Market update

US tsys opening sharply higher on rout in global equities, with tsys reaching new highs mid-morning. US 10Y below 2.0%, fell as low as 1.95% at ~5:30EST, now 1.98 (-5bps). China stocks fell 8% in the largest decline since 2007, S&P mini -~4.0%, crude below $40.  Core Euro bonds mixed with German bunds slightly higher, gilts sharply higher, peripheral spds wider led by Greece.  In Canada, GOCs are higher, lagging the move in tsys by 2-4 bps. Provis gapping wider, Ont 45s 101.5-100.5 (~4bps), CMB 25s issued last week @59 – 63/60.5.

News headlines

  • China plunges 8.5% triggering global rout (FT) World stocks sank on Monday after an 8.5 per cent plunge in Chinese shares that stoked mounting fears of a China-led global economic slowdown. The Shanghai Composite racked up its worst day since February 2007, wiping out all its gains of 2015, in a tumultuous session that even Xinhua, the official Chinese news agency, dubbed “Black Monday”.
  • China to Flood Economy With Cash as Global Markets Lose Faith (WSJ) The selloff in Chinese stocks accelerated Monday, adding pressure on Beijing, which is planning to flood its banking system with new liquidity to offset effects of its recent surprise currency devaluation, according to Chinese officials and advisers to the central bank.
  • The Fed Has a Theory. Trouble Is, the Proof Is Patchy (WSJ) Federal Reserve officials might raise interest rates soon because they have a theory: Falling unemployment pushes up prices and wages, requiring tighter credit to keep inflation in check.
  • Oil slump weighs on Canadian bank stocks as Big Six report earnings (G&M) Canadian banks are facing a tough economic environment, raising some uncertainty among observers over what the Big Six’s quarterly financial results will look like this week.
  • How much longer can Saudi Arabia’s economy hold out against cheap oil? (FP) The oil price was near its lowest in more than a decade, cash reserves were being depleted, emerging markets were in turmoil and Saudi Arabia was beginning to panic.

Overnight markets

  • Overview: IG24 5Y 87/87.65 (+4.58), US 10yr note futures are up +0.51% at 129-10+, S&P 500 futures are down -3.92% at 1894.25, Crude oil futures are down -3.39% at 39.08, Gold futures are down -0.09% at $1158.60, DXY is down -1.42% at 93.658.
  • US BANK CDS (5yr): BAC 78/83 (+3), GS 97/102 (+2), MS 87/92 (+2), C 87/92 (+1), JPM 78/83 (+2), WFC 58/63 (+2)

 US Economic Data

  • Chicago Fed National activity index came in at 0.34 in July (0.20 expec.) and better than June revised number of -0.07.

Canadian Economic Data

  • Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.




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