cti2015header-morning comments web

Market update

US tsys lower , curve flatter, US 10Y 1.77 (+2.4bps). European equities ~2.0% higher, USD +1.0%, crude 5% higher and gold 1% lower. British pound 2% lower at seven yr low on Brexit fears. HSBC posted an unexpected Q4 loss with the stock down 5.4% yet Euro banks higher, Santander up 3.5%. Euro data o/n showed weaker than exp Eurozone flash PMI for Feb (52.7 vs 53.6). In the US rate hike odds continue to rise since Yellen & last month’s payrolls, the 2Y is at 3 wk high. In Canada, GOCs are lower, flatter with spds unch vs tsys, provis opening 1/2bp tighter on risk on – supply from Alberta, BCMFA, Qc26. New Hydro ones opening small tighter, we are buyers of 10Y Hydone @ 162 (2.5MM). The issue was a relative success considering there was no ‘juicy concession for any of the 3 tranches (maybe 4bps in the 5Y) but issuance was much anticipated (they filed on Feb4th)

News headlines

  • IMF’s Lagarde Says Oil May Stay Low for Longer Than Expected (Bloomberg) Crude prices will probably stay low for longer than expected, International Monetary Fund Managing Director Christine Lagarde said, urging Gulf Arab oil-producing countries to cut spending and boost revenue through new taxes. A value-added tax that’s the same across the six-nation Gulf Cooperation Council should be adopted, Lagarde said in a speech in Abu Dhabi. The measure along with corporate income and property taxes would help raise government income, she said.
  • Oil Glut Will Persist Into 2017 as IEA Sees Prices Capped (Bloomberg) The global oil glut will persist into 2017, limiting any chance of a price rebound in the short term as the surplus takes even longer to clear than previously estimated, according to the International Energy Agency.
  • Pound Slides Most Since 2009 as Johnson Backs ‘Brexit’ Campaign (Bloomberg) The pound fell the most since March 2009 after London Mayor Boris Johnson, one of the U.K.’s most popular politicians, said he’ll campaign for Britain to leave the European Union in a June referendum. Sterling dropped at least 1.2 percent against all its 16 major peers, reversing a gain made on Friday when Prime Minister David Cameron secured a deal on membership terms with EU leaders in Brussels.
  • Europe’s Economy Strains as Global Slowdown Takes its Toll (Bloomberg) The euro area is showing signs of strain from the global slowdown. Weaker growth and deeper price cuts by companies, as captured in a monthly report by Markit Economics published Monday, will raise concerns about the health of the economy. They may also increase pressure on European Central Bank policy makers to add to stimulus at their next meeting in March.
  • Schengen collapse could cost EU up to 1.4 trillion euros over decade (Reuters) A collapse of Europe’s Schengen passport-free travel zone could cost the European Union up to 1.4 trillion euros over the next decade, a study by Germany’s Bertelsmann Foundation showed on Monday.
  • Canadian oil output growth could come to ‘complete standstill’, IEA warns (Financial Post) Canadian oilsands growth is likely to freeze after the projects under construction come on stream as heightened environmental concerns, lack of pipeline access and policy changes slow investment, warned the International Energy Agency.


Overnight markets 

  • Overview: US 10yr note futures are down -0.0955% at 130-25, S&P 500 futures are up 1.06% at 1934.75, Crude oil futures are up 6.11% at $31.45, Gold futures are down -1.75% at $1209.2, DXY is up 0.98% at 97.543.

 US Economic Data 

  • Chicago Fed Nat Activity Index was released at a level of 0.28, beating the estimate by 0.38 points and up from prior month
  • Markit US Manufacturing PMI will be released at 9:45 AM

 Canadian Economic Data 

  • There is no major economic data 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