Market update

US tsys slightly higher after housing starts/claims and after a quiet session o/n before FOMC decision, US 10Y 2.284 (-1.3bps).US stock futures lower, core euro bonds mixed – 10Y gilts lower, EU periph spds mixed. There is no real consensus on Fed decision with odds of a hike ~50% and differing opinions as to bond mkt reaction in either scenario. Suffice it to say we feel risk is far more skewed to a bearish flattening on a 25bp hike. GOCs unch, spds another ~1bp wider vs tsys – the ~6% rally in crude yest weighing esp heavy on short end spds.

News headlines

  • Wall Street Has Doubts About Fed Lifting Interest Rates (WSJ) Wall Street is skeptical that the Federal Reserve has room to raise short-term interest rates Thursday, underscoring persistent doubts about the health of the global economy and financial markets following seven years of easy policy.
  • Global stocks at three-week highs as Fed decision looms (Reuters) World stocks inched to a three-week high on Thursday while the dollar drifted lower against other currencies, as investors consolidated positions ahead of a nail-biting U.S. Federal Reserve interest rate decision.
  • US rate rise harder to justify nine years on (FT) The last time the Federal Reserve raised its target interest rate, it did not seem such a big deal. It was June 29, 2006, US inflation was running at 4 per cent, far above the Fed’s target, stock markets had been rising unremarkably for 18 months, and everyone knew that the rise was coming.

Overnight markets 

  • Overview: IG24 5Y 77/77.4 (+0), US 10yr note futures are up +0.10% at 126-20+, S&P 500 futures are down -0.34% at 1981.25, Crude oil futures are down -0.83% at 46.76, Gold futures are down -0.29% at $1115.7, DXY is down -0.24% at 95.188.
  • US BANK CDS (5yr): BAC 72/76 (+0), GS 88/92 (-1), MS 79/83 (+0), C 80/84 (+0), JPM 72/76 (-1), WFC 53/57 (-1)

US Economic Data

  • Initial jobless claims came in at 264K  for the week ending September 12th, lower than expected (275K) and lower than prior week (275K).
  • Continuing claims decreased to 2237K from 2263K and lower than expected (2258K).
  • 2Q 2015 US current account balance came in at -109.7bn  vs -111.5bn expected and -118.3bn for previous quarter.
  • Housing starts came in at 1126K (-3.0% MoM) in August versus July 1161K (-4.1% MoM).
  • Building permits increase to 1170K (+3.5% MoM) in August compared to previous month 1130K (-15.5% MoM).
  • Philadelphia Fed is forecast at 5.9 in September below August level of 8.3.
  • Fed minutes from July FOMC meeting will be release at 14:00.

Canadian Economic Data 

  • There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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