cti2015header-morning comments web

Market Update

US tsys lower with the tsy curve steeper, prices off overnight price low which saw the 10Y hit 2.485%, now 2.48% (+1.5bps). Tsys weaker in Asia as risk on carried over from Tuesday & Nikkei rose 1.43% the largest rise since Jan4th. The MSCI – All Country World Index rose to the highest level since 2015 while the Euro Stoxx index is up 1.2%. German bunds lower, yields 5-6bps higher in the long end on technical selling on stop losses and as Germany prepares to sell E1bln in long bonds. GOCs lower, spds unch vs tsys, 10Y 1.788% (+3bps) 62% retrace of the Dec-Jan rally. Provis  better bid awaiting supply – Ontario is looking to reopen its global 5Y Green bond (1.95 jan 2023) after Quebec issued $2bnln USD 5Y Monday. Peripherals tighter by 1bp led by Alberta, Man. Mani 48s 104.5/ from 106 at issue yest. Quebec plans to issue a new 10Y bond – Sep 27s , we see the curve in that area as 2.5-3bps which  would put Sep 27s at 85/86 OTC.

News headlines

Earnings Feed Global Stock Rally as Bonds Retreat: Markets Wrap (Bloomberg) Stocks around the world extended a rally as corporate earnings reignited investors’ optimism in economic growth. Bonds sold off with oil. The MSCI All-Country World Index and a gauge of German stocks headed for the highest closing level since 2015 as European equities were swept up in trades favoring banks and cyclical companies as the agents of economic growth.

Oil slips on rising U.S. inventories, awaits EIA data (Reuters) Oil prices fell on Wednesday after builds in U.S. inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters. Benchmark Brent crude LCOc1 was down 1 percent or 54 cents a barrel at $54.90 by 1024 GMT. U.S. light crude CLc1 was down 52 cents at $52.66.

As Ottawa and Alberta dither, Trump embraces the oilsands with Keystone XL nod (Financial Post) U.S. President Donald Trump delivered on his promise to approve the Keystone XL pipeline, signing an executive order Tuesday to advance its construction and giving Canada’s battered oilsands industry his support. “We are going to renegotiate some of the terms” of the Keystone XL project, Trump said to reporters. “And if they like (them) we will see if we can get that pipeline built – a lot of jobs, 28,000 jobs, great construction jobs.”

ECB can soon start talk of exit from stimulus: Lautenschlaeger (Financial Post) The European Central Bank could soon start planning an exit from its unprecedented stimulus program, Executive Board member Sabine Lautenschlaeger said on Tuesday, a rare public discussion of ending its asset buying scheme. A longtime critic of the ECB’s ultra-easy monetary policy, Lautenschlaeger has opposed many of the bank’s past easing measures and now becomes the only board member to publicly advocate an exit, a taboo for ECB President Mario Draghi, who has said that tapering, or winding down the 2.3 trillion euro ($2.5 trillion) program has not been discussed.

CN posts fourth-quarter gain as agriculture shipments lift freight volumes (GlobeAndMail) Canadian National Railway Co. says its fourth-quarter profit rose by 8 per cent, buoyed by rising grain and fertilizer shipments. Montreal-based CN, Canada’s largest railway, said revenue for the three months ending Dec. 31 rose by 2 per cent, driven by a 14-per-cent increase in agriculture freight and a 4-per-cent rise in automotive shipments.

Kuwait Expects Oil Output Cuts to Balance Market in Early 2017 (Bloomberg) OPEC and other oil producers are likely to comply fully with a deal to reduce supply, bringing global crude markets into balance early this year, Kuwaiti Oil Minister Essam Al-Marzouk said. Some countries have not yet made the full output reduction agreed to last month, but they will increase cuts over the coming months and all producers are “highly committed” to the deal, Al-Marzouk said Wednesday at a conference in Kuwait City.

Overnight markets 

Overview: US 10yr note futures are down -0.1635% at 124-1, S&P 500 futures are up 0.42% at 2284, Crude oil futures are down -0.6% at $52.86, Gold futures are down -0.64% at $1205.8, DXY is down -0.31% at 100.04, CAD/USD is down -0.43% at 0.7633.

US Economic Data 

7:00 AM MBA Mortgage Applications, Jan 20, 4.0% (prior 0.8%)
9:00 AM FHFA House Price Index, m/m, Nov, est. 0.4% (prior 0.4%)

Canadian Economic Data 

There is no major economic news for 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
Fax: (514)-861-3230