Market update
US tsys sharply lower on strong Q4 GDP (1.0 vs 0.4) after inventories revised higher. in range bound session (7 ticks in TY1), US 10Y 1.76 (+5bps). Core Euro bonds mixed – curves steeper with longs underperforming. German CPI & HICP both came in lower than exp. With CPI lower in both Germany & France in Feb expectations for additional stimulus at the March 10th ECB meeting have risen based on Eonia forwards Risk on trade pressuring bonds with European equities higher for a second day led by 3% rise in energy on higher crude back above $33.00. GOCs are lower led by 10s which are 4bps cheaper on the curve so far. Today’s rescheduled UST 7Y auction could put additional pressure on the belly of the curve. Provies opening tighter Ont longs -2bps @ 119 on Ontario budger with lower deficits for FY 15/16 and lower net borrowing. TD in the market with a 10Y sub debt issue @ ~362 which looks like a 10-15bp concession at first glance…
News headlines
- Global Stocks Rise With Commodities as China Sees Room to Ease (Bloomberg) Stocks rallied around the world and oil gained with industrial metals as China’s central bank said it sees room for monetary easing in the build-up to Group of 20 finance chiefs’ discussions on the global economy.
- How the Fed’s Cold War With Congress Could Harm the U.S. Economy (Bloomberg) Federal Reserve Chair Janet Yellen’s relations with Congress look as strained as those of her predecessor, and that could undermine the central bank’s ability to confront the next crisis. At a time when it may require congressional support for new powers should the U.S. economy stumble, the Fed is fending off lawmaker criticism of its policies, while enduring attacks from candidates campaigning to be the next president.
- French Fourth-Quarter Growth Revised Up on Consumer Spending (Bloomberg) The French economy grew faster in the fourth quarter than initially estimated as household spending recovered quickly after the Nov. 13 terrorist attacks. Gross domestic product expanded 0.3 percent in the final three months of the year instead of the 0.2 percent estimated Jan. 29, national statistics office Insee said Friday. Consumer spending rose 1 percent in December, instead of the 0.7 percent originally estimated, reducing its drag on fourth-quarter GDP, Insee said.
- Laid Bare in Shanghai: G-20 Tensions Over How to Spur Growth (Bloomberg) Global finance chiefs split over how best to revive the world economy, risking disappointment for investors seeking a coordinated campaign. Differences were laid bare on Friday as central bankers and finance ministers from the Group of 20 developed and emerging markets gathered for talks in Shanghai.
- Countries should use all policy levers to support economy: Lew (Bloomberg) U.S. Treasury Secretary Jack Lew on Friday urged countries to avoid competitive devaluation and said it was increasingly important to use all available policy tools to address a shortfall in global demand.
- Germany’s Schaeuble says little room left for more monetary stimulus (Bloomberg) Germany’s finance minister, Wolfgang Schaeuble, said on Friday that many policy makers from the Group of 20 leading economies agreed that there was little room left for additional monetary measures by central banks.
- Oil set for weekly rise as gasoline buoys prices (Bloomberg) Crude oil prices reversed early losses on Friday, with Brent on track for its first weekly gain in a month, as strong U.S. gasoline demand and hopes of OPEC action outweighed concerns over fundamental oversupply.
- China Flags Scope for Policy Stimulus, Tweaks Monetary Stance (Bloomberg) China’s central bank tweaked the description of its monetary policy stance to reflect a recent ramp-up in liquidity injections and moves to guide money market rates lower, with Governor Zhou Xiaochuan highlighting the scope for further actions if needed.
Overnight markets
- Overview: US 10yr note futures are down -0.4517% at 130-28, S&P 500 futures are up 0.5% at 1960.25, Crude oil futures are up 3.3% at $34.16, Gold futures are down -0.79% at $1229, DXY is up 0.47% at 97.746.
US Economic Data
- GDP Annualized QoQ growth was released at a level of 1.0%, beating the analysts estimate by 0.6% and up from prior quarter
- Personal Consumption Spending growth came in at 2.0%, worse than expected and down from prior month
- GDP Price Index growth was released at a level of 0.9%, beating the analysts estimate and down from prior quarter
- Core PCE QoQ growth was 1.3%, better than expected and up from prior quarter
- Personal Income growth will be released at 10:00 AM
- Personal Spending growth will be released at 10:00 AM
- University of Michigan Sentiment will be released at 10:00 AM
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