Market Update
US tsys opening slightly weaker out the curve on light volume, 10Y 2.16%, pressured lower with EGBs. UK gilts lower, curve 3bps flatter on hawkish comments from BOE Forbes hat there shouldn’t be delay in raising rates, 2Y gilt 3bps higher @ 0.24% highest since last Nov. Short sterling heavy selling volume in whites/reds (proxy for 2Y). GOCs higher, steeper after CPI came in below exp 0.1%/1.5% vs 0.2%/1.5% exp – CGBs spiked higher but have since retraced most of the move, while the short end is well bid, CAD reeling on the news 1.33 vs 1.3233 cls.
News headlines
European Shares Struggle; Oil Holds Weekly Loss: Markets Wrap (Bloomberg) European equities slipped, extending the longest run of weekly losses in a year as U.K.-listed stocks struggled on the anniversary of Britain’s vote to leave the European Union. Oil was poised for a fifth week of decline as a supply glut shows no sign of ending.
Oil slide muddies inflation outlook, weighs on stocks (Reuters) World stocks struggled to hold onto earlier gains on Friday and were poised for a flat end to the week following another wobble in energy shares, while a tentative bounce in oil prices helped commodity-related currencies gain against the dollar.
Forget euro zone breakup, sterling now deemed riskier (Reuters) For years the options market that companies and investors use to hedge against big swings in currencies viewed the euro as a bigger political and structural risk than Britain’s pound. In the political and market turmoil immediately before and following Britain’s decision last June to leave the European Union, financial market investors flipped their long-held bias against the euro and now expect sterling to be the riskier party for years to come.
Britain’s finance industry warns of threat from Brexit law changes (Reuters) Britain’s finance industry will warn the government next week to limit ministers’ powers to change legislation when it begins the mammoth task of converting European Union laws into domestic legislation in preparation for its exit from the bloc, according to a draft report seen by Reuters.
Buffett’s Home Capital Bet Backs Turbulent Canada Housing Market (Bloomberg) Warren Buffett’s deal to back Home Capital Group Inc. does more than support a struggling mortgage lender — it’s a vote of confidence for a housing market that everyone from investors to global ratings companies say is a bubble ready to burst.
Canada Ponders an Unusual Drug Problem: a Shortage of Marijuana (Bloomberg) The biggest challenge for Justin Trudeau’s forthcoming legal recreational marijuana market is a shortage of pot, the finance minister of Canada’s most-populous province says.
Overnight markets
Overview: US 10yr note futures are up 0.037% at 126-23, S&P 500 futures are up 0.06% at 2433.25, Crude oil futures are up 0.35% at $42.89, Gold futures are up 0.72% at $1258.4, DXY is down -0.23% at 97.365, CAD/USD is up 0.45% at 0.7522.
US Economic Data
| 9:45 AM | Markit US Manufacturing PMI, Jun P, est. 53.0 (prior 52.7) |
| Markit US Service PMI, Jun P, est. 53.5 (prior 53.6) | |
| Markit US Composite PMI, Jun P, (prior 53.6) | |
| 10:00 AM | New Home Sales, May, est. 590k (prior 569k) |
| New Home Sales, May, m/m, est. 3.7% (prior -11.4%) |
Canadian Economic Data
| 8:30 AM | CPI NSA, m/m, May, 0.1%, est. 0.2% (prior 0.4%) |
| CPI, y/y, May, 1.3%, est. 1.5% (prior 1.6%) |
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