- US tsys either side of unch on low volume session (204K TY1) with an upward bias since NA trading, the US 10Y 1.545% (-0.5bps). WTI trading lower after API data showed inventories up 4.46mln bbls. Asian stocks mixed with the HS index closing lower but the Nikkei up 0.60%, European stocks higher led by financials – the Euro stoxx bank index up ~5.0% to the highest level since Brexit. The UST auctions $34bln in 5Y notes this aft , at 1.13% yields are ~5bps lower than at last month’s auction which saw mediocre demand based on indirect demand. In Canada, GOCs slightly higher, provis unch – 2 deals yest for $1.3bln – Ont 26s @86.5 & Newf 26s @ 140 (53 over ont). Alberta budget update – deficit for this yr will be $500mln larger than exp due to wildfires. The BOC auctions $3.3bln in reopened Sep 19s. At 0.56% yields are ~10 bps off the July lows and with the roll to current 2s 0.5bps the 3Y doesn’t look too compelling.
- Global stocks ease, dollar holds ground as U.S. rate bets abound (Reuters) Stocks slipped on Wednesday while the dollar continued to claw back last week’s losses as investors grappled with the prospect of a U.S. interest rate increase in the months ahead coming amid continued uncertainty about the strength of the global economy.
- Developing-Nation Assets Drop on Fed Rates Bets as Oil Declines (Bloomberg) Emerging-market assets fell with commodities as expectations for a U.S. interest-rate increase grew before a speech this week by Federal Reserve Chair Janet Yellen. The MSCI gauge of developing nations’ shares dropped the most in three weeks after Fed funds futures ended Tuesday showing a 54 percent chance of a U.S. interest-rate increase by December. The dollar rose against the euro and the Swiss franc. South Korea’s won weakened after North Korea conducted a missile test, while South Africa’s currency and bonds declined amid speculation the finance minister will be replaced. Signs of rising stockpiles sent oil and copper lower.
- German Trade Bolsters Economic Growth as Investment Declines (Bloomberg) Trade was the main driver of German economic growth in the second quarter as domestic demand suffered from a slump in investment. Trade was the main driver of German economic growth in the second quarter as domestic demand suffered from a slump in investment.
- Royal Bank of Canada hikes dividend as $2.7 billion profit beats expectations (Financial Post) Royal Bank of Canada on Wednesday reported third-quarter results which beat market expectations, with funds set aside to cover bad loans falling thanks to higher oil prices. Like other Canadian lenders, RBC had seen a rise in bad loans to oil and gas companies due to declining energy prices, with crude prices falling to a 13-year low of $25 a barrel in January. However, average oil prices recovered by around 30 per cent during the latest quarter, providing relief to energy companies that had been struggling to repay debt.
- Oil falls on surprise build in U.S. crude stocks (Reuters) Oil prices fell on Wednesday on an unexpected increase in U.S. crude stocks that revived worries about the supply glut that has capped prices for the past two years. Oil prices fell on Wednesday on an unexpected increase in U.S. crude stocks that revived worries about the supply glut that has capped prices for the past two years.
- First Kenyan Oil Output Due by March 2017; Exports to Follow (Bloomberg) Tullow Oil Plc will put Kenya on the map of oil producers by the first quarter of 2017 and drill eight additional exploration wells in the African nation’s North Lokichar region, President Uhuru Kenyatta said. Exports will commence three months later, with the crude being transported by road to the Indian Ocean port city of Mombasa, Kenyatta said in an e-mailed statement after he met with Tullow’s chief operating officer, Paul McDade. Kenya’s recoverable resources are estimated at 750 million barrels.
- S. business borrowing for equipment falls 17 percent in July – ELFA (Reuters) Borrowings by U.S. companies for capital investment in July fell 17 percent from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. Companies signed up for $7 billion in new loans, leases and lines of credit last month, the Washington-based trade group said on Monday. In the first seven months of 2016, total new borrowings declined 8 percent from a year earlier, said ELFA, which reports economic activity for the $1 trillion U.S. equipment finance industry.
- Overview: US 10yr note futures are up 0.0236% at 132-8, S&P 500 futures are up 0.03% at 2186, Crude oil futures are down -1.62% at $47.32, Gold futures are down -0.65% at $1337.4, DXY is up 0.22% at 94.751.
US Economic Data
- 9:00 FHFA House Price Index, m/m, June, est. 0.3% (prior 0.5%)
- 10:00 AM: Existing Home Sales, July, est. 5.51m, (prior 5.57m)
- Existing Home Sales, m/m, July, est. -1.1% (prior 1.1%)
Canadian Economic Data
- There is no major economic data release 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