US tsys lower after stronger CPI (core highest since Aug 2011), 10Y futures higher on above avg. volume, US 10Y 1.78% (+2.5bps). European stocks lower led by banks despite ECB capital buffer news (see above). GOCs lower & steeper, spds ~3bps tighter vs tsys in the short end. Cda retail sales fell 2.2% m/m in Dec after rising 1.7% in Nov, missing consensus est by wide margin (-1.6% ex-autos vs -0.7%). Provis starting 0.5bps weaker after profit taking yesterday took spds 2bps wider. BC continues to outperform post budget – BC48/Ont46 traded up at -11.5 yest aft, now -11.8/-12.5. Another active day in corps yest with Ford long 3Y (June 19) @ 265OTC which we saw as a ~20bp concession and bonds broke tighter 259/256. Toyota priced a dual 5Y fixed & 3Y FRN, the 5Y @ 164 which broke 3bps tighter.
- European Banks Gain Reprieve as ECB Retreats on Capital Demands (Bloomberg) Euro-area banks will get a reprieve from regulators’ post-crisis steps to pile on capital requirements after the European Central Bank said it would curtail its demands on individual lenders to offset the phasing in of capital buffers.
- Here Are The Numbers That Show Who `Brexit’ Would Hurt Most (Bloomberg) If David Cameron ends up leading the U.K. out of the European Union, he’ll drag everyone else down with him. That’s the conclusion of an academic study about what the economic impact of a “Brexit” would be. No one escapes unhurt.
- Wildest Currency Swings Since 2011 Curtail Options Strategies (Bloomberg) The highest currency-market volatility in more than four years is depriving investors of a cheap way to protect against risks in financial markets — including Britain’s referendum on its membership of the European Union.
- PBOC to Raise Reserve Ratios for Banks That Don’t Meet Criteria (Bloomberg) China’s central bank said some banks will be forced to lock away more reserves, a move that may contain credit growth after advances by smaller lenders jumped in January.
- ‘Deflationary Bias’ May Afflict U.S. Economy, Fed Paper Finds (Bloomberg) The U.S. economy may be saddled with a “deflationary bias” after the last recession that makes it harder for the Federal Reserve to achieve its 2 percent inflation goal, according to research published this month by the central bank.
- K. Retail Sales Surged Most in More Than Two Years in January (Bloomberg) U.K. retail sales surged the most in more than two years in January, boosted by demand for clothing and computers.
- Tough road for Venezuela after dire data, inadequate measures (Reuters) Venezuela’s central bank on Thursday released long-awaited data showing the depth of the OPEC country’s recession, a day after President Nicolas Maduro announced a package of measures seen as insufficient to salvage the unraveling economy. The bank reported that Venezuelan inflation hit 180.9 percent in 2015, one of the highest rates in the world, while the economy contracted 5.7 percent.
- Overview: US 10yr note futures are down -0.1432% at 130-24, S&P 500 futures are down -0.68% at 1903.5, Crude oil futures are down -3.54% at $29.68, Gold futures are up 0.12% at $1227.8, DXY is up 0.03% at 96.978.
US Economic Data
- CPI MoM was released at a level of 0%, better than expected and up from prior month
- CPI Ex Food and Energy MoM, was 0.3%, beating the estimate by 0.1% and up from prior month
- CPI YoY growth was 1.4%, better than expected and up 0.7% from prior month
Canadian Economic Data
- Retail Sales MoM growth was -2.2%, worse than expected and down 3.9% from prior month
- Retail Sales Ex Auto MoM growth was -1.6%, missing the estimate by 0.9% and down from the previous period.
- CPI NSA MoM growth was released at 0.2%, better than expected and up 0.7% from prior month
- CPI YoY growth was 2%, beating the estimate by 0.2% and up 0.4% from the previous period
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