cti2015header-morning comments web

Market Update

  • US tsys opening mixed, curve flatter, longs out outperforming, curve flatter US 10Y 1.58%. FOMC minutes from July meeting at 2:00PM. Range bound, 3 tick session in TY futures, on avg volume (300k). European stocks lower, German DAX down 1.0%. German govt bonds higher, curve flatter a marked contrast to UK gilts which are lower/steeper after UK unemployment remained steady in the wake of June’s Brexit vote while initial claims fell 8.6k last month vs 9k increase exp. GOCs lower led by 10s with 2s10s +1.5bps. Canada 5Y auction today – $3.7bln Sep 21 reopen with the roll 2.5/2.4 – ~1.5bps flatter than at the last auction on July 6th even as 5s have underperformed ~10bps on the curve vs 2s/10s over the past month.  (Provis opening unch after narrowing 1bp yest on no supply. CMB 10Y (Sep 26 reopen) – guidance 57.5 thou spds are 1bp better on screen (56.5/56) after good buying yest.

 News headlines                                                                                             

  • European Stocks Slip With Oil as Fed Speculation Revives Dollar (Bloomberg)  European stocks joined a retreat in emerging markets and oil fell for the first time in a week as investors awaited minutes from the Federal Reserve to better assess whether markets had become too complacent on the prospects for interest rate hikes. The Stoxx Europe 600 Index fell for a fourth day, while MSCI’s gauge of developing-nation shares also declined, having halted an eight-day winning streak on Tuesday.
  • UK labor market shows little sign of immediate Brexit hit (Reuters) The number of people claiming unemployment benefit in Britain unexpectedly fell in July despite the shock decision by voters to leave the European Union, suggesting little immediate impact from Brexit on the labor market. Benefit claimants fell by 8,600 in the month, compared with an increase of 900 in June, and there was only a small fall in the number of jobs employers were trying to fill, the Office for National Statistics said on Wednesday.
  • Hold the lift! – Japan Inc’s answer to the rising yen (Reuters) While previous bouts of strength in the yen have pushed Japanese manufacturers to shift production overseas, exporters are coping with the recent currency stresses by penny-pinching – turning off lights and cramming elevators in the hope that nothing more drastic will be needed before the tide turns. The yen, a safe haven in troubled times, has been climbing in the unsettled period before and after Britain’s June 23 vote to leave the European Union (Brexit) upset global markets, moving nearly 10 yen against the dollar since early June to just under 100 JPY=.
  • Gaining confidence, Fed officials eye interest rate hike this year (Reuters) The Federal Reserve is raising expectations for an interest rate rise this year, even as early as next month, after two policymakers on Tuesday said the economic stars now appear to be aligning despite weak U.S. economic growth in the first half of 2016. New York Fed President William Dudley said « it’s possible » to raise rates at the Sept. 20-21 policy meeting given evidence of wage gains and a tighter labor market that could boost inflation, while Dennis Lockhart of the Atlanta Fed said a hike next month is in play.
  • Hong Kong shares slip after approval of Shenzhen-Hong Kong connector (Reuters) Hong Kong shares slipped on Wednesday, as some investors took profits and shrugged off China’s approval of a long-anticipated link to allow stock trading between Hong Kong and Shenzhen. The Hang Seng index fell 0.5 percent, to 22,799.78, while the China Enterprises Index lost 0.7 percent, to 9,641.76 points.
  • Couche-Tard poised to get even bigger with acquisition of CST (TheGlobeandMail) Alimentation Couche-Tard Inc. is poised to boost its standing as a major convenience-store consolidator and top global player if it goes ahead with another major North American acquisition. Couche-Tard, which has grown to become one of Canada’s largest companies with a market capitalization above $35-billion, is believed to be the lead contender in an auction to acquire San Antonio, Tex.-based CST Brands Inc., the second-largest publicly listed fuel and convenience-store retailer in North America. CST has more than 2,000 locations in the United States and Canada.
  • Cisco Plans to Cut Up to 14,000 Jobs Within Weeks, CRN Says (Bloomberg) Cisco Systems Inc., the largest maker of networking equipment, will cut as many as 14,000 employees worldwide, or 20 percent of its workforce, CRN reported, citing people close to the company.

Overnight markets

  • Overview: US 10yr note futures are down -0.0947% at 131-28, S&P 500 futures are up 0.03% at 2177.5, Crude oil futures are down -0.34% at $46.42, Gold futures are down -0.57% at $1349.1, DXY is up 0.11% at 94.896.

US Economic Data

  • 14:00 PM: FOMC Meeting Minutes Release, June 27

Canadian Economic Data

  • There is no major economic data for today



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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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