Market Update

US tsys slightly higher, with some follow thru FTQ bid following the terror attacks in Barcelona yest & continued US political jitters with rumours of Cohn resignation, US 10Y 2.187%. Average volume in TY futures, with price approaching 127-00 high from June 15th European stocks lower, S&P futures flat, crude slightly higher , gold reaching a new high since Nov above 1,298.   Core EGBS are higher, outperforming tsys, with long German debt leading, peripheral spreads ~1bp wider.  Large 2s5s flattener in futures has given the German bund curve a flattening bias.  GOCs  underperforming after July CPI   rose  1.3% in the core vs 1.2% in June . Provis closed 1-1.5bps wider yest, opening unch.

News headlines 

Markets on Edge Before U.S. Open; Gold, Yen Gain: Markets Wrap (Bloomberg) Markets are balanced on a knife edge as the U.S. opening looms after the S&P 500’s second-biggest selloff this year. Stocks in Europe extended declines after a terrorist attack in Barcelona added to unease about U.S. policy paralysis and lingering tensions over North Korea. Airlines and hotels led the decline of the Stoxx Europe 600 index along with banks, as industries across the board got caught in the downturn. S&P futures were flat, signaling U.S. markets may steady after the underlying index plunged 1.5 percent Thursday. Traditional havens including gold and yen gained with core bonds across the euro region, and the dollar weakened.

China July new home prices rise 0.4 pct m/m, 9.7 pct y/y (Reuters) Average new home prices in China’s 70 major cities rose 0.4 percent in July from the previous month, slowing from June’s 0.7 percent growth as policymakers worked to cool an overheated market. Compared with a year ago, new home prices rose 9.7 percent in July, slowing from a 10.2 percent gain in June, Reuters calculated from National Bureau of Statistics (NBS) data out on Friday.

Oil nudges higher on tightening supplies, weak dollar (Reuters) Oil prices edged higher on Friday, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar. But prices were still on track to close the week 2 to 3 percent lower after concerns about weaker Chinese oil demand weighed earlier in the week.

Energy Capital Is Said to Plan $5.5 Billion Calpine Takeover (Bloomberg) Private equity firm Energy Capital Partners has reached an agreement to buy U.S. power generator Calpine Corp. for $5.5 billion in cash, people familiar with the matter said. Energy Capital may announce the takeover as early as Friday, the people said, asking not to be identified because the information isn’t yet public. Calpine investors would get $15.25 a share as part of the deal, which is valued at more than $17 billion including debt, they said.

Dry Spell Has Canadian Wheat Harvest Headed for Six-Year Low (Bloomberg) It’s been so dry on Levi Wood’s Saskatchewan farm, his 4,500 acres of durum-wheat plants are six inches (15 centimeters) shorter than last year. A little more than an inch of rain fell during the entire growing season — a fraction of normal — and he expects yields will drop by as much as a third this harvest.

Overnight markets 

Overview: US 10yr note futures are up 0.099% at 126-27, S&P 500 futures are up 0.13% at 2432.75, Crude oil futures are up 0.3% at $47.23, Gold futures are up 0.77% at $1302.4, DXY is down -0.08% at 93.543, CAD/USD is down -0.2% at 0.7901.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.226% 2 Year 1.301%
5 Year 1.463% 5 Year 1.746%
10 Year 1.845% 10 Year 2.184%
30 Year 2.282% 30 Year 2.773%

US Economic Data 

10:00 AM University of Michigan Sentiment, Aug P, , est. 94.0 (prior 93.4)

Canadian Economic Data

8:30 AM CPI NSA, m/m, Jul, 0.0%, est. 0.0% (prior -0.1%)
CPI, y/y, Jul, 1.2%, est. 1.2% (prior 1.0% )
CPI Core – Common, y/y, Jul, 1.4%, (prior 1.4%)
CPI Core – Trim, y/y, 1.3%, Jul, (prior 1.2%)
CPI Core – Median, y/y, Jul, 1.7%, (prior 1.6%)


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