Market update
US tsys opening slightly lower, lagging the sizeable rally in Euro govt bonds on weaker data, month end extensions. US 10Y 2.273 (+0.4bps), curve unch. Tsy futures volume way below avg, TY1 traded in a 5 tick range o/n. Core Euro bonds higher, led by 10Y gilts. Weaker than exp China & Euro PMIs with the former falling to a 15 month low in July, In Canada, GOCs slightly higher, 1bp tighter vs tsys in 10s & longs. The loonie hit a 11Y low in early N.A. trade 1.3082 as commodities plumb new lows in the wake of the weak Chinese data. Yest we saw buyers of longs on the uptrade and vs 10s, both fm momentum type trades. No data in Cda only US new home sales which are expected to have risen 0.3% in June after a 2.2% increase in May. Interesting to note that while sales volumes are still ~60% below the peak of 2005, prices are basically back to pre-crisis levels.
News headlines
- German Manufacturing Growth Slowed in July as Exports Decline (Bloomberg) German manufacturing growth unexpectedly cooled in July as exports fell for the first time in six months.
- Copper, Aluminum Prices Follow Gold’s Wake to Hit Multiyear Lows (WSJ) Prices of major traded-metals tumbled to multi-year lows Friday as weak Chinese manufacturing data added to the brew of excess supply and a strong dollar that has put pressure on several commodities this week.
- Fed and BoE take pole positions in rate race (FT) Central banks are starting to resemble Formula One drivers of current vintage — two of them well out in front, dominating the field, the rest trailing in their wake.
- Canada bouncing back, further rate cuts unlikely, economists say (G&M) The Canadian economy is already bouncing back from a slump in the first half of the year, but it remains vulnerable to further falls in oil prices and any renewed weakness in export demand from the United States, a Reuters poll found.
Overnight markets
- Overview: IG24 5Y 69.5/70 (+1.25), US 10yr note futures are up +0.14% at 126-25, S&P 500 futures are up +0.02% at 2099.0, Crude oil futures are up +0.95% at 48.91, Gold futures are down -1.08% at $1082.3, DXY is up +0.37% at 97.470.
- US BANK CDS (5yr): BAC 68/72 (+0), GS 85/89 (+0), MS 77/81 (+0), C 76/80 (+0), JPM 68/72 (+0), WFC 51/55 (+0)
US Economic Data
- Markit US Manufacturing PMI (Preliminary) is forecast at 53.6 for July, equal to previous month.
- New home sales are forecast at 548K (0.3% MoM) in June versus May 546K (2.2% MoM).
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230