Market Update

US tsys trading weaker, US 10Y 2.206 (+2.4bps), curve ~1bp steeper, US stock index futures higher( emini +6.5), Euro stocks +0.56%.  Core Euro bonds also lower, bunds lagging the decline in tsys by 1bp, supported by the sharp decline in Italian debt, with 10Y BTP ~9bps higher 2.10%, 10Y bund/BTP spd at one-month high.  GOCs sharply lower after July core retail sales +0.7%, GOC 10Y 1.93% (+5.4bps), provis opening unch.

News headlines 

Stocks Rebound in Thin Trading; Gold, Bonds Slide: Markets Wrap (Bloomberg) European stocks joined a rally across most Asian equities following three days of losses, though trading volumes were once again depressed. Havens including gold, the yen and bonds retreated even as the likes of Bridgewater Associates’ Ray Dalio said he was reducing risk.

Oil prices steady ahead of U.S. stocks data (Reuters) Oil prices steadied on Tuesday, supported by signs that global supply may be tightening gradually and restrained by rising U.S. shale production. Benchmark Brent crude LCOc1 was unchanged at $51.66 a barrel by 1120 GMT. U.S. light, sweet crude CLc1 was also unchanged on the day at $47.37.

German economic sentiment drops more than seen (Market Watch) German economic sentiment fell markedly in August, but the general outlook for Europe’s largest economy remains “stable” and relatively solid, the ZEW think tank said Tuesday. The think tank’s measure of economic expectations fell to 10 points from 17.5 points in July, which is below the long-term average of 23.8 points. Economists polled by The Wall Street Journal had forecast a decline to 14.0 points.

UK outlines approach to cross-border legal disputes post-Brexit (Reuters) Britain urged the EU on Tuesday to stick to the existing system for resolving cross-border civil disputes after Brexit, expanding on a list of proposals for future ties to try to nudge talks forward with the bloc.

Japan urges pressure on North Korea, military to seek record defense spending (Reuters) Japan’s new foreign minister Taro Kono said on Tuesday international pressure against North Korea must be maintained until Pyongyang clearly demonstrates that it will give up its nuclear program.

Lithium Is Getting Harder to Extract (Bloomberg) Hidden within the salt flats high in the Andes mountains of South America are vast deposits of the lithium that Elon Musk may need for his electric-car revolution. But extracting the mineral from brine ponds created by Orocobre Ltd. has proved more difficult than expected.

Overnight markets 

Overview: US 10yr note futures are down -0.185% at 126-20, S&P 500 futures are up 0.31% at 2435.5, Crude oil futures are down -0.11% at $47.32, Gold futures are down -0.43% at $1291.1, DXY is up 0.41% at 93.473, CAD/USD is down -0.14% at 0.7974.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.276% 2 Year 1.322%
5 Year 1.545% 5 Year 1.782%
10 Year 1.932% 10 Year 2.208%
30 Year 2.333% 30 Year 2.781%

US Economic Data 

9:00 AM FHFA House Price Index, m/m, Jun, est. 0.5% (prior 0.4%)
House Price Purchase Index, 2Q, (prior 1.4%)
10:00 AM Richmond Fed Manufacturing Index, Aug, est. 10 (prior 14)

Canadian Economic Data

8:30 AM Retail Sales, m/m, Jun, 0.1%, est. 0.2% (prior 0.6%, revised 0.5%)
Retail Sales Ex Auto, m/m, Jun, 0.7%, est. 0.1% (prior -0.1%)


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
Fax: (514)-861-3230