Market update
US Treasuries open NY firmer. TOKYO was closed for a holiday, as was Thailand. Tsy futures initially rose on news of the Turkey coup; then some sellers came in, including a seller of 1,600 Tsy ten year futures at 131.30. Also a seller of Sept16 10yr tsy futures: of 3,994 contracts prior to 10.23 pm ET Sunday at 132.00+. Asian stocks indexes rose. LONDON saw some mild safe haven bid. But then a rethink occurred that downplayed danger of the brief weekend Turkish coup; and Tsys moved lower. Nymex crude oil moved lower. Turkish lira currency rebounded. Brisk paying ccurred in Us swaps. Uk Ftse 100 stock index up. Turkish stock index had been off as much as 5% at one point. TEVA Pharmaceuticals to sell its seven part US$ debt deal today, it appears. US 10-year note is at 1.580%. Both UST and GoC bond yields are trading 1-2 bps higher after a quiet overnight session. After a brief pop overnight, North American fixed income markets opened largely unchanged and then traded weaker all day Friday. In Canada, CGB’s initially led the down trade before 5’s and, especially, 30’s played catch up.
News headlines
- S&P 500 Futures Rise as Turkish Lira Rebounds After Failed Coup (Bloomberg) Financial markets showed signs of resilience following a failed coup attempt in Turkey, with the lira leading a recovery in developing-nation currencies and U.S. equity-index futures gaining ground. Haven assets including the yen, gold and Treasuries fell. The lira clawed back some of its losses from Friday, when news that army officers had tried to seize power triggered the currency’s steepest slide since 2008.
- Bond Investors in Italy Counting Winnings After U.K. Brexit Vote (Bloomberg) As Italian bank shareholders mourn their losses, government bond investors are counting their winnings. Money managers stepped up purchases of Italian and peripheral bonds after the U.K. voted on June 23 to exit the European Union, narrowing the spread between Italian 10-year securities and their German peers to its tightest since the start of that month.
- Oil prices largely unchanged as market shrugs off Turkey coup bid (Reuters) Oil prices were largely unchanged on Monday as traders shrugged off the impact of the attempted coup in Turkey, while disruptions to crude exports in Libya and upbeat U.S. economic data lent prices some support. Brent crude futures rose 2 cents to $47.63 a barrel by 0924 GMT, while U.S. crude futures eased by 4 cents to $45.91 a barrel.
- German economy to rebound after weak second quarter: Bundesbank (Reuters) Germany’s economy will rebound in the coming months after a weak second quarter and any impact from Britain’s decision to leave the European Union in the near future could be limited, the Bundesbank said in a monthly report on Monday. The euro zone’s biggest economy has struggled since a superb first quarter with falling industrial production, weak orders and dropping exports raising doubts about its prospects and suggesting that Germany may be succumbing to a broader global slowdown.
- Britain’s May to meet Merkel for Brexit talks in first foreign visit (Reuters) Theresa May will meet German Chancellor Angela Merkel on Wednesday to discuss how they can work together as Britain prepares to leave the European Union in her first foreign visit as prime minister, a spokeswoman said on Monday.
- Bank of England’s Weale sees little urgency to cut interest rates (Reuters) Bank of England policymaker Martin Weale said on Monday he was unsure whether he would back an interest rate cut at next month’s BoE meeting, in contrast to most of his colleagues who think stimulus is likely after Britain voted to leave the EU. Weale – who will step down after the August meeting – did not see panic among consumers or businesses after the June 23 Brexit vote and said the central bank should not be afraid of disappointing markets.
- Bank of America profit falls 19.4 percent as interest income drops (Reuters) Bank of America Corp (BAC.N), the second-largest U.S. bank by assets, reported a 19.4 percent fall in quarterly profit on Monday as low lending rates dented its interest income. However, the bank’s profit beat lowered market expectations.
Overnight markets
- Overview: US 10yr note futures are up 0.2133% at 132-5, S&P 500 futures are up 0.27% at 2158.5, Crude oil futures are down -1.09% at $45.45, Gold futures are up 0.08% at $1328.5, DXY is up 0.02% at 96.598.
US Economic Data
- 10:00 AM: NAHB Housing Market Index, July, est. 60 (prior 60)
- 16:00 AM: Total Net TIC Flows, May, (prior 80.4b)
- Net Long-term TIC Flows, May, (prior -79.6b)
Canadian Economic Data
- 8:30 AM int’l Securities Transactions, May, (prior 15.52b)
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