18/09/2015

Market update

US tsys opening sharply higher, curve flatter after Thurs huge post FOMC rally, US 10Y 2.154 (-3.6bps). Tsys were flat most of the early o/n session but started to take off as overseas stock mkts tumbled, with the DAX at key support. US auctions 10Y TIPs later this morn with the backdrop of lower crude prices and 10Y breakevens at five year lows. In Canada GOCs are higher, lagging tsys by ~1bp after spds widened by 5-7 bps across the curve in tsy rally yest. No reaction to as expected CPI. Provi spds narrowed 1bp after the FOMC, but look to be opening 0.5bps wider this morn.

News headlines

  • The ‘dots’ just got more dovish (BI) The Federal Reserve is keeping interest rates nice and low for a very long time. At the conclusion of its long-awaited Federal Open Market Committee (FOMC) meeting, the Fed announced it would keep its fed funds rate target range at 0 to 0.25%, which is where it’s been since December 2008.
  • Fed adds urgency to market’s China focus (FT) This is what it sounds like when doves cry. By the time the Federal Reserve announced that its target interest rates would not, after all, be rising this month, it came as little surprise. But its reasoning did, and means that investors’ focus will move ever more urgently towards China.
  • Banks Warn of Cost Cuts Ahead (WSJ) No news was bad news for the country’s banks on Thursday. After years of having their profits pinched by low interest rates, banks—and their investors—had been itching for the Federal Reserve to make a move.
  • Defaults Mount in Beleaguered Energy Industry (WSJ) The well is running dry for deeply indebted energy companies. Samson Resources Corp. became the latest, and largest, victim of an industry downturn, as it filed for chapter 11 protection late Wednesday. Industry experts say more oil-and-gas companies are poised to follow the Tulsa, Okla., company into bankruptcy as oil prices remain low following a steep drop that began last year.
  • Fed adds urgency to market’s China focus (FT) This is what it sounds like when doves cry. By the time the Federal Reserve announced that its target interest rates would not, after all, be rising this month, it came as little surprise. But its reasoning did, and means that investors’ focus will move ever more urgently towards China.

Overnight markets 

  • Overview: IG24 5Y 78.25/78.75 (+1.75), US 10yr note futures are up +0.39% at 127-25+, S&P 500 futures are down -1.35% at 1950.5, Crude oil futures are down -2.45% at 45.75, Gold futures are up +2.03% at $1139.7, DXY is down -0.39% at 94.257.
  • US BANK CDS (5yr): BAC 72/76 (+0), GS 87/91 (+0), MS 78/82 (+0), C 80/84 (+0), JPM 71/75 (+0), WFC 52/56 (+0)

US Economic Data

  • Leading index is forecast at 0.2% in August less than July -0.2% increase.

Canadian Economic Data 

  • CPI is flat 0.% MoM (+1.3% YoY) in August (0.0% MoM and 1.3% YoY Expec) versus July 0.1% MoM (1.3% YoY).
  • CPI core came in at 0.2% MoM (2.1% YoY) in August (0.2% MoM and 2.1% YoY Expec) compared to previous month 0.0% MoM (2.4% YoY).

 

 

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