cti2015header-morning comments web

Market update

Both UST and GoC bond yields are trading 1-2 bps higher after another quiet overnight session, with the curve a touch steeper as the longer-end of the curve underperforms. The yield on the benchmark 2Y was last trading at 0.702%, with the 5Y at 1.125%, the 10Y at 1.565% and the Bond at 2.281%. The 2/10-yr curve was last at 86.1 bps, with 2/30s at 157.8 bps. After a busy start to the week, our long end was relatively quiet with only a couple accounts picking away in cash 30s in small size. Dollarama issued $450mm 5-year and there were rumors of a BNS USD 3-year tap (ba/libor offered by .25-.75 bps again led by the front end). ross-border trade saw the 10-yr US/German spread at 160 bps. Donald Trump was confirmed as the 2016 Republican presidential candidate last night at the Republican Convention with Mike Pence confirmed as his running mate for Vice-President.

News headlines

  • Stocks Gain With S&P 500 Futures on Earnings as Treasuries Drop (Bloomberg) Positive earnings set the tone for equity markets while the dollar traded at a seven-week high as speculation grew the U.S. will raise interest rates this year. Technology companies and carmakers led the Stoxx Europe 600 Index higher after earnings from software maker SAP SE and Volkswagen AG beat analysts’ estimates. U.S. stock futures signaled shares will approach all-time highs, the dollar advanced for a second day against the euro while Treasuries declined. The lira fluctuated near a record-low as the country’s president vowed to make an “important” announcement in the wake of a failed coup attempt. Gold headed for the lowest close this month.
  • Oil edges up in subdued trade before U.S. stocks data (Reuters) Oil prices edged higher on Wednesday in muted trading as investors awaited a clearer signal from weekly U.S. crude inventory data on whether a glut was easing in the world’s largest oil-consuming nation. Global benchmark Brent crude prices LCOc1 were up 20 cents at $46.86 a barrel at 0947 GMT. On Tuesday, the contract settled down 30 cents, or 0.6 percent.
  • K. Unemployment Falls Below 5% for First Time Since 2005 (Bloomberg) The U.K. labor market showed continued strength before the country’s decision to leave the European Union. The unemployment rate fell to 4.9 percent in the three months through May, the lowest since the third quarter of 2005, the Office for National Statistics in London said on Wednesday. Economists in a Bloomberg survey had expected the rate to stay at 5 percent. The number of people in work rose 176,000, the most this year, to a record 31.7 million.
  • Bank of England sees no clear evidence of sharp Brexit hit yet (Reuters) The Bank of England said it saw « no clear evidence » that a sharp economic slowdown was yet under way after last month’s vote to leave the European Union, though there were signs investment and hiring were being put on hold. The BoE’s regional agents – who are spread around Britain and speak regularly with companies – said on Wednesday that business uncertainty « had risen markedly » but there was little evidence so far that consumers were spending less.
  • Brookfield plans $1-billion investment in Indian distressed assets (GlobeMail) Canada’s Brookfield Asset Management Inc plans to invest about $1-billion in Indian distressed assets through a joint venture with the largest lender in the South Asian nation where banks are battling a record $120-billion of sour debt. Brookfield and State Bank of India have signed a preliminary agreement to set up a joint venture for the investments, the firms said on Wednesday. SBI aims to contribute up to 5 per cent of the total investments targeted by the venture, which may also rope in other banks at a later stage, they said.
  • Dollar index at 4-month high on strong U.S. data, Fed hike hopes (Reuters) The dollar hit a four-month high against a basket of currencies on Wednesday, bolstered by strong U.S. data and growing expectations that the Federal Reserve may raise rates before the end of the year. Commerce Department data showed U.S. housing starts surged 4.8 percent, underpinning a theme of strength in the economy.
  • Canada the G7 dark horse as IMF projects improved growth in 2017 (Financial Post) As the International Monetary Fund cuts its global forecast for the next two years and warns of more fallout from Brexit, Canada is projected to emerge as a dark horse among the world’s advanced economies — at least in the short term. The IMF predicts Canada will bounce from being the third-slowest-growing G7 economy in 2016 to be second strongest — behind only the U.S. — in 2017, according to an outlook released Tuesday, which revised projections from the Washington-based organization’s last report in April.


Overnight markets                                                                     

  • Overview: US 10yr note futures are down -0.1063% at 132-3, S&P 500 futures are up 0.22% at 2163.5, Crude oil futures are down -0.2% at $44.56, Gold futures are down -1.03% at $1318.6, DXY is up 0.01% at 97.069.

US Economic Data

  • There is no major economic data for today

Canadian Economic Data

  • There is no major economic data for 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230