Market Update

Tsy futures trading weaker, long end underperforming, trailing core EGBs on light volume, as European underpinned by soft flash PMI’s.  The July FOMC statement is the highlight of the week. There should be only modest adjustments to the characterization of the economic backdrop and we expect no change to the policy language. While some have speculated that the Fed could announce the start date of balance sheet run-off in this press statement, we think the committee’s track record makes this highly unlikely. The Fed has been loath to make potentially market-moving decisions in a non-press conference meeting. Accordingly, we think the announcement comes at the September meeting when we also believe the committee will stand pat on rates. Market difficulties interpreting the FOMC statement generally stem from the Fed’s 1-month to 2-month lag in discussing the data. Where Treasury traders still discuss weaker June data released 10 days ago, the FOMC will more likely focus on the second quarter rebound. After the meeting, of course, comes a fresh deluge of Fed speakers to start by the middle of next week.

News headlines 

Euro Halts Advance as Carmakers Weigh on Stocks: Markets Wrap (Bloomberg) The euro headed for its first decline in three days as data showed the region’s economy cooling at the start of a week packed with earnings results and a Federal Reserve rate decision. Stocks were dragged down for a second day by carmakers amid a collusion probe.

Chinese capital shuts major road during rare protest (Reuters) Beijing police shut down part of a major road on Monday as they dealt with a rare protest in the Chinese capital, with demonstrators gathering to complain the government had unfairly accused a company they say helps the poor of pyramid selling.

OPEC Signals No Big Changes to Supply Deal at Russia Meeting (Bloomberg) OPEC and its allies indicated they weren’t planning any big changes to their supply deal, even as oil prices remain below $50 a barrel amid growing skepticism that their output cuts are working.

Oil rises after Saudi vows to cap crude exports next month (Reuters) Oil rallied on Monday, erasing early losses after leading OPEC producer Saudi Arabia pledged to cut its exports to help speed up the rebalancing of global supply and demand. Saudi Energy Minister Khalid al-Falih said his country would limit crude oil exports at 6.6 million barrels per day in August, almost 1 million bpd below levels a year ago.

Japan PM Abe denies favors for friend amid falling support (Reuters) Japanese Prime Minister Shinzo Abe, his ratings sinking over a suspected cronyism scandal, on Monday said he had never instructed officials to give preferential treatment to a long-time friend, adding that the latter had never sought favors.

U.S. venture capital’s digital coin quandary: cash-rich startups (Reuters) U.S. venture capital firms lining up for a slice of the burgeoning digital currency market are grappling with a novel challenge – some of the hottest tech startups that sell the coins just don’t need their money.

Overnight markets 

Overview: US 10yr note futures are down -0.049% at 126-08, S&P 500 futures are down -0.02% at 2469, Crude oil futures are up 0.42% at $45.96, Gold futures are up 0.16% at $1263, DXY is up 0.1% at 93.952, CAD/USD is down -0.16% at 0.7989.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.26% 2 Year 1.349%
5 Year 1.528% 5 Year 1.808%
10 Year 1.896% 10 Year 2.243%
30 Year 2.258% 30 Year 2.822%

US Economic Data 

9:45 AM Markit US Manufacturing PMI, Jul P, est. 52.2 (prior 52.0)
Markit US Services PMI, Jul P, est. 54.0 (prior 54.2)
Markit US Composite PMI, Jul P, (prior 53.0)
10:00 AM Existing Home Sales, Jun, est. 5.57m (prior  5.62m)
Existing Home Sales, m/m, Jun, est. -0.9% (prior 1.1%)

 Canadian Economic Data

8:30 AM Wholesale Trade Sales, m/m, May, 0.9%, est. 0.5% (prior 1.0%, revised 0.8%)
10:00 AM Bloomberg Nanos Confidence, Jul 21, (prior 58.2)


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