Market update
US Tsys lower/steeper, futures underperforming on avg volume. Big story overnight was Caixin flash China PMI was disappointing at 47, lowest since March 2009 and vs expectations of 47.5 but despite weaker Sep EZ flash PMIs the spin was that Q3 EZ growth was .4%, making it the best qtr in 4-yrs. Most global stocks up save Mexico, Brazil, Nikkei and China. Commodities bouncing, EGBs lower, EU peripheral spds behaved, USD mixed (lower vs EUR, CAD, SEK and NOK) MBS tighter, US Swaps wider. Overnight in Tokyo, Tsys opened flat and meandered down but spiked while equities tanked on the Caixin PMI data but on low volume. In London, Tsys ebbed from the getgo, led by weaker European bond mkts. This mostly on not as bad as feared PMI data. France Markit mftg PMI Sept flash 50.4 vs 48.6 exp, German Sep Services PMI 54.3 vs exp 54.5, German Sep Mfg PMI 52.5 vs exp 52.6, German Markit New Orders And Employment were up, Markit Sep EZ Mfg PMI 52.0, on tgt but below prior at 52.3, Markit Sep EZ Services PMI 54.0, below exp of 54.2 and prior 54.4. Elsewhere, Deutsche Bank lower DAX target for yr end ’15 & ’16 to 10300 & 11200. Today Lockhart speaks at 12:30. Auctions include $13B 2Y RO FRN and $35B 5Y. (MNI)
News headlines
- China manufacturing contracts at fastest pace in more than 6 years (FT) China’s crucial manufacturing sector is having its worst month since the depths of the global financial crisis in early 2009, according to a preliminary reading of a closely watched factory survey. The flash reading of the Caixin China general manufacturing purchasing managers’ index dropped to 47 points in September, down from 47.3 in August, marking the worst performance for the sector in 78 months.
- Eurozone Economy Slows Moderately in September. (WSJ) Surveys of purchasing managers show that Chinese weakness hasn’t had a big impact in the Eurozone. Activity in the eurozone’s manufacturing and services sectors slowed moderately in September, although there were few signs that a weaker outlook for China and some other large developing economies is undermining the currency area’s modest recovery.
- Alexis Tsipras Appoints New Greek Cabinet Much Like the Old (NYTimes) Greece’s newly re-elected prime minister, Alexis Tsipras, decided on Tuesday on a new cabinet with few new faces and returned the critical job of finance minister to Euclid Tsakalotos, the low-key economist who made headway with his eurozone peers in bailout negotiations. Under pressure from Greece’s European partners to start work on a barrage of economic reforms underpinning the country’s third bailout, Mr. Tsipras kept his core economic team essentially intact.
- Gross Tells Fed to `Get Off Zero Now!’ as Economies Run on Empty (Bloomberg) Bill Gross said the Federal Reserve needs to raise interest rates as soon as possible, trading some near-term market losses for longer-term stability and a healthier financial system.
- MetLife Increases Share Buyback Authorization to $1 Billion (WSJ) MetLife Inc. has raised to $1 billion the amount it has set aside to buy back shares, the insurer’s third increase since it resumed buying back its stock last year. The nation’s biggest life insurer by assets has been building capital ahead of expected stiffer federal capital rules.
- Volkswagen Faces German Probe Into Disclosure of Emissions Scandal (WSJ) Germany’s financial watchdog BaFin on Wednesday said it is investigating whether Volkswagen should have disclosed information regarding its emissions scandal sooner than it did and whether a delay could have led to irregular trading in the car maker’s shares, which dropped sharply over the past two days.
- China Said to Suspect Citic of Insider Trading During Rescue (Bloomberg) A Chinese probe found evidence that Citic Securities Co., the nation’s biggest brokerage, engaged in insider trading connected to the government’s rescue of the stock market, people familiar with the matter said.
Overnight markets
- Overview: IG25 5Y 82.904/83.229 (-0.089), US 10yr note futures are down -0.10% at 127-31+, S&P 500 futures are up +0.26% at 1937.0, Crude oil futures are up +0.65% at 46.66, Gold futures are up +0.32% at $1128.4, DXY is up +0.07% at 96.354.
US Economic Data
- MBA mortgage applications came in this morning at +13.9% for the week ending September 18th, versus prior week -7.0% decrease.
- Markit US Manufacturing PMI (Preliminary) is forecast at 52.8 in September, 0.2 point lower than prior month.
Canadian Economic Data
- Retail sales went up 0.5% MoM in July, worse than expectations of a 0.7% increase, after increasing 0.4% the previous month (revised 0.2% down).
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230