cti2015header-morning comments web

Market Update

  • US tsys opening lower, US 10Y 1.56 (+2bps), tsys under pressure for most of the overnite session after rising late yest aft. Fed Williams said Sep FOMC meeting is in play and that the US economy is strong enough to warrant rate hikes sooner than later to prevent overheating. Core Euro bonds lower led by UK gilts with the gilt curve ~3bps steeper and the UK 10Y 0.59% (+4bps). German bunds lower, yields ~2bps higher across the curve despite lower European stocks and lower oil (WTI below $48). GOCs lower, curve ~2bps steeper lagging the decline in tsys after weak Cdn data:  June retail sales -0.1% vs 0.5% exp  & CPI -0.2% vs 0.0% exp. Provis opening better bid , Ont 26s trading down @ 85.5 after closing at 87/86 yest. Supply unlikely thou Newf 10s & Mani longs rumoured.

 News headlines                                                                                 

  • European shares, oil ease as markets return to Fed-watching (Reuters) European shares were poised to post their biggest weekly loss in two months on Friday while crude oil snapped its winning streak after a weaker dollar and hopes of production cuts had lifted prices to eight-week highs. With the corporate earnings season in the United States and Europe largely out of the way, the focus is back on the U.S. Federal Reserve and whether it decides to raise interest rates.
  • Early Brexit relief not much comfort for Bank of England (Reuters) The Bank of England will draw some comfort from signs that Britons took the initial shock of June’s Brexit vote in their stride, but will see little to lessen the concern that prompted its huge stimulus announcement this month. The first official data covering the post-referendum period, published this week, has shown no immediate big hit to Britain’s economy as retail sales surged in July and claims for unemployment benefits fell.
  • Oil rises, enters bull market territory (GlobeandMail) Oil prices rose on Thursday for a sixth straight day, with Brent crude rising above $50 for the first time in six weeks as the world’s biggest producers prepared to discuss a possible freeze in production levels. Brent ended the session up 2.09 per cent at $50.89. The session high of $51.05 was its highest since June 23.
  • OPEC Freeze Wouldn’t Be So Potent as Gulf Rivals Pump More (Bloomberg) Even if OPEC strikes a deal with Russia next month in Algiers to freeze oil production, success will mean a lot less than when they tried and failed four months ago. Oil has rallied more than 10 percent since the Organization of Petroleum Exporting Countries said that it will hold an informal meeting in the Algerian capital, fanning speculation the group could complete a supply agreement with rival producers that sputtered in April. Iran may now drop its refusal to join a freeze after restoring most of the crude output curbed by sanctions, a development analysts say makes a deal more likely, but also less worthwhile.
  • Ontario Teachers’ Pension Plan seeking buyers for minority stake in $4-billion Vancouver real estate portfolio: sources (FinancialPost) The Ontario Teachers’ Pension Plan is seeking buyers for a minority stake in its $4 billion real-estate portfolio in Vancouver, including office towers and shopping malls, according to people familiar with the matter. Cadillac Fairview, the real-estate unit of Canada’s third-biggest pension fund, is looking to raise about $2 billion from the sale, according to the people, who asked not to be identified. Cadillac Fairview has hired CBRE Group Inc. and Royal Bank of Canada for the sale, the people said. Spokespeople for Cadillac Fairview, CBRE, and RBC didn’t immediately respond to requests for comment or declined to comment.
  • Pro-Brexit Economists Sense Vindication as U.K. Shows Resilience (Bloomberg) Pro-Brexit economists smell vindication, not fear. With consumers on their biggest summer spending spree in 14 years after Britain’s vote to quit the European Union, “Leave” backers Patrick Minford and Ruth Lea see reasons to be cheerful. For them, bumper retail sales figures this week and a report showing the labor market remained resilient provide initial evidence that the economy can defy gloomy pre-vote predictions.
  • Dollar edges up, but on track for weekly loss (Bloomberg) The dollar inched higher on Friday but was set for a more than 1 percent loss against all its major peers on the week, weighed down by investors’ lack of belief in the chances of a rise in U.S. interest rates this year. All of the major currencies were trading in tight ranges, with the exception of the Australian dollar, pushed 0.9 percent lower by a cut by Moody’s in its outlook for Australian bank ratings.

Overnight markets

  • Overview: US 10yr note futures are down -0.2007% at 132-4, S&P 500 futures are down -0.25% at 2178, Crude oil futures are down -0.44% at $48.01, Gold futures are down -1.05% at $1343, DXY is up 0.38% at 94.518.

US Economic Data

  • There is no major economic data release for today

Canadian Economic Data

  •   8:30 AM: Retail Sales, m/m, June, -0.1%, est. 0.5% (prior 0.2%)
    Retail Sales Ex Auto, m/m, June, -0.8%, est. 0.3% (prior 0.9%, revised 0.8%)
    CPI, y/y, July, 1.3%, est. 1.4% (prior 1.5%)
    CPI Core, m/m, July, 0.0%, est 0.0% (prior 0.0%)
    CPI Core, y/y, July, 2.1%, est. 2.1% (prior 2.1%)

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