Treasuries see some mild flatteners going on. The data today include the 9:45am ET flash July Markit Manufacturing index, then there is the June BLS state payrolls and then the 3pm ET July auction Treasury allotments. Today, positions have achieved better balance, and yields are up on good overnight flows. That balanced description fits global markets as well, with the exception of Asian equities that can’t seem to join the July party.” He adds the “most active trading in 10-yr UST remains concentrated just under 1.60%. excellent participation on the 10-yr TIPS auction Thursday confirmed the large buying that developed about 90 minutes before the sale, the same time oil prices stumbled despite a weaker dollar.
- European Stocks Decline as Commodities Retreat; Pound Slides (Bloomberg) European stocks fell and the pound slid as reports showed the first signs of economic weakness in the wake of the U.K. vote to leave the European Union. The Stoxx Europe 600 Index retreated for a second day after the euro area’s service sector cooled in July while the pound dropped for the first time in three days after business activity in Britain shrank at its fastest pace since the financial crisis. A gauge of commodities fell for a sixth day. The dollar gained.
- Goldman Sees Significant Jump in China June Capital Outflows (Bloomberg) China’s weakening currency has triggered an increase in the amount of cash leaving the country, according to analysis by Goldman Sachs Group Inc. The U.S. bank estimates $49 billion worth of foreign-exchange outflows in June, compared with $25 billion in May. Goldman’s analysis came after China’s top currency regulator released data showing sustained demand for foreign-exchange. The yuan fell 1.1 percent against the dollar and 2.2 percent versus a trade-weighted index last month.
- Crude oil prices face weekly decline as glut fears persist (Reuters) Crude futures were on track for weekly losses on Friday as investors reassessed U.S. data on oil stocks and excesses in oil products in Europe and Asia. While many expect global oversupply of oil to ease in the near term, huge amounts of crude remain in vessels at sea and storage tanks on land as the rebalancing takes longer than some had anticipated.
- Britain’s economy wilting fast after Brexit vote, may prompt more spending (Reuters) Britain’s economy is shrinking, the broadest survey of business confidence since last month’s historic vote to quit the European Union showed on Friday, piling pressure on new Prime Minister Theresa May’s government to soften the impact.
- Moody’s calls for energy executive salaries to reward value preservation rather than growth (FinancialPost) Executive compensation in the oil and gas industry is heavily pegged to achieving growth, but Moody’s Investors Services says the model is outdated given the sector’s “pessimistic” outlook and needs an overhaul.
- Japan’s CPI seen falling again in June, more headaches for BOJ (Reuters) Japan’s consumer prices were expected to fall in June for the fourth straight month, a Reuters poll found, keeping alive market expectations the central bank will expand an already massive stimulus program to hit its 2 percent price goal. Separate data next week is also expected to show exports slumped in June from a year earlier, a sign the economy is suffering from the hit from a strong yen and global uncertainties after Britain’s vote to leave the European Union.
- Euro zone business growing at weakest rate since start of 2015: PMI (Reuters) Euro zone business growth was at its slowest since the start of 2015 this month as stronger performances in the two big economies of Germany and France offset weakness in smaller countries, a survey showed on Friday. While the survey result was not as weak as predicted in a Reuters poll, the slight loss of momentum may be of concern to policymakers at the European Central Bank who have been trying to stimulate faster growth.
- Overview: US 10yr note futures are down -0.1772% at 132-0, S&P 500 futures are up 0.15% at 2161.25, Crude oil futures are up 0.29% at $44.88, Gold futures are down -0.59% at $1323.1, DXY is up 0.11% at 97.107.
US Economic Data
- 9:45 AM: Markit US manufacturing PMI, July, est. 51.5 (prior 51.3)
Canadian Economic Data
- 8:30 AM: Retail Sales, m/m, May, 0.2%, est. 0.0% (prior 0.9%, revised 0.8%)
- Retail Sales Ex Auto, m/m, May, 0.9%, est. 0.3% (prior 1.3%)
- CPI NSA, m/m, June, 0.2%, est. 0.1% (prior 0.4%)
- CPI, y/y, June, 1.5%, est. 1.4% (prior 1.5%)
- CPI Core, m/m, June, 0.0%, est. -0.1% (prior 0.3%)
- CPI Core, y/y, June, 2.1%, est. 2.0% (prior 2.1%)
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