Market Update Tsys trading unch to slightly lower at the front end, 10Y 2.82%, narrow range in TY futures o/n on abpve avg volume (385k). Second tier data today: claims and FHFA home price. Focus on Jackson Hole and Fed chair Powell testimony Friday morning. Core EGBs unch, peripherals wider, Italian 10Y BTP/Bund spd 5bps wider. GOCs also unch, no big data until next Thursday’s June GDP (0.5% exp). CIBC Q3 eps rose 25% to $3.08 vs $2.93 exp, raised its dividend to $1.36 from $1.33.
News headlines
Fed Debate on Risks Intensifies Around Post-September Rate Hikes (Bloomberg) As U.S. central bankers prepare to raise borrowing costs next month, their discussion about how high to lift their target interest rate is intensifying. Their forecasts call for strong labor markets and robust growth at a time when inflation is already slightly above their goal. At the same time, there are potential headwinds from trade disputes, waning fiscal stimulus and the lurking danger of financial instabilities that tend to build up over long periods of low policy rates during lengthy expansions.
Euro-Area Growth Stays Strong as ECB Plans to Ease Stimulus (Bloomberg) The euro-area economy showed it’s still robust as the European Central Bank prepares to wind down its bond- purchase program. IHS Markit’s composite index of manufacturing and services increased to 54.4 in August from 54.3. Economists surveyed by Bloomberg had predicted a reading of 54.5.
U.K. Net Immigration Declines as EU Workers Stay Away (Bloomberg) Net migration from the European Union to the U.K. slipped to its lowest level since 2012 as the number of nationals from the bloc working in the country fell the most on record, the Office for National Statistics said Thursday. Around 90,000 more EU citizens came to the U.K. than left in the year ending March 2018, the ONS said in a report, with fewer arriving in Britain for work. Much of the drop comes from people from western European countries coming to the U.K. for a definite job.
Dollar Advances Before Jackson Hole; Stocks Flat: Markets Wrap (Bloomberg) The dollar rallied for the first day in six as investors awaited a meeting of global central bankers after the Federal Reserve signaled no change to its pace of monetary policy tightening. U.S. equity futures and Treasuries were little changed. The greenback climbed against most of its peers after the Fed indicated in meeting minutes a readiness to increase rates again if the economy stays on track, although the currency gave back some of the advance after President Donald Trump said in an interview that he thought the market would crash if he got impeached. Among the biggest losers from the dollar’s surge were South Africa’s rand, which slumped after a tweet from Trump fueled speculation of possible sanctions against the country, and the Australian dollar, which is under pressure as Prime Minister Malcolm Turnbull fights to keep his leadership.
U.S.-China trade war escalates as new tariffs kick in (Reuters) The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25 percent tariffs on $16 billion worth of each other’s goods, even as mid-level officials from both sides resumed talks in Washington. The world’s two largest economies have now slapped tit-for-tat tariffs on a combined $100 billion of products since early July, with more in the pipeline, adding to risks to global economic growth.
CIBC raises dividend as profit soars 25% to $1.37B in third quarter (BNN) Canadian Imperial Bank of Commerce has matched the bar set by RBC a day earlier by reporting a big profit beat and a richer dividend for shareholders. CIBC’s net income surged 25 per cent year-over-year to $1.37 billion in its fiscal third quarter ending July 31. On an adjusted basis, the bank earned $3.08 per share. Analysts, on average, were expecting $2.93. The bank also said it will raise its quarterly payout to $1.36 per share from $1.33 per share.
Alibaba’s revenue jumps 61% as investments bolster sales (BNN) Alibaba Group Holding Ltd. (BABA.N) reported a 61 per cent rise in quarterly sales as the e-commerce giant’s investment in cloud computing, entertainment and groceries spurred new avenues of income. Revenue at China’s biggest e-commerce company climbed to 80.9 billion yuan (US$11.8 billion) in the three months ended June, matching the average of estimates compiled by Bloomberg. It said net income slid 41 per cent to 8.7 billion yuan, topping the 7.6 billion yuan projected after taking into account an increase in affiliate Ant Financial’s valuation. Adjusted earnings per share came in at 8.04 yuan, versus the 8.19 yuan estimate.
Overnight markets
Overview: US 10yr note futures are down -0.013% at 120-20, S&P 500 futures are down 0% at 2861.25, Crude oil futures are up 0.18% at $67.98, Gold futures are down -0.5% at $1197.3, DXY is up 0.08% at 95.226, CAD/USD is up 0.26% at 0.7672.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.117% | 2 Year | 2.602% |
| 5 Year | 2.205% | 5 Year | 2.711% |
| 10 Year | 2.262% | 10 Year | 2.823% |
| 30 Year | 2.266% | 30 Year | 2.983% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Aug 18th est 215k (212k prior) |
| Continuing Claims, Aug 11th est 1730k (1721k prior) | |
| 9:00 AM | FHFA House Price Index MoM, Jun est 0.3% (0.2% prior) |
| House Price Purchase Index QoQ, 2Q (1.7% prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Aug 19th (58.9 prior) |
| Markit US Manufacturing PMI, Aug est 55.0 (55.3 prior) | |
| Markit US Services PMI, Aug est 55.8 (56.0 prior) | |
| Markit US Composite PMI, Aug (55.7 prior) | |
| 10:00 AM | New Home Sales, Jul est 645k (631k prior) |
| New Home Sales MoM, Jul est 2.2% (-5.3% prior) | |
| 11:00 AM | Kansas City Fed Manf. Activity, Aug est 23 (23 prior) |
Canadian Economic Data
There is no Canadian economic data 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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230