Market Update
Tsys midly weaker , narrow o/n range , decent volume in TY futures (335k), US 10Y 2.33 (+2bps). No reaction to stronger than Core Euro bonds weaker as well, yields 1-2 bps higher, 10Y bund 0.198%. French yields lower for a fourth day, poll suggest Le Pen is lagging. The latest CFTC COT report for Feb 21stshowed large specs adding to net shorts in FF and Edlrs, while paring net shorts in the 10Y note by 39k to -302k (from record short -395k week of Jan 13th). GOCs weaker, outperforming tsys out to ten yrs, longs lagging on the GOC curve for a third day, 10s30s 72.2. Provis unch from Friday – spds closing 1-2bps tighter on the week. Corps on the back foot as well for change, weighed by fin’ls despite stonger earnings from RY (stock -1.7%) and CM (stock -0.69%). BCE new issue (7s & longs) closed 2 wider as well after tightening 3-4bps on the break.
News headlines
Politics Reigns as French Bonds Gain, Pound Slips: Markets Wrap (Bloomberg) Politics deepened its hold on markets, after French electoral polls boosted the country’s bonds and reports of a potential Scottish independence referendum sank the British pound. The dollar was little changed before a key speech from U.S. President Donald Trump.
Oil gains as bullish bets on rising prices hit record high (Reuters) Oil prices rose on Monday as investors showed record confidence in prices rising further, though gains were capped by the prospect of faster growth in U.S. oil production. Brent crude oil LCOc1 rose 52 cents to $56.51 a barrel by 1224 GMT, while U.S. West Texas Intermediate CLc1 added 42 cents to $54.41.
China FX regulator says strengthening supervision of forex market (Reuters) China’s foreign exchange regulator said on Monday that it will strengthen supervision of the forex market in 2017, while improving policy transparency and promoting the further opening of financial markets. Chinese authorities have taken a raft of steps in recent months to curb capital flight from the country to support the weakening yuan currency, while trying to attract more foreign investment.
LSE scuppers Deutsche Boerse merger hopes by rejecting EU demand (Reuters) The London Stock Exchange (LSE.L) has all but ended a planned merger with Deutsche Boerse (DB1Gn.DE) to create Europe’s biggest stock exchange by ruling out a European antitrust demand, saying it has strong prospects alone. In a bid to create a European trading powerhouse that would better compete against U.S. rivals making inroads on their home turf, the two exchanges struck a 29 billion euro ($30.1 billion) deal just over a year ago.
Trillions of Dollars on the Line When Trump Speaks to Congress This Week (Bloomberg) Donald Trump’s address to Congress on Tuesday is taking on the importance of a State of the Union speech when it comes to U.S. financial markets. For investors relying on more than a year of campaign promises of a pro-growth agenda to push U.S. stocks to record highs, the dollar surging and bond yields climbing, the prime-time speech to House and Senate lawmakers couldn’t come any sooner.
Foreigners’ Bets on Canada’s Housing Market Start With Its Banks (Bloomberg) One puzzle around the run-up in Canadian home prices is the extent to which foreign money is the driver. The idea is that rich people from places like China are buying up homes as an investment with no intention of ever living in Canada, pushing up the cost of housing for every one else.
Overnight markets
Overview: US 10yr note futures are down -0.124% at 125-15, S&P 500 futures are down -0.02% at 2364.5, Crude oil futures are up 0.89% at $54.47, Gold futures are down -0.13% at $1256.7, DXY is down -0.09% at 101, CAD/USD is up 0.12% at 0.7629.
US Economic Data
| 8:30 AM | Durable Goods Orders, Jan P, 1.8%, est. 1.6% (prior -0.5%, revised -0.8%) |
| Durables Ex Transportation, Jan P, -0.2%, est. 0.5% (prior 0.5%, revised 0.9%) | |
| Cap Goods Order Nondef Ex Air, Jan P, -0.4%, est. 0.5% (prior 0.7%, revised 1.1%) | |
| Cap Goods Ship Nondef Ex Air, Jan P, -0.6%, est. 0.2% (prior 1.0%, revised 1.6%) | |
| 10:00 AM | Pending Home Sales, m/m, Jan est. 0.6% (prior 1.6%) |
| Pending Home Sales NSA, y/y, Jan, (prior -2.0%) | |
| 10:30 AM | Dallas Fed Manufacturing Activity, Feb, est. 19.4 (prior 22.1) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence Index, Feb 24th, (prior 57.7) |
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