cti2015header-morning comments web

Market update

Both UST and GoC bond yields are trading 2-3 bps lower after another quiet overnight session.  Equity futures are opening the day down (S&P futures -7.25) with oil prices flat (WTI -0.07%). Tokyo mkts returned after holiday, Jpn stocks up, most Asian stocks lower Outside of Japan many equity markets in Asia have lost ground overnight. Sources cited 10-year UST futures buying while US real money bought 5s, 10s; Asian banks also buying 10s. Credit desks and trading accounts sold 10s. China yuan set at lowest since Oct. 2010. Then London saw Tsys squeezed up, Bunds bid as European stocks extended loss, as traders cite Bloomberg headlines on EU courts decision to back EU state aid rules for national banks, which hurt Italian banks shares. UK had real money and bank portfolio buying in short-end Tsys, bank portfolio seen selling in 10s, swap paying in 2s and 5s, portfolio receivers in 30s. 10) Turkey trims overnight lending rate to 8.75%. Bloomberg reports that the EU and the IMF have agreed to Bank of Greece proposals for easing of some capital controls. IMF head, Lagarde, spoke in New York, covering a broad range of topics including the situation in Turkey, Brexit and Italian banks but there was little to give markets direction.

News headlines

  • Stocks Take a Breather as Earnings Disappoint, Treasuries Gain (Bloomberg) After the S&P 500 Index yesterday set its fifth all-time high in six days,  futures signaled on Tuesday that stocks will retreat. The Stoxx Europe 600 Index had its biggest drop in two weeks as Akzo Nobel NV and Rio Tinto Group posted results that missed estimates. U.S. Treasuries and gold rose as investors sought havens, while the Australian and New Zealand dollars weakened after the countries’ central banks signaled they are moving toward interest-rate cuts.
  • UK will not invoke EU Article 50 this year, government lawyer says (Reuters) Britain will not begin its formal divorce from the European Union by invoking Article 50 of the Lisbon Treaty this year, a government lawyer told the High Court on Tuesday. Lawyer Jason Coppell indicated however that the government’s current position could change.
  • IMF to cut UK and global growth forecasts following Brexit vote (TheGuardian) All eyes will be on the IMF today as it provides its latest update on the global economy. The Washington-based Fund, headed by Christine Lagarde, is expected to downgrade its previous prediction that the global economy will grow by 3.5% in 2017.
  • China economy growing, but at only half of official estimates: SMI survey (Reuters) A survey of Chinese sales managers indicates that the economy is growing but at only about half the rate of official estimates, a private survey showed on Tuesday. China’s economy has bottomed out and continues to grow at a low but stable pace, but a major pickup in growth is unlikely this year, according to the latest China Sales Manager Index (SMI) published by World Economics on Tuesday.
  • Dollar Climbs Before Data Seen Showing Housing Sector Resilient (Bloomberg) The dollar advanced before an economic report on Tuesday that analysts forecast will show resilience in the U.S. housing sector. Bloomberg’s Dollar Spot Index rose for a third day. Economic data this week are forecast to show housing starts rose in June after contracting in May and continuing claims on unemployment benefits dropped in the week ended July 9, according to Bloomberg surveys of analysts. The dollar’s gain helped to trim this year’s decline that was driven by investors paring expectations for interest-rate increases by the Federal Reserve.
  • Goldman Sachs quarterly profit jumps 78 percent (Reuters) Goldman Sachs Group Inc (GS.N) reported a 78 percent jump in quarterly profit as the Wall Street bank earned more from bond trading and its expenses fell. Net income applicable to Goldman’s common shareholders rose to $1.63 billion, or $3.72 per share, in the second quarter ended June 30 from $916 million, or $1.98 per share, a year earlier, when Goldman set aside $1.45 billion for regulatory and mortgage-related legal settlements.
  • Turkey Put on Review for Downgrade by Moody’s After Coup Attempt (Bloomberg) Turkey had its debt put on review for a downgrade by Moody’s Investors Service after President Recep Tayyip Erdogan thwarted a coup attempt that erupted over the weekend. Moody’s will look at Turkey’s Baa3 credit rating, the lowest level of investment grade, to “assess the medium-term impact” of the failed coup on the country’s growth and policy-making institutions, according to a statement.

Overnight markets                                                                                           

  • Overview: US 10yr note futures are up 0.0947% at 132-5, S&P 500 futures are down -0.19% at 2156, Crude oil futures are up 0.18% at $45.32, Gold futures are up 0.16% at $1331.4, DXY is up 0.58% at 97.124.

US Economic Data

  • 8:30 AM Housing Starts, June, 1189k, est. 1166k (prior 1164k, revised 1135k)
    •   Housing Starts, m/m, June, 4.8%, est. 0.2% (prior -0.3%, -1.7%)
    •   Building Permits, June, 1153k, est. 1150k (prior 1138k, revised 1136k)
    •   Building Permits, m/m, June, 1.5%, est. 1.2% (prior 0.7%)

Canadian Economic Data

  • There is no major economic data for today



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