cti2015header-morning comments web

Market Update

Tsys firmer, curve flatter with the long end outperforming, yields 1-2bps lower, with the 10Y 2.411 (-1.8bps).  Heavy volume in TY futures (508K) with a slight fade in Asia and rally in Europe  on safe haven buying related to French election and weaker Q4 UK GDP (2..0% y/y vs 2.2% exp). French risk sent 2Y German yields to new record lows at -0.915%,  the France 5Y hit 0.20% before reversing 7bps to 0.13% on new poll which showed Le Pen losing ground. The US auctions $34bln in 5Y notes at 1:00Pm with the 2Y FRN sale at 11:30. GOCs gaining ground after very disappointing retail sales for Dec -0.5% vs 0.0% exp with ex-autos weaker as well -0.3% vs 0.5% exp. Provis well bid after better Ontario deficit numbers released yest, Ontarios trading up late yest afternoon.

News headlines 

Euro Slips, Bonds Gain as Investors Turn Cautious: Markets Wrap (Bloomberg) The euro extended declines and bonds rose as European political risk ensured an ongoing demand for havens. The dollar edged higher before the release of Fed minutes.

Oil Slips From One-Week High as Focus Returns to OPEC Cuts (Bloomberg) Oil fell from the highest price in more than a week amid speculation about the effectiveness of OPEC’s supply curbs and forecasts for another expansion in U.S. crude stockpiles. Futures dropped 0.6 percent in London, ending three days of gains.

China home price growth cools for 4th straight month as government curbs bite (Reuters) China’s home price growth slowed for the fourth straight month as demand cooled further in its biggest cities, a welcome sign for policymakers as they seek to defuse bubbles in the world’s second-largest economy amid an explosive growth in debt.

Eurozone finally escapes deflation in January (Market Watch) For the first time in almost four years, none of the eurozone’s 19 members was in deflation during January, an encouragement to the European Central Bank in its long struggle to lift inflation to its target and keep it there.

German Ifo Sentiment Rises as Bundesbank Sees Growth Pickup (Bloomberg) German business confidence unexpectedly improved, underpinning the Bundesbank’s prediction that economic growth strengthened at the start of the year. The Munich-based Ifo institute’s business climate index rose to 111 in February from a revised 109.9 in January. That compares with a median estimate of 109.6 in a Bloomberg survey of economists.

Sterling hits two-month high versus euro ahead of GDP breakdown (Reuters) Sterling gained another 0.4 percent against the euro in early trade in London on Wednesday, extending a run to two-month highs in the previous session driven by French political nerves.

Bell-MTS approval could influence potential Quebecor-Shaw spectrum deal, analysts say (Financial Post) An apparent easing in the federal government’s policy aimed at encouraging four national wireless careers raises the question of whether Quebecor Inc. will sell its non-core spectrum to Shaw Communications or wait for a better offer from the Big Three.

Overnight markets 

Overview: US 10yr note futures are up 0.1879% at 124-30, S&P 500 futures are down -0.11% at 2357.5, Crude oil futures are down -0.64% at $53.98, Gold futures are up 0.1% at $1240.1, DXY is up 0.21% at 101.58, CAD/USD is up 0.42% at 0.7577.

US Economic Data

8:30 AM Retail Sale, m/m, Dec, -0.5%, est. 0.0% (prior 0.2%, revised 0.3%)
  Retail Sales Ex Auto, m/m, Dec, -0.3%, 0.5% (prior 0.1%, revised -0.1%)

Canadian Economic Data

10:00 AM Existing Home Sales, m/m, Jan, est. 1.1% (prior -2.8%)
14:00 AM FOMC Meeting Minutes release from Jan 31-Feb 1 meeting


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