cti2015header-morning comments web

Market Update

Tsys still on the back foot with the 10Y 2.44 (+1bp) after stronger eco data (housing starts +11.3%) and after Yellen yest afternoon said the economy is close to the dual mandate goals of full employment and stable inflation, hinting at the possibility of more than two rate increases this yr. Core European bonds in catch-up mode , 10Y gilts 4bps higher, bund yields 2-3bps higher with prices off the lows since ECB decision. As expected the ECB left its bond buying unchanged noting QE could be expended if conditions worsen. Draghi press reiterating need for continued monetary stimulus saying underlying inflation remains subdues. GOCs slightly lower on the open, with Can/US 7-10 bps tighter led by the short end after Poloz mentioned further rate cuts should downside risks be realized , citing ‘significant uncertainties’ with respect to trade under the new US administration.

News headlines 

Futures flat as countdown to Trump’s inauguration begins (Reuters) U.S. stock index futures were little changed on Thursday, with investors seemingly wary of taking on risk ahead of Donald Trump’s swearing-in as U.S. president on Friday.

ECB keeps rates, asset-buying plan unchanged as expected (Reuters) The European Central Bank left interest rates and the main parameters of its asset purchase scheme unchanged as expected on Thursday, keeping unprecedented stimulus in place to aid the bloc’s slow but steady recovery. Markets now turn their attention to ECB President Mario Draghi’s 1330 GMT news conference.

OPEC Seeks to Quiet Doubts on Supply Cuts as Rally Falters (Bloomberg) When OPEC and Russia meet this weekend to gauge progress on their oil-supply deal, they’ll be trying to dispel the shadow of previous unfulfilled promises. Oil prices rose 20 percent in the month after OPEC agreed to cut output, reaching $54.06 a barrel in New York on Dec. 28. Since then, they’ve slipped almost 5 percent as traders, with one eye on rising U.S. shale production, await proof that OPEC and other producers will live up to their deal. They recall how Russia broke its pledge during cutbacks in 2008, while some members of the producers group failed to fully implement the agreement.

Australian Unemployment Rate Climbs as More Join Search for Work (Bloomberg) Australia’s economy added jobs in December, although not enough to prevent the unemployment rate edging up as participation in the workforce increased. December’s data caps a volatile year for Australian jobs, as declining participation for much of 2016 signaled more spare capacity than improved hiring figures suggested.

Don’t Assume Canada Will Rally With U.S., Poloz Warns Investors (Bloomberg) Bank of Canada Governor Stephen Poloz has a message for those betting Canada’s economy will ride shotgun on the U.S. recovery: think again. Canada’s central bank chief spelled out Wednesday how his economy is still diverging from the U.S. two years after an oil shock took hold. His statements cast doubt on the recent rally in the country’s dollar and bond yields that, in the past, have accompanied similar rallies in the U.S.

Canadian Pacific Railway Ltd chief executive steps down early to pursue opportunities at competitors (Financial Post) It appears that larger-than-life railroad executive Hunter Harrison isn’t quite ready to head back to his horse farm. Canadian Pacific Railway Ltd. announced Wednesday that Harrison, 72, will step down immediately. He had originally planned to retire in July, but now intends to “pursue opportunities involving other Class 1 railroads,” CP said, using the industry term to refer to the largest North American railways by revenue.

Overnight markets 

Overview: US 10yr note futures are down -0.426% at 124-6, S&P 500 futures are down -0.04% at 2265.5, Crude oil futures are up 0.96% at $51.57, Gold futures are down -0.96% at $1200.5, DXY is up 0.55% at 101.49, CAD/USD is down 0% at 0.7535.

US Economic Data 

8:30 AM Housing Starts, Dec, 1226k, est. 1188k (prior 1090k, revised 1102k)
Housing Starts, m/m, Dec, 11.3%, est. 9.0% (prior -18.7%, revised -16.5%)
Building Permits, Dec, 1210k, est. 1225k, (prior 1201k)
Building Permits, m/m, Dec, -0.2%, est. 1.1% (prior -4.7%)
Initial Jobless Claims, Jan 14, 234k, est. 252k (prior 247k, revised 249k)
Continuing Claims, Jan 7, 2046k, est. 2075k (prior 2087k, revised 2093k)
Philadelphia Fed Index, Jan, 23.6, est. 15.3 (prior 21.5)
9:45 AM Bloomberg Consumer Comfort Index, Jan 15, (prior 45.1)
Bloomberg Economic Expense, Jan, (prior 53.5)

Canadian Economic Data

8:30 AM Int’l Securities Transactions, Nov, 7.24b, prior (15.75b, revised 15.77b)
Manufacturing Sales, m/m, Nov, 1.5%, est. 1.0%  prior (-0.8%, revised -0.6%)


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