cti2015header-morning comments web

Market Update

US tsys lower, yields 2-4 bps higher led by 10s @ 2.434 (+3.4bps), curve 1.5bps steeper. Tsys pressured since Asia after Monday’s short covering rally. USD higher after hitting a seven-week low on Treasury Secretary Mnuchin warning of excessive strength, S&P futures unch, European equities higher, crude slightly higher @ 52.90. Big news overnite UK Govt lost its Brexit appeal at the Supreme court, gilts touched the lows after the news with the UK 10Y back above 1.40% vs 1.45% high from last Friday. Europe also facing supply from France (20Y) , Spain (10Y) and the UK (40Y).  GOCs lower, spds ~1bp narrower vs tsys , 10Y 1.71% (+3.4bps), provis 0.5bps wider, Ont 48 92/91.5, Ont 26 81/80, PQ/Ont 26 2.5/2.3. BC & MP rumoured as possible today, MP/Ont 46 roll @15 at the tights as is the long Alta/Ont 46 @9/8.  In corps IGM FInancial (Ah) issued 2 tranche $600mln in 10s and longs both met with strong demand closing 2-3bps tighter. H&R issued $200mln in 7Ys @ 201.8, closing 1bp tighter. Royal has a $1.75bln deposit note maturing tommorrow ( 3.66% 17).

News headlines

Dollar Rises With Stocks as Pound Drops on Brexit: Markets Wrap (Bloomberg) The dollar rose from the lowest this year, poised to end three days of declines that have book-ended the inauguration of the new U.S. president. The pound and gold slipped.

Japan January flash manufacturing PMI shows fastest expansion in almost three years (Reuters) Japanese manufacturing activity expanded in January at the fastest pace in almost three years as export orders surged, suggesting that overseas demand is not as weak as some economists and business leaders had feared.

China’s Efforts to Stem Capital Outflows Are Starting to Pay Off (Bloomberg) China’s campaign to stop cash flooding out of the country is showing some success. For the first time since the yuan’s devaluation in August 2015, Chinese banks last month registered net inflows under the capital account, according to cross-border payments figures released last Thursday by the currency regulator. The yuan, which plunged last year by the most in two decades, is now heading for its biggest monthly advance against the dollar since March.

Supreme Court Rules Brexit Trigger Needs Parliamentary Vote (Bloomberg) The highest U.K. court ruled Prime Minister Theresa May must seek an act of Parliament to trigger the two-year countdown to Brexit, handing lawmakers a chance to soften the government’s plan.

Trump calls for more U.S. auto jobs, factories ahead of CEO meeting (Reuters) U.S. President Donald Trump on Tuesday will push the chief executives of General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV to increase production in the United States and boost American employment.

Canadian Drillers Brave Deep Freeze as Oil Patch Revives Growth (Bloomberg) In the snowy prairies of Western Canada, not even temperatures below -40 degrees have stopped Stampede Drilling Ltd.’s 60 recently rehired workers from manning the oil-service provider’s rigs after a nine-month dry spell for the business. 

Overnight markets 

Overview: US 10yr note futures are down -0.1878% at 124-19, S&P 500 futures are up 0.09% at 2264, Crude oil futures are up 0.74% at $53.14, Gold futures are down -0.16% at $1213.7, DXY is up 0.07% at 100.23, CAD/USD is down -0.13% at 0.7564.

US Economic Data 

9:45 AM Markit US Manufacturing PMI, Jan P, est. 54.5 (prior 54.3)
10:00 AM Existing Home Sales, Dec, est. 5.52m  (prior 5.61m)
Existing Home Sales, m/m, Dec, est. -1.8% (prior 0.7%)
Richmond Fed Manufacturing Index, Jan, est. 7 (prior  8)

Canadian Economic Data

There is no major economic news for today.


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