cti2015header-morning comments web

Market Update

US tsys little changed in narrow overnite range, US 10Y 2.562 (+0.4bps) . Tsys were bid higher in Europe on Italian/Spanish banking news, as Monte Paschi fell to a new low on concerns over a capital raise. Spanish banks will have to repay  ~E4bln to mortgage customers after a ruling by the EU court. The Euro Stoxx index is down 0.44% while Spanish govt bond yields are 3-4 bps higher. Crude paring gains, trading $53.44 after API data showed inventories fell 4.15mln barrels vs 2.5mln expected. GOCs lower inline with tsys, the 10Y below 1.80%. The BOC auctions $3.9bln in Feb 19s at noon with the F19/2Y roll 0.1bps wider at 2.7/2.6 – the top of the three month range yet consistent with the 7bp steepening in 2s5s. Two year yields are 10bps higher since the last auction on Nov 30th which is supportive as near term econ data – namely CPI/ retail sales is expected to reinforce the BOC’s patient outlook for policy, made more apparent in last week’s FSR which noted heightened risks to household indebtedness.

News headlines

Futures little changed after Dow, Nasdaq hit records (Reuters) U.S. stock index futures were little changed on Wednesday, a day after the Nasdaq Composite Index and Dow Jones Industrial Average hit record highs, with the blue-chip index closing just 25 points shy of the 20,000 mark. Investors have said that breaching 20,000 could mean that a recent rally on Wall Street would continue. The Dow, first calculated in 1896, hit 10,000 in 1999.

Oil prices lifted by expected fall in U.S. inventories (Reuters) Oil rose on Wednesday, driven by expectations for a decline in U.S. crude inventories and bringing price gains for December to 10 percent, which would be the strongest performance in the final month of the year in six years.

Russia says trust needed for global oil output deal to be success (Reuters) Trust between oil producing countries is important if a global deal to curtail output is to succeed, Russian Energy Minister Alexander Novak said on Wednesday. Earlier this month, OPEC and non-OPEC oil producers led by Russia signed a deal to cut oil output by almost 1.8 million barrels per day in order to prop up weak prices.

Monte dei Paschi says could run out of liquidity after four months (Reuters) Ailing Italian bank Monte dei Paschi di Siena (BMPS.MI) expects to burn through around 11 billion euros (9.29 billion pound) of liquidity more quickly than previously forecast, an updated document on the bank’s website showed on Wednesday.

Dollar retreats from 14-year high, Swedish crown has best day in six months (Reuters) The dollar took a breather on Wednesday after reaching a 14-year high the previous day, while the Swedish crown chalked up its biggest rise in six months after the Riksbank voted to ease policy further only by the narrowest of margins.

Trudeau Joins Obama in Freezing Arctic Offshore Oil Drilling (Bloomberg) President Barack Obama banned new offshore oil and gas drilling in more than 100 million acres of the U.S. Arctic and undersea canyons in the Atlantic Ocean, a move certain to provoke a fight with the Republican-led Congress and his successor in the White House.

Overnight markets                                                                     

Overview: US 10yr note futures are up 0.1269% at 123-9, S&P 500 futures are down -0.01% at 2266.25, Crude oil futures are up 0.32% at $53.47, Gold futures are up 0.33% at $1137.3, DXY is down -0.44% at 102.84, CAD/USD is down -0.03% at 0.7483.

US Economic Data

7:00 AM MBA Mortgage Applications, Dec 16, 2.5%, (prior -4.0%)
10:00 AM Existing Home Sales, Nov, est. 5.50m (prior 5.60m)
Existing Home Sales, m/m, Nov, est. -1.8% (prior 2.0%)

Canadian Economic Data 

There is no major economic news 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