Market update
US tsys opening higher, US 10Y 2.20 (-2.3bps) as Euro stocks down 1.4%, Nikkei off 2.0% after disappointment with latest BOJ easing (see above). Core Euro bonds higher, 10Y bund/tsy spd 3bps wider. GOCs higher, outperforming tsys by 2bps on much weaker than exp CPI (core -0.3% vs unch exp), CAD above 1.40 for the first time since 2004. Provis trading down Ont 46s 109/108.5 1.5bps wider on risk off – supply still poss today.
News headlines
- Dollar plunges against yen after Bank of Japan’s surprise easing move (Marketwatch) The dollar fell sharply against the yen on Friday as investors ultimately expressed disappointment in additional easing measures by the Bank of Japan, with the expectation that more must be done.
- Withdrawals hit US corporate bond funds (FT) Investment grade bond funds in the US have been hit with a record wave of redemptions, a week after two high-yield funds announced they would shutter and another barred withdrawals as the credit market showed further cracks.
- Fed Hikes, but Some Rates Veer Lower (WSJ) On the day the Federal Reserve implemented its plan to raise interest rates, driving up overnight borrowing costs, broader market forces conspired instead to drive other U.S. interest rates down.
- Japanese Stocks Whipsaw After BOJ Unveils New ETF Buying Program (Bloomberg) Japanese stocks whipsawed as investors digested a Bank of Japan announcement that it will establish a new program for purchases of exchange-traded funds. The Topix index jumped as much as 2 percent after the announcement, before resuming losses to be down 1.8 percent to 1,537.10 at the close in Tokyo, to cap a 0.8 percent weekly loss. The Nikkei 225 Stock Average slipped 1.9 percent to 18,986.80. The BOJ said a new ETF purchase program will have an annual budget of 300 billion yen ($2.5 billion) to offset any market impact as it resumes selling stock holdings in April. It will also extend the maturity of Japanese government bond holdings, it said in Tokyo.
- China Home-Price Increase Spreads to More Cities (Bloomberg) China’s home-price recovery spread to more cities in November, especially smaller ones, after Chinese authorities rolled out easing measures targeting regions with a surplus of unsold homes. New-home prices increased in 33 cities among the 70 cities tracked by the government, compared with 27 in October, the National Bureau of Statistics said Friday. Prices dropped in 27 cities, compared with 33 in October, and were unchanged in 10.
- Ukraine Defaults on $3 Billion Bond to Russia (Bloomberg) Ukraine said it won’t repay $3 billion in bonds due to Russia, moving a step closer to a court battle amid a new wave of economic tension between the two ex-Soviet neighbors.
- Canadian dollar tumbles to close below 72 cents US (CBC News) The Canadian dollar continued its slide today, closing below the 72-cent US mark for the first time since the spring of 2004. The loonie ended the trading day at 71.68 cents US, down more than four-fifths of a cent from its close Wednesday. At one point during the day, it was down more than a full cent.
Overnight markets
- Overview: IG25 5Y 94.486/95.111 (+0.380), US 10yr note futures are up +0.28% at 126-15+, S&P 500 futures are down -0.26% at 2019.50, Crude oil futures are down -0.52% at 34.77$, Gold futures are up +0.70% at $1056.90, DXY is down -0.36% at 98.914.
US Economic Data
- Markit US Services PMI (Preliminary) is forecast at 55.9 for December, 0.2 point lower than previous month.
- Kansas City Fed manufacturing index is forecast at 2 in December higher than November level (1).
Canadian Economic Data
- CPI is down -0.1% MoM (+1.4% YoY) in November (0.1% MoM and 1.5% YoY Expec) versus October 0.1% MoM (1.0% YoY).
- CPI core came in at -0.3% MoM (2.0% YoY) in November (0.0% MoM and 2.3% YoY Expec) compared to previous month 0.3% MoM (2.1% YoY).
- Wholesale trade sales came in at -0.6% MoM in October worst than September -0.3% decrease and lower than expected (+0.1%).
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