Vladimir Putin triggered the most intense backlash from Republicans of anything he’s done since winning election in 2016. Republicans who looked past the release of his recorded remarks about grabbing women and his refusal to denounce neo-Nazi protesters, or complained but took no substantive action when he imposed tariffs on allies found their line in the sand after he sided with Putin against the U.S. intelligence community’s consensus that Russia interfered in the 2016 election.

Toronto Leads Canada’s Biggest Gain in Home Sales This Year (Bloomberg) Canadian home sales rose in June at the fastest pace this year, led by a 17 percent surge in Toronto, a sign the market may be regaining strength. Transactions climbed 4.1 percent from May after touching a five-year low, the Canadian Real Estate Association reported Monday from Ottawa. Benchmark prices fell 0.1 percent on the month and advanced 0.9 percent from a year earlier.

Stocks Drop as Traders Await Powell; Oil Steadies: Markets Wrap (Bloomberg) U.S. equity futures fell alongside European stocks as investors digested a flood of earnings as well as prepared for the latest clues from the Federal Reserve on monetary policy in the world’s biggest economy. Most commodities climbed, as oil steadied. Futures on the Nasdaq slumped as Netflix Inc. tumbled in pre-market trading after delivering disappointing subscriber growth. Results from Goldman Sachs narrowly beat investor expectations, while trading revenue disappointed. On the Stoxx Europe 600 Index, gains in mining and chemicals shares were outweighed by declines in telecommunications and household goods.

TSX futures set to open lower, manufacturing sales data awaited (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Tuesday as investors awaited a report on the country’s manufacturing sales for May. September futures on the S&P/TSX index were down 0.17 percent at 7:15 a.m. ET. Canada’s manufacturing sales data for May is due at 08:30 a.m. ET. On Monday, Toronto Stock Exchange S&P/TSX composite index closes down 66.39 points, or 0.40 percent, at 16,494.73.

Boeing lifts industry demand forecast as air show deals roll on (Reuters) Boeing (BA.N) raised its rolling 20-year industry forecast for passenger and cargo aircraft on Tuesday, as a steady flow of deals on day two of the Farnborough Airshow underscored the industry’s resilience to rising global trade tensions. The world’s biggest planemaker predicted 42,700 industry deliveries over the next two decades, up three percent from its estimate of 41,030 a year ago. That would be worth $6.3 trillion at list prices versus last year’s $6.1 trillion forecast.

Netflix plunges as subscriber growth disappoints in Q2 (BNN) Netflix Inc. () stunned Wall Street by attracting fewer subscribers than expected last quarter, renewing concerns that the video-streaming service has become an investment bubble. The shares plunged as much as 15 per cent after Netflix added 5.2 million users in the period, about a million fewer than it predicted. Its outlook for the current quarter also reflected a deceleration: The world’s largest paid online TV network expects to add 5 million customers, a slower pace than a year earlier.

Overnight markets

Overview: US 10yr note futures are up 0.039% at 120-07, S&P 500 futures are down -0.13% at 2793, Crude oil futures are up 0.16% at $68.17, Gold futures are up 0.1% at $1241, DXY is up 0.1% at 94.607, CAD/USD is up 0.14% at 0.7601.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.918% 2 Year 2.595%
5 Year 2.041% 5 Year 2.747%
10 Year 2.124% 10 Year 2.847%
30 Year 2.175% 30 Year 2.952%

US Economic Data

9:15 AM Industrial Prduction MoM, Jun est 0.5% (-0.1% prior)
  Manufacturing (SIC) Production, Jun est 0.7% (-0.7% prior)
  Capacity Utilization, Jun est 78.3% (77.9% prior)
10:00 AM NAHB Housing Market Index, Jul est 68 (68 prior)
16:00 AM Total Net TIC Flows, May (138.7b prior)
  Net Long-term TIC Flows, May (93.9b prior)

Canadian Economic Data

8:30 AM Manufacturing Sales MoM, May est 0.4% (-1.3% prior)

 

 

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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

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