Market update
US tsys moving lower after initial spike on tame CPI (but shelter rose 0.4% – largest since 2007),US10Y 2.20% (+1bp) curve 1bp flatter. Equities lower in Europe, Asia higher, gold higher, crude slightly lower (42.50). China stocks – another volatile day – shares were down ~5.0% before PBOC intervention led stocks to close 1.2% higher. FOMC minutes later this afternoon – data since the July meeting has been positive for the most part except inflation is still very much contained as commodities continue to weaken, Fed speak has been mixed with Lockhart pushing for Sep increase while Powell & others prefer to wait. In Canada, GOCs moving lower, spds unch vs tsys with CMB 10Y & FRN this morning. Provis wider, supply still possible despite CMB , long Ont rumored. Alberta expected to price its USD 5Y (MS + 17), Alb/Ont 43 -1/-1.5 (0 /-1) yest…
News headlines
- China Flips to Gains After Steep Losses Earlier (WSJ) A steep drop in China shares flipped to gains Wednesday, the latest signal that Beijing won’t let the market fall too far before engineering a rescue.
- Surge in emerging market capital outflows hits growth and currencies (FT) A surge of capital gushing out of emerging markets has risen toward $1tn over the past 13 months, roughly double the amount that fled during the financial crisis amid slumping confidence in the world’s developing economies.
- ECB’s Market Dilemma: What Happens When Bond Supply Dries Up? (Bloomberg) As the European Central Bank purchases bonds in an effort to stimulate the euro region’s economy, policy makers in Frankfurt face a dilemma: what to do when they run short of securities to buy.
- Target Lifts Earnings Outlook (WSJ) Target Corp. on Wednesday lifted its profit outlook for the year after posting stronger-than-expected earnings in its second quarter and its fourth straight quarter of same-store sales growth.
- Housing woes? $12-million Calgary listing bucks trend in luxury real estate (G&M) Luxury home sales in Calgary have taken a hit this year thanks to slumping oil prices, but that isn’t preventing Sotheby’s from listing a $12.25-million home today.
Overnight markets
- Overview: IG24 5Y 78.6/79 (+0.92), US 10yr note futures are up +0.01% at 127-15, S&P 500 futures are down -0.27% at 2088.25, Crude oil futures are down -0.38% at 42.46, Gold futures are up +0.44% at $1121.8, DXY is down -0.10% at 96.939.
- US BANK CDS (5yr): BAC 71/74 (+0), GS 90/93 (+0), MS 80/83 (+0), C 80/83 (+0), JPM 72/75 (+0), WFC 51/54 (+0)
US Economic Data
- MBA mortgage applications came in this morning at +3.6% for the week ending August 14, versus prior week 0.1% increase.
- CPI increase 0.1% MoM (0.2% YoY) in July (0.2% MoM and 0.2% YoY Expec) versus June 0.3% MoM (0.1% YoY).
- CPI core came in at 0.1% MoM (1.8% YoY) in July (0.2% MoM and 1.8% YoY Expec) compared to previous month 0.2% MoM (1.8% YoY).
- Fed minutes from July FOMC meeting will be release at 14:00.
Canadian Economic Data
- There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230