Market Update
US Treasuries prices open NY mildly weaker, after overnight muted consolidation followed Tuesday march higher to higher prices. Some say their game plan will be to buy dips. However, 10Y could not close below 2.261% 55-day moving average. June housing starts +8.3% to 1.215m SAAR, well above the 1.150m rate expected. This followed upward revisions to total starts in May and downward revisions in Apr. Building permits +7.4% to 1.254m SAAR, highest % change since Nov 2015, with single-family (+4.1%) and multi-family (+14.6%) permits both up. Despite increases this month, the numbers are still low in 2Q, which could mean home building will be a drag on 2Q GDP. Canada May mfg sales +1.1%, above expected. But ex autos and parts -0.1%. Tot sls volume +1.1%%. New ordrs -3.6%. Unfilled ordrs -1.5%. Inv/sales 1.35. Overall not as strong as headline suggests, especially since Apr rev dn to +0.4% from +1.1%.
News headlines
Euro Retreats as ECB Meets; Earnings Boost Stocks: Markets Wrap (Bloomberg) The euro retraced some recent gains as European policy makers gathered in Frankfurt before Thursday’s rate decision. The region’s equities got a lift from corporate results, while oil fluctuated and gold fell.
Accommodative monetary policy still needed: ECB’s Villeroy (Reuters) The European Central Bank has made progress steering inflation towards its two percent inflation target but loose monetary policy is still necessary, ECB policymaker Francois Villeroy de Galhau said on Wednesday.
ECB Is Studying Stimulus Options for Possible Fall Decision (Bloomberg) While European Central Bank policy makers look forward to a summer break, the institution is quietly working on stimulus plans for them to consider on their return. The ECB’s Frankfurt-based staff are examining scenarios for the future path of quantitative easing ahead of a Governing Council decision that is expected to take place in September or later, according to euro-area officials familiar with the matter. The people asked not to be named as the work is confidential. An ECB spokesman declined to comment.
Greek Bond Sale Is Said to Be Delayed by IMF Debt Cap Rule (Bloomberg) Greece’s much anticipated return to bond markets this week has been held off partly due to a ceiling set by the International Monetary Fund on the amount of debt the country can hold, according to three officials familiar with the matter who asked not to be identified as the talks are confidential.
Poloz’s Rate Hike Spells Trouble for Trudeau’s ‘David and Neera’ (Bloomberg) For one view of Canada’s rate hike, consider the case of David and Neera. He can’t get a raise, is worried about retirement and they borrowed money a couple years ago to fix the roof. Interest costs will jump now, with vacations and kids’ clothes already out of reach.
China’s Guangzhou offers incentives to boost home rental market (Reuters) The southern Chinese boomtown of Guangzhou has announced a flurry of incentives to boost its home rental market as a year-long property boom makes new housing less affordable.
Overnight markets
Overview: US 10yr note futures are down -0.062% at 126-01, S&P 500 futures are up 0.12% at 2460.75, Crude oil futures are up 0.04% at $46.42, Gold futures are down -0.08% at $1240.9, DXY is up 0.13% at 94.729, CAD/USD is down -0.19% at 0.7934.
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Jul 14, 6.3%, (prior -7.4%) |
| 8:30 AM | Housing Starts, Jun, 1215k, est. 1160k (prior 1092k, revised 1122k) |
| Housing Starts, m/m, Jun, 8.3%, est. 6.2% (prior -5.5%, revised -2.8%) | |
| Building Permits, Jun, 1254k, est. 1201k (prior 1168k) | |
| Building Permits, m/m, Jun, 7.4%, est. 2.8% (prior -4.9%) |
Canadian Economic Data
| 8:30 AM | Manufacturing Sales, m/m, May, 1.1%, est. 0.8% (prior 1.1%, revised 0.4%) |
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