Market Update

Treasuries open NY weaker, curves mixed (2/10Y steeper, 5/30Y flatter) after mixed overnight flows in a rangebound market. Bunds declined in moderate volume as did Euro currency, after ECB minutes show ECB concern about Euro strength. Treasuries hold a tight range despite lower initial weekly jobless claims, but also amid softer Philly Fed business activity index. Initial unemployment claims -12k to 232k in August 12 payrolls survey week, below the 240k level expected. Claims were at a level of 234k in the July 15 survey week, so there was little change between mid-July and mid-August. The 4-wk moving avg -500 to 240,500, a third straight decline.Canada Jun manufacturing sales -1.8% vs -1.2% expected, largest drop since Nov’14. Vol -1.0%. New orders -3.0%; unfilled ordrs -2.1%. Overall disappointing but comes after 3 mos of gains. y/y gains still strong and 2Q sls still +1.5% q/q (vol +0.5%).

News headlines 

Euro, Stocks Drop Before ECB Minutes; Bonds Gain: Markets Wrap (Bloomberg) The euro fell against most of its major peers while European shares drifted lower before the region’s central bank releases minutes of its last policy meeting. Gold edged closer to $1,300 an ounce and the British pound weakened.

Oil steady as high U.S. output balances crude stock draw (Reuters) Oil prices steadied on Thursday after U.S. data showed a big fall in crude stockpiles but also an increase in production, taking U.S. crude output to its highest in more than two years. Brent crude LCOc1 was unchanged at $50.27 a barrel by 0845 GMT. U.S. light crude CLc1 was 5 cents lower at $46.73.

Britain ‘confident’ of new phase in Brexit talks by October (Reuters) Britain said on Thursday it was « confident » talks with the European Union would move towards discussing their future relationship by October, in contrast to warnings from the top EU negotiator that the target is receding.

North American farmers unite behind NAFTA, supply management spat likened to ‘family fight‘ (National Post) Farmers from Canada, the United States and Mexico are showing a united front and downplaying irritants as negotiators begin a rewrite of the North American Free Trade Agreement.

Japan Reports Trade Surplus in July as Exports Rise Again (Bloomberg) Japan posted a trade surplus for a second consecutive month in July as exports continued to grow. Imports surged again, the latest sign that domestic demand is recovering. The July data offer an early look at how trade might affect the Japanese economy in the current quarter.

Fed’s Fischer says move to unwind bank regulation ‘dangerous’: FT (Reuters) Efforts by the United States government to loosen regulations on banks are « dangerous and extremely short-sighted », one of the U.S. central bank’s top policymakers said in an interview with the Financial Times published late on Wednesday.

Overnight markets 

Overview: US 10yr note futures are down -0.086% at 126-13, S&P 500 futures are down -0.24% at 2461.5, Crude oil futures are down -0.38% at $46.6, Gold futures are up 0.66% at $1291.4, DXY is up 0.36% at 93.878, CAD/USD is up 0.04% at 0.7922.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.251% 2 Year 1.33%
5 Year 1.509% 5 Year 1.794%
10 Year 1.899% 10 Year 2.238%
30 Year 2.337% 30 Year 2.819%

US Economic Data

8:30 AM Initial Jobless Claims, Aug 12, 232k, est. 240k (prior 244k)
Continuing Claims, Aug 5, 1953k, est. 1955k (prior 1951k, revised 1956k)
Philadelphia Fed Business Index, Aug, 18.9, est. 18.0 (prior 19.5)
9:15 AM Industrial Production, m/m, Jul, est. 0.3% (prior 0.4%)
Capacity Utilization, Jul, est. 76.7% (prior 76.6%)
Manufacturing Production, Jul, est. 0.2% (prior 0.2%)
9:45 AM Bloomberg Consumer Comfort Index, Aug 13 (prior 51.4)
Bloomberg Economic Expense, Aug, (prior 47.0)
10:00 AM Leading Indicator, Jul, est. 0.3% (prior 0.6%)

Canadian Economic Data

8:30 AM Manufacturing Sales, m/m, Jun, -1.8%, est. -1.0% (prior 1.1%, revised 1.3)


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