cti2015header-morning comments web

Market update

Tsys opening lower, yields 1-2 bps higher ,10Y 1.863%.  Tsys opened higher in Asia yet fell thru the rest o/n session as European equities stabilize at six week lows, and reports of foreign CB selling tsys (MNI). Low volume in TY futures (264k). Selling in UK gilts also pressured tsys as speculation the Uk will remain in the union.  GOCs lower, prices off the lows afterApr CPI came in 0.3% vs 0.4% exp, Mar retail sales -1.0% vs -0.6% exp. Provis opening heavier, Ont longs trading down at 105, 10s unch @ 94/93. Long Alberta rumoured yet unlikely given early close. Alberta was downgraded by S&P yest afternoon citing budgetary shortfall & high debt burden. Alb/Ont 46 roll holding firm so far at 19. HQ issued $1bln new May 19s yest @ 51 – seemed to be a bit of a struggle given the size and liquidity concerns.

News headlines

  • Stocks Rebound From Six-Week Low as Oil Advances, Yen Retreats (Bloomberg) Financial markets stabilized after being buffeted this week by speculation the Federal Reserve is moving closer to raising interest rates. Global shares rebounded from a six-week low as crude and commodity prices recovered, while the yen weakened on reduced demand for haven assets.
  • Dudley Says June-July Fed Hike Reasonable If Data on Track (Bloomberg) The Federal Reserve is moving closer to raising interest rates at one of its next two meetings and the fact this message is getting through to financial markets is welcome news, said New York Fed President William Dudley. “If I’m convinced that my own forecast is on track, then I think a tightening in the summer, the June-July time frame, is a reasonable expectation,” Dudley told reporters Thursday in New York.
  • Lacking new ideas, G7 to agree on ‘go-your-own-way’ approach (Reuters) A rift on fiscal policy and currencies is likely to set the stage for G7 advanced economies to agree on a “go-your-own-way” response to address risks hindering global economic growth at their finance leaders’ gathering on Friday. As years of aggressive money printing stretch the limits of monetary policy, the G7 policy response to anemic inflation and subdued growth has become increasingly splintered.
  • Japan’s Aso tells G7 FX stability vital, no competitive devaluations (Reuters) Japanese Finance Minister Taro Aso said on Friday he told his Group of Seven counterparts that currency stability is of utmost importance and that excess volatility and disorderly currency moves could harm economies. Aso told reporters in Sendai, northern Japan, where he is chairing a meeting of G7 finance ministers and central bankers, that he had voiced opposition to “competitive devaluation of currencies.”
  • Snubbed by West, Russia rolls out red carpet for Asian leaders (Reuters) The Kremlin has seized on the visit by southeast Asian leaders for a summit as an opportunity to show Russia still has friends on the international stage, despite being cold-shouldered by the West over the conflict in Ukraine. Russia has had few chances to host major international gatherings since Western sanctions were imposed, so there has been considerable fanfare around this week’s summit with members of the Association of South-East Asian Nations (ASEAN).
  • Alberta’s Wildfires Couldn’t Have Come at a Worse Time for the Local Economy (Bloomberg) The wildfires raging in Alberta are destined to go down as the most expensive natural disaster in Canada’s history, doing monumental damage to property and the environment in the process. These blazes may have also caused harm to the province’s nascent economic green shoots .
  • S&P downgrades Alberta rating; cites fiscal uncertainty, debt (Reuters) S&P lowered its debt rating for Alberta To ‘AA’ From ‘AA+’ on Thursday, the latest ratings agency to downgrade the Canadian province that has struggled with the impact of tumbling oil prices. The agency, which kept its negative outlook on Alberta, said the downgrade reflects the province’s very weak budgetary performance and high debt burden, which it expects to “increase rapidly” over the next three fiscal years.
  • Valeant Gets Notice of Default From Bondholders on Late 10-Q (Bloomberg) Valeant Pharmaceuticals International Inc. received a notice of default from some of its bondholders because of a delay in filing its first-quarter financial results, the company said Thursday. The notice from creditors started the clock on a 60-day grace period, giving Valeant until July 18 before the bondholders can demand immediate repayment if the company hasn’t filed the statement.


Overnight markets 

  • Overview: US 10yr note futures are down -0.0482% at 129-20, S&P 500 futures are up 0.29% at 2044.75, Crude oil futures are down -0.44% at $47.95, Gold futures are up 0.19% at $1257.2, DXY is up 0% at 95.29.

US Economic Data 

  • 10:00 AM: Existing Home Sales, April, est. 5.40m (prior 5.33m)
    • Existing Home Sales, m/m, est. 1.3% (prior 5.1%)

 Canadian Economic Data 

  • 8:30 AM : Retail Sales. m/m, March, -1.0%, est. -0.6% (prior 0.4%, revised 0.6%)
    • Retail Sales Ex Auto, m/m, March, -0.3%, est. -0.4% (prior 0.2%, revised 0.3%)
    • CPI NSA, m/m, April, 0.3%, est. 0.3% (prior 0.6%)
    • CPI, y/y, April, 1.7%, est. 1.7%, (prior 1.3%)
    • CPI Core, m/m, April, 0.2%, est. 0.1% (prior 0.7%)
    • CPI Core, y/y, April, 2.2%, est. 2.0% (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