cti2015header-morning comments web

Market Update

US tsys sharply higher, yields 4-6 bps lower,10Y 2.34%, S&P futures down 0.39%, GBP surging 2.5% – the largest gain since 2008 after UK PM May confirmed the UK will quit the European single market in a ‘hard brexit’. Tsys off the highs after weaker Empire Manuuf Index, the 10Y reached 2.30% prior to May’s speech ~7:00am EST.. Yet May’s tone was seen as more conciliatory as she said she wanted the UK to remain a global trading partner. Core European bonds higher, gilts lagging the rally in bunds as gilts have almost completely reversed o/n gains. Fed Dudley , in speech in NYC said the Fed is unlkely to ‘snuff out’ the expnasion anytime soon. GOCs higher, spds 2-3bps wider vs tsys, 10Y 1.65%. Pembina (BBB) in the mkt with 2 tranche 7Y and longs. for $500mln. Provis heavy for a 4th day, as rates rally, Sask 30Y at 12 + Onts rumoured but already well spoken for already.

News headlines 

May Pledges Vote on Brexit Taking U.K. Out Of EU’s Single Market (Bloomberg) Prime Minister Theresa May pledged to pull Britain out of the European Union’s single market while staying inside parts of its customs union, saying the U.K. parliament will get a vote on the final Brexit deal.

Dollar Drops on Trump Comments as May Boosts Pound: Markets Wrap (Bloomberg) The dollar weakened and gold advanced with bonds after the President-elect said the U.S. currency is already “too strong.” The pound rallied as British Prime Minister Theresa May laid out plans to leave the European Union.

Oil up on Saudi commitment to cut; U.S. output seen rising (Reuters) Oil prices settled up on Monday, as Saudi Arabia’s commitments to reducing production offset a report forecasting U.S. output would again rise this year. The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear a global oversupply that has depressed prices for more than two years.

Chinese leader pushes back against Trump on free trade (Reuters) Chinese President Xi Jinping offered a vigorous defense of globalization and free trade in a speech at the World Economic Forum in Davos on Tuesday, which underscored Beijing’s desire to play a greater global role as the United States turns inward.

Hyundai Motor to boost U.S. investment as automakers respond to Trump (Reuters) The Hyundai Motor Group said it plans to lift U.S. investment by 50 percent to $3.1 billion over five years and may build a new plant there – the latest auto firm to announce fresh spending after President-elect Donald Trump threatened to tax imports.

Germany says NATO concerned about Trump ‘obsolete’ remark (Reuters) Germany’s Foreign Minister said on Monday that U.S. President-elect Donald Trump’s comments that NATO was obsolete had aroused concern across the 28-member alliance. Frank-Walter Steinmeier, speaking after a meeting with alliance Secretary-General Jens Stoltenberg in Brussels, said Trump’s remarks contradicted views expressed by designated Defense Secretary James Mattis. He spoke also of “amazement”.

Overnight markets

Overview: US 10yr note futures are up 0.313% at 125-6, S&P 500 futures are down -0.4% at 2263.5, Crude oil futures are up 1.58% at $53.2, Gold futures are up 1.38% at $1212.7, DXY is down -0.55% at 100.62, CAD/USD is down -0.82% at 0.7652.

US Economic Data 

8:30 AM Empire Manufacturing, Jan, 6.5, est. 8.5  (prior 9.0, revised 7.6)
8:30 AM Revisions: NY Fed Empire Manufacturing

Canadian Economic Data 

There is no major economic data release for today
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.Disclosure and Disclaimer

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