cti2015header-morning comments web

Market Update

US tsys moving lower after stronger Durable Goods after quiet o/n session and before Yellen speech at Jackson Hole. Light volume in TY futures (~252K), tsys lagging the decline in core Euro bonds despite weak German IFO confidence, the 10Y German bund 2bos higher @ -0.07%. GOCs weaker after US durable goods came in stronger than exp for July. Provis opening beter offered after closing wider yest 1-1.5bps. Manulife printed a 5Y dep note yest @ 125 (25 over Bank dn) which was well oversubscribed, opening 120 bid.

News headlines                                                                                                                                                                                                       

  • European Stocks Retreat as Dollar Rally Fades Before Yellen (Bloomberg)  European stocks fell for the first time this week amid concern over the outlook for economic growth while a dollar rally ran out of steam before signals on the likely path of U.S. interest rates. Equity markets retreated in Europe as an unexpected drop in German business sentiment signaled companies remained cautious after Britain’s decision to quit the European Union.
  • Oil prices fall as hopes of production freeze fade (Reuters) Oil prices slipped on Thursday as the market focused on oversupply and fading hopes of a production freeze. Global crude oil benchmark Brent LCOc1 was down 15 cents at $48.90 a barrel by 1043 GMT, having closed down 1.8 percent on Wednesday. U.S. light crude oil CLc1 was down 5 cents at $46.72 a barrel, after dropping 2.8 percent on Wednesday.
  • German Companies Get Delayed Brexit Shock as Confidence Plunges (Bloomberg) German business sentiment unexpectedly declined the most in more than four years in August in a sign that companies are waking up to the consequences Britain’s decision to quit the European Union will have on the economy. The drop in the key Ifo business climate index enforces the concern company executives from Siemens AG to Thyssenkrupp AG have raised in the previous weeks: Political uncertainty related to Brexit and a range of other crises in the region threaten to damp so-far solid growth in Europe’s largest economy. Business sentiment in France, whose recovery ground to a halt in the second quarter, also slipped this month.
  • Central bankers eye public spending to plug $1 trillion investment gap (Reuters) While markets wait for Janet Yellen’s latest message about the direction of monetary policy, the Federal Reserve chief and her colleagues already have one for politicians: the U.S. economy needs more public spending to shift into higher gear. In the past few weeks, Yellen and three of the Fed’s other four Washington-based governors have called in speeches and Congressional hearings for government infrastructure spending and other efforts to counter weak growth, sagging productivity improvements, and lagging business investment.
  • Bond Traders Are Desperate for Direction From Yellen in Jackson Hole (Reuters) The world’s biggest bond traders are getting fed up with Fedspeak. Weeks of conflicting economic reports have whipsawed investors seeking to handicap the path of interest rates, and money managers overseeing about $6 trillion, including Pacific Investment Management Co. and Vanguard Group Inc., say policy makers aren’t making their task any easier.
  • CIBC sees big jump in profit after gain on sale of U.S. money manager (Financial Post) Canadian Imperial Bank of Commerce said its fiscal third-quarter profit rose 47 per cent, boosted by a $383 million gain from selling its minority stake in U.S. money manager American Century Investments. Net income for the period ended July 31 rose to $1.44 billion, or $3.61 a share, from $978 million, or $2.42, a year earlier, the Toronto-based bank said Thursday in a statement. Profit excluding some items was $2.67 a share, beating the $2.34 average estimate of 14 analysts surveyed by Bloomberg.
  • TD Bank profit grows four per cent to $2.36 billion on strong U.S. bank earnings (Financial Post) TD Bank is reporting a third-quarter profit of $2.36 billion, up four per cent from a year ago on strong earnings from its U.S. retail banking operations. Last year, the bank earned $2.27 billion during the three months ended July 31. On a per share basis, TD earned $1.24 during the third quarter, compared with $1.19 during the same period last year.

Overnight markets

  • Overview: US 10yr note futures are down -0.1064% at 132-3, S&P 500 futures are down -0.24% at 2169.75, Crude oil futures are down -0.34% at $46.61, Gold futures are down -0.55% at $1322.4, DXY is down -0.13% at 94.661.

US Economic Data

  • 8:30 AM:  Initial Jobless Claims, August 20th, 261k, est. 265k (prior 262k)
    •     Continuing Claims, August 13th, 2145k, est. 2155k (prior 2175k)
    •     Durable Goods Orders, July P, 4.4%, est. 3.4% (prior -3.9%, revised -4.2%)
    •     Durable Ex Transportation, July P, 1.5%, est. 0.4% (prior -0.4%, revised -0.3%)
  • 9:45 AM: Markit US Services PMI, August P, est. 51.8 (prior 51.4)
    •     Markit US Composite PMI, August P, (prior 43.6)
  • 11:00 AM: Kansas City Fed. Manufacturing Activity Index, August, est. -2 (prior -6)

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
Fax: (514)-861-3230