Market Update

US tsy yields slightly lower, curve 0.5bps flatter, US 10Y 2.24% (-1.1bps).  Crude above $51.00 (+1.1%) after OPEC said the latest production cuts are working. Core Euro bonds higher led by German bunds, euro currency lower after Angela Merkel’s win was clouded by strong showing of far right AFD party.  Quiet on the data front this week yet Fed speakers including Yellen tomorrow and Fischer on Thursday could shed some light on the Fes’s balance sheet unwind. Supply this week with the US Tsy auctioning $101bln in 2Y, 5Y & 2Y FRNs.  GOCs slightly lower in the short end, 10Y unch 2.11%, Poloz speech this Wednesday the main focus after Lane warned the central bank is paying close attention to short term rates and the dollar. Provis starting the week 0.5bps tighter , outlook is for more 10 & 30Y supply this week from Ont/QC after Alberta & BC long deals last week, with the GOC curve at the flattest levels in ~10 yrs.

News headlines 

Merkel’s Bloc Regroups After ‘Nightmare Victory’ in Germany (Bloomberg) Angela Merkel’s political bloc is starting to draw lessons from its electoral losses to the Alternative for Germany party as pressure mounts for the chancellor to win back voters lost to the populist right.

Shinzo Abe of Japan Calls Early Election, as a Rival Party Forms (NYTimes) Seizing on anxiety over tensions about North Korea and the opposition’s weakness, Prime Minister Shinzo Abe of Japan called Monday for an early election next month.

Bank of England asks banks to hold more capital on consumer loan risks (Reuters) British lenders need to hold around an extra 10 billion pounds ($13.5 billion) in capital to guard against increased risks from rapidly rising unsecured consumer lending, the Bank of England said on Monday.

TSX futures edge higher with oil prices (Reuters) Canada’s main stock index futures inched higher on Monday as oil prices rose after major producers said at a meeting that the global market was well on its way towards rebalancing.

Iron Ore Succumbs to Bear Market and May Extend Slump Into $50s (Bloomberg) Iron ore has slumped back into a bear market after posting the biggest weekly loss in 16 months amid concern that record demand in China may ease off as mills enact winter output cuts just as data from the top user signals that the economy may be cooling.

U.S. dairy takes aim at Canada’s supply management system in NAFTA talks (TheGlobeandMail) The first punches in what promises to be a bitter fight over Canada’s protected dairy industry are expected to be thrown during this week’s third round of North American Free Trade talks in Ottawa.

Overnight markets 

Overview: US 10yr note futures are up 0.087% at 125-27, S&P 500 futures are down -0.09% at 2497.25, Crude oil futures are up 1.26% at $51.3, Gold futures are down -0.24% at $1294.4, DXY is up 0.43% at 92.568, CAD/USD is down -0.22% at 0.8121.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.61% 2 Year 1.435%
5 Year 1.816% 5 Year 1.86%
10 Year 2.11% 10 Year 2.246%
30 Year 2.444% 30 Year 2.779%

US Economic Data

8:30 AM Chicago Fed Nat Activity Index, Aug, -0.31 est. -0.25 (prior -0.01 revised 0.03)
10:30 AM Dallas Fed Manufacturing Activity, Sep, est. 11.5 (prior 17)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Sep. 11.5 (prior 17)


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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230