Market Update: US tsys moving higher in recent trade 10Y below 2.84%(-2bps), light volume in TY futures, light data today with FOMC minutes on Wed along with Fed Jackson Hole Symposium. Stocks higher, S&P fur +5, Nasdaq +18, crude slightly lower 65.75. Core EGBs unch, German 10Y bund 0.30% low end of narrow 3bp range over the last two weeks with peripheral bonds narrower. GOCs higher, outperforming tsy by 0.5bps, curve 0.5bps flatter, the 10Y GOC @ 2.24% now below pre CPI levels. Provis unch to start, Ontario 10s @ 68bps – where they issued last week. CMBs outpeforming since supply last week 10Y WI 40.5/ vs 41 at issue.
News headlines
Trudeau Says 2019 Canada Election Is Fight Against Polarization (Bloomberg) Justin Trudeau said the 2019 Canadian election will be a contrast between his Liberal Party’s push for a cleaner environment and fighting inequality, and Conservatives who’ll attempt to exploit divisions created by a global wave of populism. The prime minister made the remarks late Sunday afternoon in his home district in Montreal, turning attention back to campaign politics a few days after he rejected the idea of calling an early election. Trudeau’s Liberals have lost their earlier lead in public opinion polling, and are now essentially tied with the Conservatives led by Andrew Scheer.
Venezuela’s 95% Devaluation Adds to Chaos After Drone Attack (Bloomberg) Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend — a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain. One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days.
Inflation Unexpectedly Hits 3% in Test for Bank of Canada (Bloomberg) Canada’s inflation hit the 3 percent mark for the first time since 2011 in July, an unexpected surge that puts pressure on the Bank of Canada to accelerate interest-rate increases. The consumer price index recorded an annual pace of 3 percent, quickening from 2.5 percent a month earlier, Statistics Canada said Friday from Ottawa. Economists expected the inflation rate to remain unchanged.
U.S. Stock Futures Track Gains Across Europe, Asia: Markets Wrap (Bloomberg) U.S. equity futures and European stocks followed Asian shares higher on Monday as traders held onto hopes for an easing of the trade war ahead of a meeting of central bankers later in the week that may throw up clues on the outlook for markets. The dollar edged up and the euro fell. Contracts on the S&P 500, Dow and Nasdaq all pointed to a positive open, while miners climbed with metals to help the Stoxx Europe 600 Index gain in thin volumes. There were advances across most Asian equities, though Japan’s gauge bucked the trend. The dollar firmed after two days of declines and the 10-year Treasury yield was steady. The onshore yuan climbed amid signs China is propping up the currency just as it prepares to restart trade negotiations with the U.S. The euro slipped for the first time in four days.
Tesla sues Ontario over canceled electric vehicle rebate (Reuters) Electric vehicle-maker Tesla Inc is taking the Ontario government to court over the Canadian province’s cancellation of an electric vehicle incentive program, according to documents filed in court on Aug. 10. In July, shortly after coming to power in Ontario, the Progressive Conservative government under Doug Ford canceled a slew of green energy initiatives, including an Electric and Hydrogen Vehicle Incentive Program that provided rebates of up to C$14,000 ($10,640) for people who bought electric cars.
China shifts to Iranian tankers to keep oil flowing amid U.S. sanctions (Reuters) Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States. The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.
Big banks poised for strong quarter amid housing stability, rate hikes (BNN) Canada’s biggest banks are expected to report yet another strong quarter as the country’s housing market shows signs of stability and rising interest rates add to their bottom line. Royal Bank of Canada is the first lender to report its fiscal third-quarter results on Wednesday, and most analysts are expecting « solid » growth across the industry, with estimates of earnings-per-share growth as high as 10 per cent year-over-year. « We believe the earnings environment sets up well for a strong second half… With the Canadian housing market behaving itself, investors can turn their attention away from that and towards earnings, which have been supported by (profit) margin expansion, operating leverage, and growth in the expansion segments, » said Robert Sedran, an analyst with CIBC Capital Markets in a research note. Canadian Imperial Bank of Commerce will be the next to report its earnings for the three-month period on Thursday, followed by Bank of Nova Scotia and Bank of Montreal on Aug. 28, National Bank of Canada on Aug. 29 and Toronto Dominion Bank on Aug. 30.
Overnight markets
Overview: US 10yr note futures are up 0.104% at 120-12, S&P 500 futures are up 0.15% at 2856.5, Crude oil futures are up 0.05% at $65.94, Gold futures are up 0.79% at $1193.6, DXY is up 0.12% at 96.22, CAD/USD is up 0.07% at 0.7651.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.109% | 2 Year | 2.612% |
| 5 Year | 2.19% | 5 Year | 2.738% |
| 10 Year | 2.262% | 10 Year | 2.855% |
| 30 Year | 2.272% | 30 Year | 3.011% |
US Economic Data
There is no US economic data for today.
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Aug 17th (55.9 prior) |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230