Market Update
Tsys trading unch yet off the lows after weaker Q4 GDP (1.9% unrevised vs 2.1% exp), curve ~1bp flatter, US 10Y 2.358 (-0.7bps), equity futures slightly lower, crude -0.28% @ 53.90. Mkts await Trump speech to Congress tonite. Dallas Fed Kaplan on CNBC said its time for the Fed to remove accommodation ‘sooner rather than later’. Core Euro govt bonds lower, bund yields 1-3 bps higher, 10Y bund 0.211 vs Friday’s low 0.182%. Peripherals mixed – Italy yields lower for a third day, France 10Y +2.5bps @ 0.895% – France CPI weak yet little impact. GOCs higher, 10Y 1.62 (-2bps), spds 2bps narrower vs tsys. Provis ended yest better offered, Ont rumourd for today in longs as well as MP. Crombie Reit reopened their 21s for $75mln @ 245 , which looked ~7bps cheap.
News headlines
Stocks Steady, Dollar Slips Before Trump Address: Markets Wrap (Bloomberg) Investors mostly hit the pause button on Tuesday, with European stocks trading little changed and the dollar paring this month’s gains before President Donald Trump addresses Congress. Oil declined. Shares of raw-material producers fell as the outlook for industrial metals worsened, while construction companies rose a second day after Trump said Monday he’ll spend “big” on infrastructure. Yields on Treasuries were little changed after rising at the start of the week as the odds of a Federal Reserve interest-rate increase in March jumped.
Oil prices dip, rising U.S. output offsets OPEC cuts (Reuters) Global oil prices dipped on Tuesday but continued to trade in a tight range with the OPEC-led output cuts offset by increasing crude production from the United States. The Organization of the Petroleum Exporting Countries has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards – the United Arab Emirates and Iraq – pledge to catch up quickly with their targets.
Exclusive: Saudi Arabia wants oil prices to rise to around $60 in 2017 – sources (Reuters) Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year, five sources from OPEC countries and the oil industry said. This is the level the OPEC heavyweight and its Gulf allies – the United Arab Emirates, Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said.
Competitive Gains Drive Poloz’s Steadfast Caution on the Loonie (Bloomberg) Bank of Canada Governor Stephen Poloz has been keen to point out how much weaker his country’s economy is relative to the U.S., ostensibly in a bid to ensure investors don’t get too far ahead of themselves pricing in interest rate hikes.
BMO tops forecasts; announces share buyback (TheGlobeAndMail) Bank of Montreal, Canada’s fourth-biggest lender, on Tuesday reported much higher-than-expected quarterly earnings and announced plans to buy back 15 million of its shares. Net income for the first quarter ended on Jan. 31 rose to $1.49-billion, or $2.22 per share, from $1.07-billion, or $1.58 per share, a year earlier.
Valeant’s revenue falls for third straight quarter (TheGlobeAndMail) Valeant Pharmaceuticals International Inc. reported a 12.9 per cent fall in quarterly revenue on Tuesday, its third straight quarter of a double-digit percentage decrease, as sales declined across its businesses and realized prices fell.
Overnight markets
Overview: US 10yr note futures are up 0.025% at 124-20, S&P 500 futures are down -0.08% at 2366.25, Crude oil futures are down -0.85% at $53.59, Gold futures are down -0.23% at $1255.9, DXY is down -0.08% at 101.05, CAD/USD is up 0.26% at 0.7567.
US Economic Data
| 8:30 AM | GDP Annualized, q/q, 4Q S, 1.9%, est. 2.1% (prior 1.9%) |
| GDP Price Index, 4Q S, 2.0%, est. 2.1% (prior 2.1%) | |
| Personal Consumption, 4Q S, 3.0%, est. 2.6% (prior 2.5%) | |
| Core PCE, q/q, 4Q S, 1.2%, est. 1.3% (prior 1.3%) | |
| Wholesale Inventories, m/m, Jan P, -0.1%, est. 0.4% (prior 1.0%, revised 0.9%) | |
| 9:45 AM | Chicago Purchasing Manager, Feb, est. 53.5 (prior 50.3) |
| Conference Board Consumer Confidence Index, Feb, est. 111.0 (prior 111.8) | |
| 10:00 AM | Richmond Fed Manufacturing Index, Feb, est. 10 (prior 12) |
Canadian Economic Data
| 8:30 AM | Industrial Product Price, m/m, Jan, 0.4%, est. 0.5% (prior 0.4%, revised 0.3%) |
| Raw Materials Price Index, Jan, 1.7%, est. 1.2% (prior 6.5%) |
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