Market update
US sharply higher/flatter, futures outperforming on good volume. Global stocks in the red after Norway unexpectedly cut rates 25 bps to .75bps, Taiwanese cut rates to 1.75%, its first cut since 2009 and as BMW now becomes the second auto company to have emissions problems. USD mixed, commodities mixed with risk off boosting gold while WTI and Brent are up a smidge. EGBs mostly up with bund curve bull flattening, EU peripheral spds vs Germany behaved. Key data point in Europe was German IFO, a bit stronger than expected at 108.5 vs exp 107.9. Overnight in Tokyo, Tsy prices opened better and traded slightly better in a sideways pattern. Firming was due to some weakening in stocks and weaker Japanese Mfg PMI, a Taiwan rate cut and talk of big sales in 20Y Aussie bonds. Prices ebbed from the get-go in London but Norway’s rate cut and the big turn in European stocks allowed bonds to bottom around 4am ET. Another leg higher seen as NY traders take their seats. Data today will be released via websites due to Pope visit in DC. That includes wkly claims on Labor Dept site, Durables and New Home Sales on Commerce site. That means might be a slight delayed by news wires as this is not normal lockup procedure. (MNI)
News headlines
Janet Yellen’s Inflation Lecture More Than Just an Academic Exercise for Fed (Dow Jones Business News) Federal Reserve Chairwoman Janet Yellen speaks Thursday 5pm at the University of Massachusetts Amherst on an economic topic–inflation dynamics and monetary policy–that has major implications for the debate over when the central bank should begin raising short-term interest rates.
Abe Unveils Target to Boost Japan’s Economy to 600 Trillion Yen (Bloomberg) Prime Minister Shinzo Abe unveiled a new economic growth target and vowed to halt Japan’s population slide, as he seeks to claw back support after the passage of unpopular defense bills. Abe made the remarks following his official reappointment Thursday to a second three-year term as leader of the ruling Liberal Democratic Party. Shifting his focus, he avoided mentioning his trademark policies of monetary easing, fiscal spending, as well as tricky regulatory reforms that many economists say are already too slow.
Norway Cuts Rates to Record Low to Save Economy From Oil Slump (Bloomberg) Norway’s central bank unexpectedly lowered interest rates to an all-time low and said it may ease policy further as it seeks to rescue an expansion in western Europe’s biggest petroleum producer from a plunge in oil prices.
GE Capital Said to Agree to Sell Private-Equity Unit to Ardian (Bloomberg) General Electric Co. agreed to sell its private-equity investment group to French alternative asset manager Ardian for about $500 million, people with knowledge of the matter said.
Ardian won the assets earlier this month in an auction process run by Evercore Partners Inc., said two of the people, who asked not to be identified because the information is private.
Taiwan Cuts Rate for First Time Since 2009 as Exports Falter (Bloomberg) Taiwan lowered its policy rate for the first time since the global financial crisis, sending forwards on the island’s currency to a six-year low.
The central bank cut the benchmark discount rate by 12.5 basis points to 1.75 percent, it said in a statement in Taipei on Thursday. Eleven of 24 economists surveyed by Bloomberg predicted a cut, while the remaining 13 had expected the rate to be held for the 17th straight quarter.
We Still Aren’t Sure What Will Cause Janet Yellen to Pull the Trigger (Bloomberg) The effectiveness of the Federal Reserve’s communication strategy is clearly questionable when the outcome of a Federal Open Market Committee meeting is considered a coin toss among economists who closely follow monetary policy.
Ifo Business Climate Index Edges Upwards (CESifo Group) The Ifo Business Climate Index for German industry and trade rose in September to 108.5 from 108.4 points (seasonally revised) last month. Companies assessed their current business situation slightly less favourably than in August. However, they expressed greater optimism about future business developments. The German economy is proving robust.
Overnight markets
Overview: IG25 5Y 87.019/83.373 (+2.889), US 10yr note futures are up +0.21% at 128-07, S&P 500 futures are down -0.88% at 1911.5, Crude oil futures are down -0.43% at 44.29, Gold futures are up +0.47% at $1136.8, DXY is down -0.23% at 95.849.
US Economic Data
- Initial jobless claims came in at 267K for the week ending September 19th, lower than expected (272K) but slightly higher than prior week (264K).
- Continuing claims decreased to 2242K from 2243K and higher than expected (2240K).
- Durable goods orders decreased in August by -2.0%, better than expectations of -2.3% MoM (0.0% vs 0.1% Ex Trans.) versus revised July 1.9% MoM (0.4% Ex Trans.).
- Nondefense capital goods ( New Orders) diminished by -0.2% in August, they were expected to decrease -0.2% MoM (-0.2% MoM vs 0.5% for Shipped) this is compared to +2.1% (NO) and 0.5% (S) for the previous month revised data.
- New home sales are forecast at 515K (1.6% MoM) in August versus July 507K (5.4% MoM).
- Kansas City Fed manufacturing index is forecast at -6 in September higher than August level (-9).
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