cti2015header-morning comments web

Market Update

Tsys opening slightly higher, flatter, US 10Y 1.616%, on muted volume in TY futures. European bonds lower led by the 10Y, profit taking after yest rally brought the 10Y bund/tsy spd to 3 month wides. Reuters story that Saudia Arabia would cut production if Iran agreed to freeze output also weighing on bonds thou is crude slightly is lower on the day ($46.24). Eurozone composite PMI fell to a 20-month low in Sep on weakness in services, pointing to Q3 growth of 0.3%, unch vs Q2. Based on Eonia futures the mkt is now pricing in ~40% odds of a rate cut by March. GOCs reacting as expected to much weaker CPI/retail sales figs – GOCs rallying led by 5s, curve ~2bps steeper – mkt now pricing 25% odds of 25bp rate cut by year end based on OIS. Provi spds hanging in so far depsite 10Y yields ~14bps lower on the week. Buying across the curve yest sparked by 10Y Quebec which went extremely well- issued @ 89, 88.5 bid this morn. 

News headlines

  • Europe’s Economy Sees No Traction as Germany Loses Momentum (Bloomberg) The euro-area economy saw its pace of growth dip to a 20-month low at the end of the third quarter, highlighting the challenge facing policy makers to build momentum. IHS Markit said its monthly composite Purchasing Managers Index declined to 52.6 in September from 52.9 in August. Services weakened and manufacturing improved, with all three measures staying above the 50 mark that divides expansion from contraction.
  • German Economy Loses Momentum as Services Restrain Growth (Bloomberg) At a national level, there was a surprise in the German data, where services PMI came in at 50.6, well below the 52.1 expected by economists surveyed by Bloomberg. Germany’s economy lost momentum at the end of the third quarter as near-stagnation in the services sector offset an improvement in manufacturing.
  • France overtakes Germany (CNBC) The data showed that France saw a robust increase in service sector activity which offset its ongoing stagnation in manufacturing. This led the French Composite PMI to rise above its German counterpart for the first time in over four years, according to IHS Markit.
  • Oil Rebounds as Saudi Arabia Said to Offer Output Deal to Iran (Bloomberg) Oil rebounded to head for a weekly gain after Saudi Arabia was said to have offered to reduce production if Iran agreed to freeze its output.
  • Former OPEC President Optimistic There Will Be Deal in Algiers (Bloomberg) Chakib Khelil, the former Algerian energy minister who steered OPEC the last time it decided to cut supply, said he’s confident the group will reach an accord next week as low oil prices force members to act.
  • Asian Stocks Pare Best Weekly Gain Since July as Topix Declines (Bloomberg) Asian stocks fell for the first time in six days, with the regional benchmark gauge paring the biggest weekly advance since July, as Japanese exporters retreated and a rally in Hong Kong equities lost steam. The MSCI Asia Pacific Index dropped 0.2 percent to 142.00 as of 4:10 p.m. in Hong Kong, halting a five-day increase. The measure has advanced 3.6 percent this week.
  • Facebook Overestimated Key Video Metric for Two Years (WSJ) Big ad buyers and marketers are upset with Facebook Inc. after learning the tech giant vastly overestimated average viewing time for video ads on its platform for two years, according to people familiar with the situation.
  • CBOE Said in Talks to Buy Exchange Operator Bats Global (Bloomberg) CBOE Holdings Inc. is in talks to acquire Bats Global Markets Inc., according to people familiar with the matter, a deal that would combine a 43-year-old Chicago firm that still runs trading pits where humans buy and sell options with a fully electronic exchange.
  • LSE’s Rolet Says 100,000 Jobs at Risk If Clearing Leaves London (Bloomberg) One-hundred thousand jobs would be at risk if clearing leaves the U.K., said London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet.

Overnight markets

  • Overview: US 10yr note futures are up 0.1552% at 131-2, S&P 500 futures are down -0.09% at 2166.25, Crude oil futures are down -0.3% at $46.18, Gold futures are down -0.07% at $1343.7, DXY is down -0.01% at 95.441.

US Economic Data 

  • 9:45 AM : Markit US Manufacturing PMI, Sep P, est. 52.0 (prior 52)

Canadian Economic Data

  • 8:30 AM: Retail Sales, m/m, July, -0.1%, est. 0.1% (prior -0.1%)
  • Retail Sales Ex Auto, m/m, July, -0.1%, est. 0.5% (prior -0.8%, revised 0.6%)
  • CPI, y/y, Aug, 1%, est. 1.4% (prior -0.2%)
  • CPI Core, m/m, Aug, 0%, est 0.2% (prior 0.0%)
  • CPI Core, y/y, Aug, 8%, est. 2.0% (prior 2.1%)


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