cti2015header-morning comments web

Market Update

Tsys slightly lower, reversing most of the earlier losses which saw the 10Y touch 2.509% at 5:22am ET, now 2.47% (+0.5bps). Tsys weaker in Europe tracking core EGBs with l.t. bund yields 3bps higher, gilts yields higher despite very weak retail sales for Dec (-2.0% vs -0.4%)yet before long gilt syndication next week. GOCs higher, 3 bps tighter vs tsys after Dec Cdn CPI surprised to the downside falling 0.2% vs unch (1.7% vs 1.5% exp) with weakness in food prices (-1.3% , the third monthly decline) offsetting a 5.5% increase in energy. CAD is lower for a third day to a two week low. Provis closed well bid yest for a second day, the positive tone in credit and a well received 10Y OPB Fin deal contributing.OPB issued $750 mln 10s @ 123 vs 10s (117 OTC) with bonds closing 120/117 – still 40 bps back of 10Y Ontarios & ~20 over deposit notes!. Manitoba longs rumoured today (MP46/ONT46 15/14).

News headlines 

 U.S. Futures, Dollar Advance Before Trump Sworn In: Markets Wrap (Bloomberg) U.S. futures climbed with the dollar and Treasuries fell as investors await the start of Donald Trump’s presidency. The Stoxx Europe 600 Index was poised for its worst week since early December while the pound slid after a report showed U.K. retail sales fell at the fastest pace in almost five years last month. Gold headed for a fourth weekly advance.

U.K. Retail-Sales Slump Hints at Cracks in Britain’s Brexit Boom (Bloomberg) U.K. Chancellor of the Exchequer Philip Hammond told a Davos gathering on Friday that an inflation pickup will put a damper on consumers this year. The first signs may already be appearing. Less than an hour before Hammond spoke, data showed retail sales fell at the fastest pace in almost five years in December, recording a 1.9 percent drop that far exceeded even the most pessimistic forecasts in a Bloomberg survey.

EU Said to Warn Deutsche Boerse-LSE Merger May Crush Rivals (Bloomberg) European Union regulators told Deutsche Boerse AG and London Stock Exchange Group Plc that their $12 billion deal to create the region’s dominant exchange operator risks eliminating rivals for clearing services, according to two people who’ve seen the statement of objections.

GE profit rises 35.7 percent (Reuters) General Electric Co reported on Friday a 35.7 percent rise in quarterly profit, helped by strength in its power and renewable energy businesses. Earnings from continuing operations attributable to GE shareholders rose to $3.48 billion in the fourth quarter ended Dec. 31 from $2.57 billion a year earlier.

Rail industry consolidation could be back on the table as Harrison steps down from CP (Financial Post) Consolidation in the rail industry could be back on the front burner after battle-scarred veteran Hunter Harrison stepped down from the head of Canadian Pacific Railway Ltd., reportedly to work his magic at another underperforming railroad.

Fed’s Yellen says unwise to allow U.S. economy to run ‘hot’ (Reuters) With monetary policy still modestly accommodative, the U.S. central bank should continue to raise interest rates slowly or risk harm to the recovery the Fed has sought to nurture, Federal Reserve Chair Janet Yellen said on Thursday.

 Overnight markets 

Overview: US 10yr note futures are down -0.1258% at 124-1, S&P 500 futures are up 0.24% at 2267, Crude oil futures are up 1.52% at $52.15, Gold futures are up 0.05% at $1202.1, DXY is up 0.21% at 101.36, CAD/USD is up 0.48% at 0.7473.

US Economic Data 

There is no major economic news for today

Canadian Economic Data 

8:30 AM CPI NSA, m/m, Dec, -0.2%, est. 0.0% (prior -0.4%)
  CPI, y/y, Dec, 1.5%, est. 1.7% (prior 1.2%)
  Retail Sales Ex Auto, m/m, Nov, 0.1%, est. 0.0% (prior 1.4%)
  Retail Sales, m/m, Nov, 0.2%, est. 0.5% (prior 1.1%, revised 1.2%)


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