Market Update

Tsy futures trading weaker and close to session lows, long end underperforming, weighed by UK 30-yr Gilt auction, stronger German Ifo and block selling in 10-yr tsy not in future. 2/10Y steeper but 5/30Y flatter after two-way overnight trading flows. Tsy will sell $26B 2Y note auction at 1pm ET. Overnight Treasuries saw mild flight-to-quality bid amid rising N. Korea tension as Korea Herald reported “unusual activities” in N.Korea side missiles, perhaps preparation for missile test. China beefs up defenses on its N.Korea border on feared potential intervention by US.

News headlines 

Dollar slumps to 13-month lows before Fed; euro up (Reuters) The dollar slumped a more than one-year low against a basket of currencies on Tuesday as investors grew more wary on the short-term outlook although they held off placing more bearish bets ahead of a Federal Reserve meeting starting today.

Saudi Arabia Turns Off the U.S. Oil Tap (Bloomberg) At last, Saudi Arabia seems to be doing what it takes to reduce the world’s most visible oil glut: the one in the U.S. Unfortunately, its renewed vigor comes as OPEC’s deal to reduce excess crude stockpiles starts to show signs of unraveling elsewhere, a subject that will be wrestled with by the group’s oil ministers as they and other producer nations meet in St Petersburg on Monday.

Caterpillar posts 46 percent rise in profit, boosts forecast (Reuters) Caterpillar Inc (CAT.N) reported a 46 percent jump in quarterly profit on Tuesday, helped by strength in its construction and resources businesses, and raised its profit outlook for the year.

Trump Continues Criticism of ‘Weak’ Attorney General Sessions (Bloomberg) President Donald Trump sharply criticized his attorney general, Jeff Sessions, on Tuesday, using the word “weak” to describe a man who was one of his earliest and most dedicated supporters.

Fed to stick to plans for rate hike, balance-sheet selloff this year (Market Watch) The Federal Reserve doesn’t want to leave any doubt: The central bank still plans to raise interest rates again this year and start to sell off its vast holdings of Treasurys and mortgage-related bonds.

Alphabet adds to cash pile despite higher costs, antitrust fine (Reuters) Alphabet Inc reported a 21 percent jump in quarterly revenue on Monday, maintaining a growth rate that is rarely seen among companies its size and suggesting the big sales gains enjoyed recently by the other Internet firms are not done yet.

Overnight markets 

Overview: US 10yr note futures are down -0.211% at 125-29, S&P 500 futures are up 0.27% at 2475.25, Crude oil futures are up 1.73% at $47.14, Gold futures are down -0.19% at $1258.3, DXY is down -0.26% at 93.728, CAD/USD is down -0.13% at 0.8003.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.31% 2 Year 1.378%
5 Year 1.615% 5 Year 1.848%
10 Year 1.976% 10 Year 2.282%
30 Year 2.305% 30 Year 2.862%

US Economic Data 

9:00 AM FHFA House Price Index, m/m, May, est. 0.5% (prior 0.7%)
10:00 AM Conference Board Consumer Confidence, Jul, est. 116.5 (prior 118.9)
Richmond Fed Manufacturing Index, Jul, est. 7 (prior 7)

Canadian Economic Data

There is no major economic new 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