cti2015header-morning comments web

Market Update

US tsys firmer, yields 1-2 bps lower led by the 7Y , longs lagging. Tsy sec Mnuchin interviewd on CNBC said tax reform is a priority, yet wont impact economy until next yr. Mnuchin also daid it ‘makes sense’ to look at issuing a 50 year tsy bond. US tsy auctions @ $28bln 7Y bonds with the WI ~2.22%, 6bps richer than the prior auction. French bonds are outperforming, yields 4-6bps lower related to yest news of coalition between centrist politician Bayrou and Macron. Atlanta Fed Lockhar saying 2-3 rate hikes is appropriate for this yr.  Fed funf futures mkts are pricing in 36% odds of a rate hike in March vs 32% at the start fo the month. The odds of two hikes before y/e has barely risen despite the hawkish fed rhetoric of late, currently standing at ~25%. GOCs higher, curve 2bps flatter led by 10s, the 10Y ~4bps lower @ 1.68% . Provi spds well bid this morning, Ontarios trading up in 10s & longs , Ont 26s @ 75 – 3bps tighter on the week after Q3 update expecting a $1.9bln deficit for theis FY vs over $4.0bln initially projected, the lowest since the 2008 econ crisis.

News headlines 

Investors Weighing Earnings, Fed Hit Pause Button: Markets Wrap (Bloomberg) Markets largely entered a holding pattern Thursday, with global equities mixed and the dollar edging higher as investors digested a fresh batch of European corporate earnings, the latest twists in the French election and minutes from the Federal Reserve. Oil climbed.

French Bonds Rally After Macron Boosts Presidential Campaign (Bloomberg) French government bonds led gains in Europe after independent candidate Emmanuel Macron agreed to an alliance with his centrist rival Francois Bayrou, boosting his bid to become president.

UK economy picks up in late 2016 but signs of Brexit hit appear (Reuters) Britain’s economy sped up at the end of 2016, data showed, but over the whole year it was weaker than previously thought and there were signs that the Brexit vote will increasingly act as a brake on growth in 2017.

Tax, Borrow or Wait? Something’s Got to Give in Trudeau’s Budget (Bloomberg) Justin Trudeau’s embrace of deficits won him accolades from global investors and policy makers, but not a full year into his first budget and Canada has run out of fiscal runway.

Exxon revises down oil and gas reserves by 3.3 billion barrels (Reuters) U.S. oil major Exxon Mobil Corp has revised down its proved crude reserves by 3.3 billion barrels of oil equivalent as a result of low oil prices throughout 2016, a company filing showed on Wednesday.

CIBC kicks off big bank results with profit boost, dividend hike (TheGlobeAndMail) Canadian Imperial Bank of Commerce reported higher profit of $1.4-billion for its fiscal first quarter, boosted in part by the sale of real estate properties. Adjusted to exclude certain items, CIBC’s profit was up 13 per cent to nearly $1.2-billion, or $2.89 per share, ahead of analysts’ expectations of $2.57 a share.

Overnight markets 

Overview: US 10yr note futures are up 0.2% at 125-01, S&P 500 futures are up 0.17% at 2365, Crude oil futures are up 2.05% at $54.69, Gold futures are up 1.26% at $1248.8, DXY is down -0.17% at 101.05, CAD/USD is down -0.55% at 0.7638.

US Economic Data

8:30 AM Chicago Fed Nat Activity Index, Jan, -0.05,  est. 0.00, (prior 0.14, revised 0.18)
  Initial Jobless Claims, Feb 18, 244k, est. 240k, (prior 239k, 238k)
  Continuing Claims, Feb 11, 2060k, est. 2068k, (prior 2076k, revised 2077k)
9:00 AM House Price Purchase Index, 4Q, (prior 1.5%)
  FHFA House Price Index, m/m, Dec, est. 0.5% (prior 0.5%)
11:00 AM Kansas City Fed Manufacturing Activity, Feb, est. 9 (prior 9)

Canadian Economic Data

7:30 AM CFIB Business Barometer, Feb, est. 62.9 (prior 60.1)


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