US tsys trading higher, yields ~2bps lower & curve unch, US 10Y 1.705. Ten yr futs higher since European trading as global equities weaker (Euro stocks -2.0%), USD higher and crude down $1.00 @ 0.75. Fed Fischer said March rate hike not off the table, lower gas prices supporting consumer spending, but admits ‘we simply don’t know what FOMC will do in March. Tsy auctions $34bln in 5Y notes this aft so a modest concession may be needed considering that barely 50% odds of a rate hike are priced in all year (jan 5Y auction cleared ~1.5bps cheap to the WI). In Canada GOCs are higher, lagging tsys ~1bp. Provis opening with risk off tone after supply yest (Alb longs, O led spds ~2bps wider at the close.
- Lew Says Don’t Expect `Crisis Response’ From Group of 20 Meeting (Bloomberg) U.S. Treasury Secretary Jacob J. Lew downplayed expectations for an emergency response to global market turbulence when Group of 20 finance chiefs and central bankers meet this week in China, calling on nations to do more to boost demand without pursuing unfair currency policies.
- Fischer says no Fed plan to move to negative interest rates (Reuters) Federal Reserve Vice Chairman Stanley Fischer said there is no plan to use negative rates in the United States, though the matter is under study.
- Global Stocks Extend Losses With Oil as Brexit Risk Roils Pound (Bloomberg) Global equities extended declines as a sliding oil price weighed on industry groups from banks to commodity producers and dragged down emerging markets.
- Carney: Bank of England could cut interest rates to zero, but not below (TheGuardian) The Bank of England could cut interest rates to zero, but will seek to avoid following Sweden, Denmark and the eurozone by setting negative rates to bolster growth and inflation.
- Brazil Credit Ratings Cut to Junk by Moody’s (Bloomberg) Brazil’s sovereign rating was cut to junk by Moody’s Investors Service, the last of the major ratings companies to strip the country of its investment grade as President Dilma Rousseff struggles to shore up fiscal accounts amid deepening political turmoil.
- Global shares fall sharply with oil prices, yen in demand (Reuters) Shares fell sharply on Wednesday as oil prices dropped after Saudi Arabia effectively ruled out output cuts by major producers, lifting investor appetite for low-risk assets such as the Japanese yen and gold.
- Some of Canada’s largest companies facing Ontario land-transfer tax hit worth millions (Financial Post) The Ontario government is threatening to go as far back as 1989 to target commercial entities, including two of Canada’s largest companies, that have been avoiding land-transfer taxes through what is now a disputed legal loophole, according to a ministry notice sent out this month.
- Overview: US 10yr note futures are up 0.3222% at 131-12, S&P 500 futures are down -0.85% at 1899.75, Crude oil futures are down -3.14% at $30.87, Gold futures are up 1.84% at $1245.1, DXY is up 0.14% at 97.62.
US Economic Data
- MBA Mortgage Applications growth was released at -0.043%, down from the prior month
- Markit US Services PMI will be released at 9:45 AM
- Markit US Composite PMI will be released at 9:45 AM
- New Home Sales will be released at 10:00 AM
- New Home Sales MoM growth will be released at 10:00 AM
Canadian Economic Data
- There is no major economic data 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