Market Update
Tsys trading weaker, close to overnight lows , with the 10Y above 2.60% since March, now 2.61 (+2bps), heavy volume in TY futures (580k), stops triggered in futures, convexity holding on break above 2.60% (MNI). Core Euro bonds also lower , thou 10Y bund has rebounded from o/n losses on comments from Bundesbank Pres Weidmann that Germany should not expand fiscal policy, the 10Y tsy/bund spd widening from 10bps over the week to 204. GOCs weaker in line with tsys, curve steeper. GOC made round trip yesterday, yields essentially unch in wake of ‘dovish hike’ – with the curve ~1bp steeper. 10Y GOC abpve 2.20% resistance , highest since Sep 2014.
News headlines
House Heads for Vote on Stopgap Funding Plan: Shutdown Update (Bloomberg) Temporary government funding runs out Jan. 19 and the House and Senate will have to pass a temporary extension to avoid a partial shutdown of the federal government. Democrats are demanding that spending legislation include a provision permanently shielding about 690,000 undocumented immigrants brought to the U.S. as children from deportation.
China’s economy grew 6.9% in 2017, topping both the official target and 2016’s growth (NBC) China’s economy grew 6.9 percent in 2017, ending the year on a positive note as official figures topped the government target of around 6.5 percent, the country’s statistics bureau said on Thursday.
OPEC-Russia Oil Deal Faces a New Danger: Too Much Winning (Bloomberg) When OPEC and Russia meet this weekend to review their strategy for clearing a global oil glut, they’ll face an unusual problem: it could be working just a bit too well.
Goldman Is Worth Less Than Morgan Stanley for the First Time in a Decade (Bloomberg) For the first time in over a decade, Goldman Sachs Group Inc. is worth less than its longtime rival, Morgan Stanley, at least in the eyes of equity investors. After reporting a plunge in bond trading, Goldman’s market capitalization fell to $99.4 billion at the close on Wednesday, a fraction less than Morgan Stanley. That snapped a 4,105-day streak, which started on Oct. 23, 2006.
U.S. Treasury Yield Hits 2.6%; Europe Stocks Mixed: Markets Wrap (Bloomberg) U.S. bonds extended a drop to send the 10-year Treasury yield above 2.6 percent for the first time since March, though it did little to help the dollar hold on to Wednesday’s gain. The euro strengthened while European stocks were mixed.
Bank of Canada hikes rates, takes dovish tone amid NAFTA clouds (Reuters) The Bank of Canada raised interest rates on Wednesday, as expected, as job growth and firmer inflation outweighed the cloud of NAFTA uncertainty, but the head of the central bank admitted the decision was not a no-brainer.
Trump says terminating NAFTA would yield the ‘best deal’ in renegotiations (Reuters) U.S. President Donald Trump on Wednesday said that terminating the North American Free Trade Agreement would result in the “best deal” to revamp the 24-year-old trade pact with Canada and Mexico in favor of U.S. interests.
Overnight markets
Overview: US 10yr note futures are down -0.178% at 122-14, S&P 500 futures are down -0.1% at 2801, Crude oil futures are up 0.14% at $64.06, Gold futures are down -0.77% at $1328.9, DXY is up 0.05% at 90.585, CAD/USD is up 0.14% at 0.8032.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.79% | 2 Year | 2.054% |
| 5 Year | 2.028% | 5 Year | 2.416% |
| 10 Year | 2.222% | 10 Year | 2.609% |
| 30 Year | 2.367% | 30 Year | 2.883% |
US Economic Data
| 8:30 AM | Housing Starts, Dec 1192k est 1275k (1297k prior) |
| Housing Starts MoM, Dec -8.2% est -1.7% (3.3% prior) | |
| Building Permits, Dec 1302 est 1295k (1298k prior) | |
| Building Permits MoM, Dec -0.1% est -0.6% (-1.4% prior) | |
| Philadelphia Fed Business Outlook, Jan 22.2 est 25.0 (26.2 prior) | |
| Initial Jobless Claims, Jan 13th 220k est 249k (261k prior) | |
| Continuing Claims, Jan 6th 1952k est 1900k (1867k prior) | |
| 9:45 AM | Bloomberg Economic Expectations, Jan (47.0 prior) |
| Bloomberg Consumer Comfort, Jan 14th (53.5 prior) |
Canadian Economic Data
| 8:30 AM | ADP Canada Employment Report Published |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230