Market update
Tsys slightly higher, US 10Y 1.74 (-1bp), curve unch despite 4.0% move lower in crude after oil producers failed to come to agreement on prod freeze at Doha meeting. Fed Dudley making mostly positive comments on the US economy, thou reiterating still significant headwinds, uncertainties. Tsys also supported by news of Brazil Pres Rousseff being impeached as well as lack of progress on Greek talks. Core Euro bonds lower, underperforming tsys with curves in UK & Germany 2 bps 2 steeper pressured by heavy supply from Belgium this morning. In Canada, GOCs lower led by 10s ~2bp, provis a bit wider so far in the short end – alberta ~3bps wider Friday after DBRS downgrade.
News headlines
- Global shares follow oil down after Doha disappointment (Reuters) A dive in oil prices sent stock markets lower on Monday after producers meeting in Qatar failed to agree on a plan to curb global supply, quashing the more optimistic tone which prevailed for much of the past week. Japan’s Nikkei index led the way, tumbling more than 3 percent after a devastating earthquake in the southwest of the country, with signs from a summit in Washington that other Group of 20 governments oppose intervention against the strength of the yen also playing a role.
- China March home prices rise at fastest rate in two years, top cities boom (Reuters) China’s home prices in March gained at the fastest pace in almost two years but that growth may slow as local authorities tighten home purchase requirements in the two top performing cities on fears of a bubble forming. The southern city of Shenzhen continued to be the top performer, with home prices surging 61.6 percent from a year ago, followed by Shanghai with a 25 percent gain.
- Rousseff Hangs by a Thread After Losing Impeachment Vote (Bloomberg) Dilma Rousseff’s presidency is hanging by a thread after Brazil’s lower house of Congress voted in favor of her impeachment, a decision that’s likely to cheer investors just as it threatens to bring down the curtain on 13 years of leftist rule. The opposition garnered 367 votes, 25 more than the two-thirds majority it needed to send the impeachment motion to the Senate.
- Morgan Stanley First-Quarter Profit Beats Estimates on Cost Cuts (Bloomberg) Morgan Stanley reported first-quarter profit that beat Wall Street estimates as the firm cut costs and revenue from trading stocks and bonds declined less than some analysts predicted. The shares climbed. Net income fell 53 percent to $1.13 billion, or 55 cents a share, from $2.39 billion, or $1.18, a year earlier, the New York-based company said Monday in a statement. Profit surpassed the 47-cent average estimate of 22 analysts surveyed by Bloomberg.
- PepsiCo Profit Tops Estimates as North American Snacks Gain (Bloomberg) PepsiCo Inc. posted first-quarter profit that beat analysts’ estimates after North American snack sales rose, helped by price increases. Earnings were 89 cents a share, excluding some items, the Purchase, New York-based company said in a statement on Monday. Analysts estimated 81 cents, according to data compiled by Bloomberg. Sales fell 2.9 percent to $11.9 billion, matching analysts’ average projection.
- Saudi Arabia could sell off billions in American assets if bill passes: NYT (Bloomberg) The Saudi Arabian government has threatened to sell of hundreds of billions of dollars’ worth of American assets should the U.S. Congress pass a bill that could hold the kingdom responsible for any role in the Sept. 11, 2001 attacks, the New York Times reported on Friday. The newspaper reported that Saudi foreign minister Adel al-Jubeir told U.S. lawmakers last month that “Saudi Arabia would be forced to sell up to $750 billion in Treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.”
- Singapore exports tumble in March, demand in key markets remains weak (Reuters) Singapore’s exports tumbled in March as sales to China, the United States and Europe contracted in a sign the trade-dependant economy remains vulnerable as weak global demand puts its manufacturing sector to the sword. Non-oil domestic exports (NODX) slumped 15.6 percent in March from a year earlier, trade agency International Enterprise Singapore said in a statement on Monday.
- DBRS downgrades Alberta’s credit following budget deficit projections to 2024 (Financial Post) A day after Alberta’s finance minister said he would make the case for holding the province’s credit ratings steady, DBRS Ltd. downgraded the province’s debt. Citing Alberta’s large expected deficit this year and in the future, DBRS downgraded the province’s issuer and long-term debt rating from triple-A to double-A (high) on Friday afternoon.
- Bombardier, Embraer still in the running for major Delta order: aviation consultant (Financial Post) Bombardier Inc. is one of two manufacturers that are still in the running to sell a large number of new aircraft to Delta Air Lines Inc., according to an aviation consultant familiar with the talks. Delta is reportedly nearing a decision on what aircraft it will use to replace its aging fleet of 120 MD-80s and has narrowed it down to Bombardier’s CSeries and Embraer SA’s E-Jet, said Scott Hamilton, managing director of aviation consultancy Leeham Co.
Overnight markets
- Overview: US 10yr note futures are down -0.0598% at 130-18, S&P 500 futures are down -0.42% at 2066.25, Crude oil futures are down -4.19% at $38.67, Gold futures are up 0.48% at $1240.5, DXY is down -0.1% at 94.606.
US Economic Data
- There is no major economic data for today
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