cti2015header-morning comments web

Market Update

  • US tsys/ GOCs slightly higher in another quiet overnite session as mkts await Fed Yellen’s speech at Jackson Hole at 10:00EST. US Q2 GDP in line with exp, the GDP deflator revised higher to 1.8% from 1.7%Fed Bullard on the tape saying inflation is low but not that low, and that it is ‘time to rethink normalization’. Core Euro bonds higher, 10Y bund -0.078% on light volume. Euro stocks flat, the Nikkei fell 1.0% on financials & healthcare, the USDJPY in close to weekly resist ~100.37. Provis opening unch after closing unch yest, sprds have been in a narrow 2bp range over the last two weeks – no issuance yest thou QC 10Y still rumored. Impressive results for Q3 from Cdn banks so far, TD &CM both beat exp this morn joining RY & BMO. We tradedthe new Manu Bank 5Y yest in context of issue spread, and are buyers of VSNCN 19s, TD 4.859 (NVCC).

News headlines                                                                                                   

  • Global equities set 2-week low before Yellen speech, dollar dips (Reuters) Global shares slipped to a two-week low and the dollar edged down on Friday as investors turned cautious before a keynote speech by Federal Reserve Chair Janet Yellen that could map out a clearer path for U.S. interest rates. The MSCI All-Country World index .MIWD00000PUS was down 0.1 percent by 1041 GMT, after slipping to its lowest level since Aug. 9 earlier in the session. The pan-European STOXX 600 index also fell 0.1 percent.
  • Oil prices dip as Saudi Arabia dampens prospects of output freeze (Reuters) Oil prices dipped in early trading on Friday after the Saudi energy minister tempered expectations of strong market intervention by producers during talks next month. International benchmark Brent crude oil prices were trading at $49.55 per barrel at 0114 GMT, down 12 cents from their previous close.
  • All quiet before Yellen: dollar dips as Fed speech approaches (Reuters) The dollar inched down on Friday to leave it little changed on the week, with investors focused on a speech later in the day by the chair of the Federal Reserve that may signal whether U.S. interest rates will rise this year. Janet Yellen’s keynote address at a global gathering of central bankers in the U.S. mountain resort of Jackson Hole is due at 1400 GMT.
  • Euro zone lending picks up, easing pressure on ECB to act (Reuters) Lending to euro zone companies and households grew steadily in July, suggesting the region’s modest economic recovery remains on track after the Brexit vote and easing pressure on the ECB to provide more stimulus. Loans to companies rose 1.9 percent year-on-year in July, up from 1.7 percent a month earlier and the fastest rate in five years, European Central Bank data showed. Household lending grew by 1.8 percent, matching a June reading that was revised up from 1.7 percent.
  • CIBC says it could weather housing crash of up to 30% in Canada as earnings beat expectations (Financial Post) A steep drop in home prices of 30 per cent and a spike in unemployment to 11 per cent across the country would cost Canadian Imperial Bank of Commerce less than $100-million in mortgage losses, according to the bank’s stress tests. On a conference call with analysts Thursday, where the topic of a potential housing downturn was raised, CIBC’s chief risk officer Laura Dottori-Attanasio told analysts that the bank assumes losses in such a scenario would include some insured mortgages where claims would be denied by overwhelmed insurers.
  • Canada — and particularly Alberta’s oil industry — paying higher price for climate change policy than U.S. (Financial Post)  As Alberta struggles with its most devastating recession ever, a new study highlights why different climate change policy choices made by Canada and the United States point to continued hardship for Canada’s top oil producing province. The two trading partners are focusing on different areas for GHG reductions and are using different policy tools because of their unique resource endowments, geography, climate, history and politics, according to the study by IHS Energy, led by Kevin Birn.
  • Canada’s Harper, Iconic Conservative Leader, to Quit Politics (Bloomberg) Stephen Harper, who united and revived Canada’s conservative movement and led it to three election victories, will resign as a lawmaker Friday to work as a consultant, a person familiar with his plans said. Harper, 57, will launch a Calgary-based consulting firm, Harper and Associates, providing strategic advice with a focus on developing international business, according to the person, who was not authorized to speak publicly about the matter.

Overnight markets

  • Overview: US 10yr note futures are up 0.071% at 132-5, S&P 500 futures are up 0.01% at 2173.75, Crude oil futures are up 0.3% at $47.47, Gold futures are up 0.68% at $1333.6, DXY is down -0.27% at 94.516.

US Economic Data

  • 8:30 AM: Wholesale Inventories, m/m, July P, 0.0%, est. 0.1% (prior 0.3%, revised 0.2%)
    • GDP Annualized, q/q, 2Q S, 1.1%, est. 1.1% (prior 1.2%
    • GDP Price Index, 2Q S, 4.4%, est. 2.2% (prior 2.2%)
    • Personal Consumption, 2Q S, 2.3%, est. 4.2% (prior 4.2%)
    • Core PCE, q/q, 2Q S, 1.8%, est. 1.7% (prior 1.7%)
  • 10:00 AM: University of Michigan Sentiment, August F, est. 90.8 (prior 90.4)

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