Us tsys slightly higher, curve flatter on light volume in tsy futures, US 10Y 1.87% (-1.2bps). European and Asian equities ~1.0% lower, the USD index is higher for a fifth day – the USD has now retraced ~75% of the post March 16th FOMC decline as Fed Bullard and others have warned in recent days that the next rate hike may not be far off. Core Euro bonds higher led by the long end on weakness in European stocks, lower crude as well as weaker German and French consumer confidence . GOCs higher after 8:30 US data (core durable goods -1.1% vs 0.3%). Provis opening wider on risk off, yest Newf issued both 5s & longs with both going well, rumours of Toronto 20Y muni deal.
News headlines
- Global Stocks Extend Loss as U.S. Rate Speculation Lifts Dollar (Bloomberg) Stocks dropped around the world as the dollar extended gains into a fifth day, with the potential for higher U.S. interest rates again roiling financial markets as the Easter vacation looms. European shares have fallen every day this week, with raw-materials producers sliding as the Bloomberg Commodity Index declined. Crude slipped after data showed a bigger-than-expected increase in U.S. stockpiles, and iron ore fell for a third day, denting emerging markets.
- Dollar rise hits commodities as Fed talks of tightening (Reuters) The dollar was on its best run in almost a year on Thursday, pressuring commodities and shares after yet another Federal Reserve official talked up the chance of more than one hike in U.S interest rates this year. If the dollar .DXY can keep its footing going into the long Easter weekend it will notch up a near 2 percent, and first weekly gain in a month against the world’s other major currencies.
- Oil slides on mounting U.S. stockpiles, strong dollar (Reuters) Oil fell below $40 a barrel on Thursday, heading for the biggest weekly slide in two months, dented by record-high stockpiles in the United States and a stronger dollar. The U.S. government’s Energy Information Administration (EIA) said crude stockpiles climbed by 9.4 million barrels last week – three times the 3.1-million-barrel build forecast by analysts in a Reuters poll.
- China stocks fall as state media reports resumption of short-selling (Reuters) March 24 China stocks fell on Thursday morning after state media reported that 35 domestic brokerages have resumed short-selling business after a long hiatus. The CSI300 index declined 1.0 percent to 3,204.16 points at the end of the morning session, while the Shanghai Composite Index lost 0.9 percent, to 2,982.48 points. Many Chinese financial institutions voluntarily halted margin lending and stock shorting activities during China’s mid-2015 stock market crash, in response to heavy pressure from Beijing.
- Chinese Earnings Estimates Cut Most Among Major Asian Markets (Bloomberg) Chinese companies listed in Shanghai and Hong Kong had their profit estimates cut the most among major Asian economies as the slowest growth in more than two decades erodes corporate earnings. Projections for earnings of companies in the Shanghai Composite Index in the next 12 months were lowered by 6.8 percent, while those for firms in Hong Kong’s Hang Seng China Enterprises Index, or the H-share gauge, were reduced by 6.2 percent, according to data compiled by Bloomberg.
- ECB Loans Banks 7.3 Billion Euros as New Long-Term Plan Readied (Bloomberg) The European Central Bank handed 7.3 billion euros ($8.2 billion) to euro-area banks in the seventh round of a program aimed at boosting lending to companies and consumers, shortly before it starts a new and more generous plan. The take-up in the targeted longer-term refinancing operation compares with 18.3 billion euros the ECB lent in a similar operation in December and 15.5 billion euros handed out in September. Banks have now taken a total of 426 billion euros since the first offer in 2014.
- ‘Brexit’ Outcome Depends on How the Don’t-Knows Vote, If At All (Bloomberg) Opinion polls are now in focus ahead of the U.K. referendum on the nation’s membership of the European Union, as investors search for clues on whether recent events helped undecided voters make their minds up if Britain should stay in or leave the Union. Developments that could have had some influence include the testimony by London Mayor Boris Johnson, who backs the U.K. leaving the EU, and Chancellor George Osborne, who supports ongoing membership. The resignation of minister Iain Duncan Smith, who supports the nation’s exit from the Union, and the bomb attacks in Brussels also are likely to have an impact on opinions.
- Taiwan Cuts Benchmark Rate Again (WSJ) Taiwan’s central bank cut its benchmark interest rate for the second time in three months Thursday, opting to support the island’s recession-hit economy and take advantage of a relatively calm reaction in Asia to the Federal Reserve’s first rate increase in nearly a decade. The central bank lowered the benchmark discount rate to 1.625% from 1.750%. It also trimmed its other key rates for secured and unsecured loans by the same amount. The central bank last lowered rates in September, the first reduction in more than six years.
Overnight markets
- Overview: US 10yr note futures are up 0.0725% at 129-14, S&P 500 futures are down -0.65% at 2015.5, Crude oil futures are down -2.61% at $38.75, Gold futures are down -0.07% at $1224.7, DXY is up 0.12% at 96.165.
US Economic Data
- Initial Jobless Claims came in at a level of 265k, better than expected and up from prior month
- Continuing Claims came in at a level of 2149k, better than expected and up down from prior month
- Durable Goods Orders MoM variation was -2.8%, stronger than expected and down from prior month
- Durable Goods Ex Transportation MoM variation was -1%, weaker than expected and down form prior month
- Cap Goods Orders NonDef Ex Air MoM variation was -1.8%, weaker than expected and down form prior month
- Cap Goods Ship Nondef Ex Air MoM variation was -1.1%, weaker than expected and up from prior month
- Markit US Services PMI will be released at 9:45 AM
- Markit US Composite PMI will be released at 9:45 AM
- Kansas City Fed Manufacturing Activity will be released at 11:00 AM
Canadian Economic Data
- Kansas City Fed Manufacturing Activity will be released at 11:00 AM
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