- US tsys higher, US 10Y 1.558 (-1.8bps) curve flatter in ‘risk off’ move as the Nikkei fell 1.5% and the Yen rose on rumors of smaller than expected BOJ stimulus. Japan’s finance minister said the size of the fiscal stimulus package has yet to be decided. Core Euro bonds higher led by 10Y gilts with the 10Y gilt/bund spread at new lows – gilts supported by comments from BOE Weale who favors immediate stimulus for the UK economy. GOCs trading higher in line with tsys, 2s/10s another ~2bps flatter. Provis opening unch after better buying yest afternoon closed spds 1/2bp tighter. Expectations still high for supply based on solid tone, low all in yields part at the 10Y and before tomorrow’s GOC 10Y auction.
- Yen Gains With Bonds Before Central Banks Meet; Stocks Fluctuate (Bloomberg) A sense of caution dominated financial markets Tuesday, with haven assets including the yen and Treasuries gaining as central banks prepared to meet this week in the U.S. and Japan. Worse-than-expected earnings from BP Plc weighed on European stocks.
- Canadian National Railway Co earnings slip as decline in shipments cut into company’s revenue (FinancialPost) Canadian National Railway Co reported slightly lower second quarter earnings on Monday as a decline in shipments cut into revenue, but said it expects volumes to improve in the months ahead. Chief Executive Luc Jobin said the railway faced a “very challenging volume environment” in the quarter, but sees business improving in the second half.
- Brace yourself for a fall in oil prices: Morgan Stanley warns ‘correction is upon us’ (FinancialPost) Gear up for a fall in oil prices. The global oil market is “severely oversupplied” with gasoline — with stocks at a five-year high — serving as a blow to crude prices from next month, reckon Morgan Stanley analysts led by Adam Longson.
- WestJet profit beats as passenger traffic rises, fuel costs fall (Reuters) Canada’s WestJet Airlines Ltd WJA.TO reported higher-than-expected quarterly revenue and profit as its passenger traffic rose and fuel costs fell. WestJet’s fuel expenses, typically an airline’s largest variable cost, declined 15 percent in the second quarter ended June 30.
- Russia’s Currency Is Turning a Blind Eye to Oil Prices (Bloomberg) The Russian ruble is proving surprisingly impervious to the price of oil. The currency of the world’s largest energy exporter has more or less ignored the value of the commodity in the past few months, according to Citigroup Inc. analysts led by Luis Costa.
- Canada is reverting to its pre-1992 telecom conditions (TheGlobeandMail) Some Canadians will recall the early days of Canadian telecom, prior to the introduction of competition 2 1/2 decades ago. Telephone companies such as Bell and Telus were 100-per-cent monopolies, part of a national consortium. In those days, a voice call from Toronto to Vancouver cost $1 a minute, under a guaranteed-rate-of-return regime provided to the consortium companies by Canadian regulators. In essence it was a utility, like the electric power providers.
- Anti-Keystone XL group takes first shot at its new target: Energy East (FinancialPost) The big U.S. green group that led the assault against Keystone XL is firing its opening salvo Tuesday against Energy East, joining an already-crowded field of opponents and proving Alberta’s and Canada’s climate change plans are failing to moderate anti-pipeline campaigns.
- Overview: US 10yr note futures are up 0.0592% at 132-5, S&P 500 futures are down -0.02% at 2161.75, Crude oil futures are down -1.65% at $42.42, Gold futures are up 0.05% at $1327.8, DXY is down -0.16% at 97.134.
US Economic Data
- 9:45 AM: Markit US Service PMI, July, est. 52.0 (prior 51.4)
- Markit US Composite PMI, July, (prior 51.2)
- 10:00 AM: Consumer Confidence Index, July, est. 96.0 (prior 98.0)
- Richmond Fed Manufacturing Index, July, est. -5 (prior -7)
- New Home Sales, June, est. 560k (prior 551k)
- New Home Sales, m/m, June, est. 1.6% (prior -6.0%)
Canadian Economic Data
- There is major economic news 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