cti2015header-morning comments web

Market update

Tsys trading in narrow range o/n, with better tone in European hours on uptick in bunds, US 10Y 1.93 (-1bp). GOCs opening unch, curve 1bp flatter.  European stocks higher for a second day, the USD index is higher vs majors while commodities mostly lower and. Yesterday Cda/US narrowed 4bps as the safe haven bid in tsys quickly evaporated in N.A. hrs amid firmer stocks, stronger Phili Fed nonmfg, and hawkish comments from Fed Evans. The GOC curve flattened quickly post budget as increased issuance will impact the 2-5Y sector disproportionately. Gross bond issuance will increase by $41bln to $133bln (est 120-125bln), with increases along all sectors including an additional 10Y auction and a new 3Y. 2Y auction today will test demand for the sector post budget. Provis opening unch, Ont & QC poss today as well as a long muni rumoured.

News headlines

  • Europe recovers from Brussels-driven losses (Reuters) European stock markets bounced back on Wednesday from the concerns over security that have dominated the past 24 hours, helped by a handful of more positive signals on the health of the world’s major economies. Some Asian markets fell earlier in subdued trading as investors pulled back on positions ahead of the long Easter weekend, opting for caution following the suspected Islamic State suicide bomb attacks in Brussels.
  • Futures little changed day after Brussels attacks (Reuters) U.S. stock index futures were little changed on Wednesday as investors remained cautious a day after the attacks in Brussels and ahead of the Good Friday market holiday. Signs of improving business sentiment at the world’s major economies helped European markets recover, but Asian shares fell as investors backed away from risk.
  • Oil slips after U.S. stock build reasserts glut concerns (Reuters) Oil prices eased on Wednesday after figures from an industry group showed U.S. crude stockpiles rose last week by more than expected, reinforcing concerns that a global glut continues unabated. U.S. crude futures fell 33 cents to $41.12 a barrel by 0945 GMT. Prices struck a 2016 high of $41.90 in the previous session. The contract has rebounded more than 50 percent after hitting its lowest since 2003 in February.
  • OPEC, Russia oil output freeze deal may be ‘meaningless’: IEA (Reuters) A deal among some OPEC producers and Russia to freeze production is perhaps « meaningless » as Saudi Arabia is the only country with the ability to increase output, a senior executive from the International Energy Agency (IEA) said on Wednesday. Brent crude futures are up more than 50 percent from a 12-year low near $27 a barrel hit early this year, bouncing back after Russia and OPEC’s Saudi Arabia, Venezuela and Qatar struck an agreement last month to keep output at January levels.
  • German cabinet approves balanced budget plans up to 2020 (Reuters) The German cabinet on Wednesday approved financing plans that include increasing spending by more than 30 billion euros ($33.56 billion) up until 2020 while sticking to a balanced budget. An influx of 1.1 million migrants last year raised questions about whether Germany could cover the cost of accommodating and integrating the newcomers without jeopardizing its cherished balanced budget.
  • Trudeau Tackles Economy Head on With C$120 Billion in Deficits (Bloomberg) As an opposition lawmaker in Canada’s parliament seven years ago, Justin Trudeau criticized former Prime Minister Stephen Harper for making government “totally absent from the defining issues of our time.” In his first budget as prime minister released Tuesday, Trudeau put the federal government back at the center of the nation’s economy with almost C$120 billion ($92 billion) in accumulative deficits and the biggest jump in spending since the 2009 recession.
  • British ‘Out’ campaign takes 2 percentage point lead ahead of EU referendum – ICM poll (Reuters) The campaign for Britain to leave the European Union has taken a 2 percentage point lead, according to an ICM poll, indicating a dispute in the Conservative Party may have dented confidence in Prime Minister David Cameron’s push for the country to stay in. Support for Britain to leave the EU rose to 43 percent, up 2 percentage points from a similar poll a week ago and the highest proportion in favour of a British exit since ICM started its referendum tracker in May 2015.
  • Bank of Thailand Keeps Rates Unchanged at 1.5% (Bloomberg) Thailand’s central bank kept its key interest rate unchanged for a seventh straight meeting and said it stands ready to curb volatility in the baht as the country seeks to avoid a fourth straight year of export contraction. The Bank of Thailand held its one-day bond repurchase rate at 1.5 percent, with Monetary Policy Committee members voting unanimously in favor, it said on Wednesday.
  • In era of cheap oil, Saudi loses shine for foreign workers (Reuters) Mobarak Musa, a mobile telephone salesman from Syria, has spent 10 years working in Saudi Arabia, sending part of his wages back home to support his parents and three brothers. A shift in Saudi labor policy means he won’t be able to do so for much longer.

Overnight markets 

  • Overview: US 10yr note futures are up 0.0243% at 128-27, S&P 500 futures are up 0.04% at 2043.25, Crude oil futures are down -0.63% at $41.19, Gold futures are down -1.44% at $1230.6, DXY is up 0.29% at 95.922.

US Economic Data 

  • MBA Mortgage Applications variation was -3.3% from prior period.
  • New Home Sales will be released at 10:00 AM
  • New Home Sales MoM variation will be released at 10:00 AM

Canadian Economic Data 

  • New Home Sales MoM variation will be released at 10:00 AM


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