Market update
Treasuries prices opened weaker, steeper after mkt saw overnight zigzag pattern, 10-year note 1.599%. Then we saw mixed policy signals as Reuters said Japanese government could spend up to Yen 20 Trillion in a stimulus program. European stocks narrowly mixed, ECB left rates unchanged. Tsys trading lower after ECB releases. Bunds saw pre-ECB position tweaking, and also were weighed by supply from France and Spain government debt. Tsys see end user buying of intermediates; official account buying in the Tsys front end. Fast money had mixed flows in the five and ten year notes. Light fast money payers in 2Y, 5Y US swaps. Short end pressured by renewed selling as US$ LIBOR rates again rose to new 7-year highs. Tsy sells a 1pm ET $13B 10Y TIPS auction.
News headlines
- Global stocks nurse nine-month highs before ECB meeting (Reuters) World stocks faded after hitting nine-month highs on Thursday as signals from Japan that its next shot of stimulus won’t include hand-out ‘helicopter money’ cooled the mood. The European Central Bank’s first post-Brexit meeting was due later with expectations that it will keep rates on hold. The European Central Bank’s first post-Brexit meeting was due later with expectations that it will keep rates on hold.
- Kuroda Says No Need and No Possibility for Helicopter Money (Bloomberg) Bank of Japan Governor Haruhiko Kuroda rejected the idea of helicopter money, dousing speculation that this could be the next policy step as prices fall and growth wanes in the world’s third-largest economy.
- Oil steadies as U.S. inventories send mixed signals (Reuters) Oil prices steadied on Thursday after the U.S. Energy Department reported a ninth consecutive weekly drawdown of crude stocks but an overall build in oil inventories. U.S. West Texas Intermediate crude for September delivery CLc1, the new front-month contract from Thursday, was up 12 cents at $45.87 a barrel at 1035 GMT. The August contract expired on Wednesday after rising 29 cents, or 0.7 percent, to settle at $44.94 a barrel.
- Yen touches six-week low, eyes on ECB (Reuters) The dollar touched a six-week high against the yen on Thursday, bolstered by reports of a doubling of initial expectations for economic stimulus from Tokyo and bets that the Bank of Japan (BOJ) will ease policy next week. After sinking briefly below $1.10 on Wednesday, the euro recovered to trade around a quarter of a percent higher on the run-in to an ECB meeting that currency markets seem confident will deliver no great new easing to weaken the currency.
- Brexit Vote Hits Pricing, Not Profits, as Uncertainty Reigns (Bloomberg) The U.K.’s vote to leave the European Union has sown confusion in corporate executive suites, and so far it’s had a greater effect on pricing and planning than on profitability. Engineering giant ABB Ltd., publisher Daily Mail & General Trust Plc and appliance retailer AO World Plc cited rising uncertainty in their quarterly profit reports on Thursday, the busiest day for earnings announcements since the June 23 referendum. Still, consumers are still buying cars, handbags and ice cream, bolstering companies like Daimler AG, Hermes International SCA and Unilever.
- France Demands Explanations From May Over Delays to Brexit Talks (Bloomberg) French President Francois Hollande demanded an explanation from the British government of why it is stalling on its exit from the European Union. Hollande and Irish Prime Minister Enda Kenny called on the U.K. to start the Brexit process as soon as possible and said they both have specific concerns to be addressed during the talks. Britain’s two closest neighbors said their counterpart Theresa May needed to trigger the exit mechanism quickly to allow “orderly negotiations to begin” after a meeting in Dublin Thursday. The French leader returns to Paris to meet with May later in the day.
- Rogers profit beats estimates on wireless, Internet growth (Reuters) Rogers Communications Inc, Canada’s biggest wireless provider by subscribers, posted a better-than-expected quarterly profit as it added more postpaid wireless and Internet subscribers. Rogers added 65,000 postpaid wireless subscribers in the second quarter. Postpaid customers typically use more expensive devices and pay more for service than prepaid subscribers.
Overnight markets
- Overview: US 10yr note futures are down -0.0474% at 131-30, S&P 500 futures are down -0.12% at 2165, Crude oil futures are down -0.28% at $45.62, Gold futures are up 0.11% at $1320.8, DXY is down -0.23% at 96.976.
US Economic Data
- 8:30 AM: Chicago Fed National Activity Index, June, 0.16, est. -0.20 (prior -0.51, revised -0.56)
- Initial Jobless Claims, July 16th, 253k, est. 265k (prior 254k)
- Continuing Claims, July 9th, 2128k, est. 2137k (prior 2149k, revised 2153k)
- Philadelphia Fed Index, July, -2.9, est. 4.5 (prior 4.7)
- 9:00 AM : FHFA House Price Index, May, est. 0.4% (prior 0.1%)
- 10:00 AM: Existing Home Sales, June, est. 5.48m (prior 5.53m)
- Existing Home Sales, m/m, June, est. -0.9% (prior 1.8%)
- Leading Indicator, June, est. 0.2% (prior -0.2%)
Canadian Economic Data
- 8:30 AM: Wholesale Trade Sales, m/m, May, 0.16%, est. 0.2% (prior 0.1%, revised 0.2%)
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