Market update
US tsys unch, yields on the rise as oil and stocks recover from earlier weakness – US 10Y 2.0% after falling to 1.96% in early European trading. WTI fell ~3.7% to $29.20 then bounced on DJ news that Saudi & Russia were more on oil cuts (BN). US Tsy auctions $26bln 2Y notes at 1:00PM before heavier supply next week (2Y FRN, 5 & 7 Y notes for $79bln). Latest JPM Treasury Client Survey showed the most shorts among All Clients since August 3, 2015 at 27. GOCs opening lower, spds unch with tsys. Eco calendar sparse until Friday’s Nov GDP. Provi spds opening another 0.5-1bp weaker after a brutal session yest. Onts closed 3bps wider, Alberta reopened their June 25s @Ont +12 – they closed 13.5/12.5 and are 15/13 this morn! Even as crude is higher on the day. Deere came with a CAD 3Y @ 135 – recall they issued a USD 3Y back on Jan 5th at t+85/GOCs + 105. So spds ~30 bps wider over 2 weeks, so looked like a 5-10bp concession to us.
News headlines
- China shares end at 14-month lows after late selling frenzy (Reuters) Chinese shares plunged more than 6 percent to 14-month lows on Tuesday after oil prices dropped again, reviving concerns about global growth and prompting a sell-off in the world’s equity markets.
- Investment inflows into Brazil soar as external gap meets forecasts (Reuters) Foreign direct investment into Brazil came in December at more than twice the amount estimated by analysts, as a weakening currency and declining asset prices triggered a jump in merger and acquisition activity at the end of last year.
- German two-year yields hit new low as March ECB cut priced in (Reuters) German two-year bond yields hit a record low on Tuesday as another fall in oil prices prompted a dip in money market rates, implying that investors expect the European Central Bank to cut its deposit rate in March.
- ‘Ocean of fear’: Canadian investors sitting on record cash pile risk billions in lost returns (Financial Post) A new report suggests Canadians are sitting on a record $75-billion in excess cash in their portfolios, fearful of making a move in today’s volatile markets.
- Brexit ‘would trigger economic and financial shock’ for UK (The Guardian) A UK vote to leave the EU would trigger a snap recession, prompt a fall in share prices and house prices and knock as much as 2% off GDP, according to analysts at the investment bank Credit Suisse.
Overnight markets
- Overview: US 10yr note futures are up +0.07% at 128-21, S&P 500 futures are up +0.36% at 1877.00, Crude oil futures are up +1.02175%% at 30.65$, Gold futures are up +0.75072% at $1113.90, DXY is down -0.017% at 99.328.
US Economic Data
- The S&P/Case-Shiller 20-City Composite rose 5.8 percent year over year in November, above consensus estimates for a 5.6-percent jump and faster than the 5.5-percent increase in October.
- Markit Services and Composite PMI data is due at 9h45am
- US Consumer Confidence survey and Richmond Fed business survey for January will also be out at 10am
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230