Market Update
US tsys higher, yields 2-4bps lower, bull flattener led by the 10Y 1.81% (-4bps), above avg volume in TY futures (435k). S&P futures slightly lower (-3.5), crude -1.5%. Aug IP/Cap Utilization, FOMC decision tomorrow. The latest survey by JP Morgan showed US Treasury shorts fell 10pts to the lowest since May. GOCs higher, underperforming the rally in the US, 10Y 1.45% (-2.5bps). July Man Sales -1.3% vs -0.1% exp – auto sales down 4.7% m/m.
News headlines
S&P 500 Futures Slip With Europe Shares; Oil Drops: Markets Wrap (Bloomberg) U.S. index futures declined with European stocks while Treasuries continued higher as investors weighed the fallout from a drone attack on one of the world’s biggest oil facilities and the record surge in crude prices that followed.
Oil sheds gains, stocks dip as Fed comes into focus (Reuters) Oil shed some of its gains on Tuesday as the United States raised the possibility of releasing crude reserves, while stocks inched lower as investors waited for this week’s Federal Reserve meeting.
TSX futures down on lower crude prices (Reuters) Futures for Canada’s main stock index were lower on Tuesday after oil prices pulled back from previous session gains.
Oil market gripped by uncertainty over lost Saudi production (BNN) Oil markets are grappling with uncertainty over how long it will take Saudi Arabia to restore output after the devastating attacks that knocked out five per cent of global crude supply.
With Trump trade war a threat, Fed is set to cut rates again (BNN) For a second straight time, the Federal Reserve is set to cut interest rates this week to try to protect the economy from the consequences of a global slowdown and President Donald Trump’s trade war with China.
Trade talks seen as unlikely to mend U.S.-China divide (Reuters) U.S. and Chinese officials will restart trade talks at the end of this week, but any agreement the world’s largest economies carve out is expected to be a superficial fix.
U.S. value fund managers betting shift to value stocks won’t last (Reuters) The massive U.S. market rotation into value stocks over the last two weeks is finally giving value fund managers a reason to be hopeful after years of underperformance.
Size matters. Big U.S. farms get even bigger amid China trade war (Reuters) As the 2018 harvest approached, North Dakota farmer Mike Appert had a problem – too many soybeans and nowhere to put them. Selling was a bad option. Prices were near decade lows as U.S. President Donald Trump’s trade war with China weighed heavily on the market. Temporary storage would only buy him a little bit of time, particularly in an area where cold weather can damage crops stored in plastic bags.
FOREX-Geopolitical risks push dollar to recent highs; crown, Aussie sink (Reuters) The dollar firmed within sight of a recent two-year high on Tuesday on the back of ongoing geopolitical risks in the Middle East with investors looking forward to an interest rate cut by the U.S. central bank on Wednesday.
Market Overview: US 10yr note futures are up 0.194% at 129-10, S&P 500 futures are down -0.08% at 2999, Crude oil futures are down -1.35% at $62.05, Gold futures are up 0.01% at $1511.7, DXY is down -0.01% at 98.599, CAD/USD is up 0.13% at 0.7542.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.61% | 2 Year | 1.733% |
| 5 Year | 1.467% | 5 Year | 1.668% |
| 10 Year | 1.446% | 10 Year | 1.81% |
| 30 Year | 1.642% | 30 Year | 2.28% |
US Economic Data
| 09:15 AM | Industrial Production MoM, Aug Survey: 0.20% Prior: -0.20% |
| Capacity Utilization, Aug Survey: 77.60% Prior: 77.50% | |
| 10:00 AM | NAHB Housing Market Index, Sep Survey: 66 Prior: 66 |
| 04:00 PM | Net Long-term TIC Flows, Jul Survey: — Prior: $99.1b |
| Total Net TIC Flows, Jul Survey: — Prior: $1.7b |
Canadian Economic Data
| 08:30 AM | Manufacturing Sales MoM, Jul Survey: -0.10% Prior: -1.20% |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230