Market Update

US tsys trading lower, narrow overnite range on very light volume in TY1 (146k), 10Y 2.213% (+1bp). S&P futures +3.5pts, European equities up 0.40%, crude 49.63 unch.  Core EGBs also lower, German bund yields 1bp higher, gilts outperforming slightly, recovering some of the sharp selloff from last week. Portugal upgraded by S&P to investment grade has taken the Portugal/Germany 10Y spread 28bps tighter  to  203bps –  the spd was closer to 400bps in March. GOC yields higher underperforming tsys by 1-1.5bps, 10Y above 2.10% for the first time since Nov 2014- 2.115%. Provis opening unch, long Alberta rumoured, Alta/Ont 48 roll close to recent narrows 8.5/8.0. The market sees a 47.7% chance the Fed hikes rates again in 2017, Bloomberg data shows.

News headlines 

Wall Street hits record highs, S&P 500 pierces 2,500 (Reuters) Wall Street reached record highs on Friday, with the S&P 500 surpassing 2,500 points as telecommunications shares rose and technology bounced back after two days of declines. The S&P 500’s breach of the 2,500-mark came less than four months after it closed above 2,400, and brought 2017’s gain to nearly 12 percent. U.S. stocks haven’t had a 5% correction in more than 400 days. S&P 500’s 269% rally since a 2009 low is third strongest ever.

Dollar Rebounds as FOMC Meeting Makes Case for Profit Taking (Bloomberg) The Fed is getting ready for its ‘biggest meeting of the year.’ The Fed is widely expected to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its meeting on Wednesday, September 20.

Euro Zone Inflation Confirmed at 1.5 Percent in August (NYTimes) Euro zone headline inflation hit its highest level in four months in August, official data showed on Monday, confirming the European Union statistics office’s earlier flash estimate. Eurostat said consumer prices in the 19 countries sharing the euro rose in August by 1.5 percent year-on-year and by 0.3 percent on the month, in line with the average forecast of economists polled by Reuters.

Chinese capital bans winter construction to improve air quality (Reuters) Beijing will suspend construction of major public projects in the city this winter in an effort to improve the capital’s notorious air quality, official media said on Sunday, citing the municipal commission of housing and urban-rural development. All construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15 within the city’s six major districts and surrounding suburbs, said the Xinhua report.

Brent Oil Holds Near 5-Month High on Signs of Tightening Supply (WSJ) Oil prices nudged higher Monday, holding on to recent gains that pushed prices to a five-month high last week, buoyed by recent data showing tightening supplies. Brent crude, the global oil benchmark, rose 0.5% to $55.87 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7% at $50.21 a barrel.

WestJet, Oilers, Flames among Alberta businesses warning against proposal to end daylight time changes (Globe and Mail) Alberta businesses are coming out against a proposal from a member of Premier Rachel Notley’s government to create a new time zone for the province. WestJet Airlines Ltd., as well as the Edmonton Oilers and Calgary Flames, are warning of early-morning flights and late-night hockey games if a private member’s bill working its way through Alberta’s legislature is approved. The bill, which would end the ritual of springing forward and falling back, would leave the province in Mountain Daylight Time year-round in a renamed time zone that would be known as Alberta Standard Time.

Overnight markets 

Overview: US 10yr note futures are down -0.074% at 126-07, S&P 500 futures are up 0.18% at 2501.75, Crude oil futures are down -0.6% at $49.59, Gold futures are down -0.72% at $1315.6, DXY is up 0.1% at 91.963, CAD/USD is up 0.11% at 0.8193.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.609% 2 Year 1.389%
5 Year 1.821% 5 Year 1.812%
10 Year 2.105% 10 Year 2.211%
30 Year 2.45% 30 Year 2.776%

US Economic Data 

10:00 AM NAHB House Market Index, Sept, est. 67 (prior 68)
16:00 PM Total Net TIC Flows, Jul, (prior $7.7b)
16:00 PM Net Long-Term TIC Flows, Jul (Prior $34.4b)

Canadian Economic Data 

8:30 AM Int’l Securities Transactions, July, 23.95b, prior -0.92b, revised -0.86b)
10:00 AM Bloomberg Nanos Confidence, Sep.15 (prior 58.4)



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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230