Market Update
US tsys off the lows as equities give up some earlier gains (S&P +1%, +4% from Thursday’s low 2818), 10Y 1.60% (+4bps). Tsys steady then under pressure in Europe, steepening with German bunds – bund curve 12bps steeper since Thursday. Euro area CPI rise 1% last month, revised lower from 1.1% adding to the negative data flow from Europe and raising odds of additional ECB stimulus. Focus this week on Jackson Hole conference and Powell speech on Friday. GOCs lagging the move lower in tsys, GOC 10Y 1.18 (+2bps), curve only marginally steeper (1bp) compared to huge move in US & Europe. CPI/Retail Sales key data this week. Odds of a rate cut at the October meeting have risen sharply since the start of the month to ~65% currently.
News headlines
Stocks Climb Globally With Dollar; Treasuries Drop: Markets Wrap (Bloomberg) U.S. equity futures rose alongside stocks in Europe and Asia as traders parsed the latest trade news from Washington and awaited commentary from the Federal Reserve chief. Treasuries fell with European government bonds.
TSX set to open higher as oil prices rise (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Monday as crude prices rose after an attack on a Saudi oil facility by Yemeni separatists during the weekend.
Oil Rises as Drone Attack on Saudi Oilfield Stokes Mideast Fears (Bloomberg) Oil rose for a second day as a drone attack on a Saudi Arabian oil field revived concerns that the tense Middle East political situation may jeopardize crude exports.
Explainer: How China’s new interest rate reforms will work (Reuters) China’s central bank pushed out long-awaited interest rate reforms on Saturday by establishing a reference rate for new loans issued by banks to help steer corporate borrowing costs lower and support a slowing economy.
Stimulus optimism boosts stocks, eases pressure on bonds (Reuters) World stock markets rose on Monday on signs that major economies would look to prop up stalling growth with fresh stimulus measures, easing pressure on bonds and dampening demand for perceived safe-havens such as gold.
BoE’s Carney says negative rates not an option for UK: Central Banking (Reuters) Bank of England Governor Mark Carney said he did not think negative interest rates were an option for the British economy at the moment, in comments published on Monday.
German economy could continue to shrink: Bundesbank (Reuters) The German economy could have continued to shrink over the summer as industrial production drops amid a dearth of orders, the Bundesbank said on Monday, suggesting that the euro zone’s biggest economy is now in a recession.
Trump says U.S. is talking with China but not ready for a deal (BNN) President Donald Trump said the U.S. is “doing very well with China, and talking!” but suggested he wasn’t ready to sign a trade deal, hours after his top economic adviser laid out a potential timeline for the resumption of substantive discussions with Beijing.
Market Overview: US 10yr note futures are down -0.358% at 130-15, S&P 500 futures are up 1.04% at 2921.5, Crude oil futures are up 0.6% at $55.2, Gold futures are down -1.14% at $1506.2, DXY is up 0.08% at 98.218, CAD/USD is down -0.09% at 0.7541.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.362% | 2 Year | 1.513% |
| 5 Year | 1.231% | 5 Year | 1.459% |
| 10 Year | 1.205% | 10 Year | 1.603% |
| 30 Year | 1.425% | 30 Year | 2.094% |
US Economic Data
There is no US economic data for today.
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Aug 16 Survey: — Prior: 57.8 |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230