cti2015header-morning comments web

Market Update

– Tsys opening higher,10Y yields lower for a fifth straight day, on ‘risk off’ session as Euro stocks are off 1.6%, Nikkei fell 1.25% & US stock futures moving lower as well. Deutsche Bank fell ~7% to a record low on news the German govt has ruled out assistance.  Crude oil rebounding on speculation producers will agree to cur production at this Wednesday’s meeting in Algiers. German bunds trading higher on sharp declines in bank stocks with the 10Y bund ~1bp lower at -0.096%. German business sentiment rebounded sharply in Sept, based on the 3pt jump in the latest IFO index to a 27-month high. JGBs mixed with the long end lower, curve 4bps steeper – Kuroda said the BOJ’s move to control the Japanese govt yield curve will give them more flexibility with its bond purchase program. In Canada, GOCs opening higher lagging the rally in tsys by 1-2bp across the curve, yet after Friday’s impressive 6bp outperformance on weak Cdn CPI & retail sales. Strong buying in CGBs led the 10Y sector higher Friday, ~2bps narrower on the GOC curve. Provi spreads resisted the move lower in GOC yields, 10Y Onts trading up at 82.5 Fri aft – Ont 10Y yield has broken below the lows of July at 1.85%. Spds opening this morn unch, Ont rumoured for this morn given where spds/yields are.  First Cap Realty reopened their 10Y issue on Thurs at 217, now 220/215.

News headlines                                                                                                                                  

– Stocks Drop on Bank, Commodity Company Woes; Turkish Lira Falls (Bloomberg) European stocks headed for their biggest drop since July as banks and energy producers dragged equities lower around the world, prompting investors to retreat to   the safety of government bonds and the yen.

Oil rises as OPEC meets, volatility hits post-Doha high (Reuters) Oil rallied on Monday as the world’s largest producers gathered in Algeria to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April. Scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low last week, when prices fell by nearly 5 percent, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.

Deutsche Bank Slumps to Fresh Record Low on Capital Concerns (Bloomberg) Deutsche Bank AG shares dropped to a record low amid concerns that mounting legal bills, including a looming fine over its pre-crisis mortgage bond business, may force the German lender to raise capital. The shares declined as much as 6.9 percent and traded at 10.71 euros at 12:38 p.m. in Frankfurt, down 6.1 percent. That brings losses to about 53 percent this year. The 38-member Bloomberg Europe Banks and Financial Services Index slipped 2.4 percent, with Deutsche Bank the worst performer.

IMF welcomes BOJ new policy framework, sees 2 percent inflation elusive (Reuters) The International Monetary Fund said on Monday that a new monetary policy framework adopted by the Bank of Japan marked « progress », but stuck to its view that the central bank won’t be able to hit its ambitious 2 percent inflation goal anytime soon.

China launches $52.5 billion state enterprise restructuring fund, report says (Reuters) China has launched a 350 billion yuan ($52.5 billion) restructuring fund as the government pushes ‘supply-side’ reforms that have included mergers of inefficient state enterprises and laying off workers in struggling sectors such as coal and steel. The China State-owned Enterprises Restructuring Fund will be managed by the State-owned Assets Supervision and Administration Commission (SASAC), the Economic Information Daily, a newspaper run by the official Xinhua news agency, reported on Monday.

Carney’s Corporate-Bond Purchases May Worsen Liquidity Squeeze (Bloomberg) The start of the Bank of England’s corporate-bond buying program on Tuesday may exacerbate already tight liquidity in the sterling debt market. The central bank plans to purchase 10 billion pounds ($13 billion) of sterling investment-grade corporate debt over 18 months, heightening competition in a relatively small market that is dominated by investors who favor sterling assets, such as U.K. pension funds. It also adds to a wider debt-market pinch, partly caused by the start of a similar European Central Bank corporate-bond buying program in June.                                                                                                                  

Overnight markets

– Overview: US 10yr note futures are up 0.1431% at 131-7, S&P 500 futures are down -0.43% at 2148.75, Crude oil futures are up 1.39% at $45.1, Gold futures are up 0.07% at $1342.6, DXY is down -0.27% at 95.222.

US Economic Data

– 10:00 AM:  New Home Sales, Aug, est. 600k (prior 654k)

New Home Sales, m/m, Aug, est. -8.3% (prior 12.4%)

– 10:30 AM:  Dallas Fed Manufacturing Activity, Sep, est. -3.0 (prior -6.2)

Canadian Economic Data

-There is major economic data release 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
Fax: (514)-861-3230