cti2015header-morning comments web

Market update

US tsys moving lower after Q1 GDP came in lower than exp, but core PCE stronger – US 10Y 1.86 after reaching a low 1.815 in Europe. Tsys  rallying overnite  in follow thru to post FOMC move yest, heavy volume in TY futs (438K). Big move in JPY/USD after BOJ surprised with no action on policy, the JPY surging 3.0%.  Global stocks al lower with the Nikkei down 3.6%, Euro stox down 1.8%. Core European bonds higher & flatter led by German bunds on weak German state inflation. Belgium announced its two tranche 7 & 50Y syndicated deal with order book for 50Y E8bln for 3bln size. Supply in the US today with $28bln 7Y & $15bln 2Y FRN and month end extension for tsys 0.09 yrs vs 0.14yrs for Europe. GOCs higher in line with tsys, provis  1bp wider after closing 4bps wider yest. We would expect Ontario to issue today as interest has been building steadily esp after latest pullback in spds, also they may want to front run what is shaping up to be a heavy corp calendar in May.

News headlines

  • Yen Jumps on BOJ Shock, Bonds Rally After Fed as Stocks Decline (Bloomberg) Even when they do nothing, central banks have the power to surprise and bewilder. The yen surged the most since August’s market meltdown and equities wilted after the Bank of Japan refrained from adding to its monetary stimulus. Bonds jumped around the world and gold rallied as the Federal Reserve signaled no hurry to raise interest rates. Inaction from the Reserve Bank of New Zealand triggered the kiwi’s biggest gain in a month.
  • Markets Get the Worst Kind of Kuroda Surprise as BOJ Stands Pat (Bloomberg) Haruhiko Kuroda hasn’t lost his power to jolt markets: but now he’s moving them by doing nothing. The yen soared the most in eight months and stocks sank in Tokyo on Thursday as the Bank of Japan Governor held off from adding to the central bank’s bond-buying program or its budget for exchange-traded equity funds. The move confounded economists, a slight majority of whom had expected extra easing, and investors, who’d pushed the Topix index higher and the yen toward a one-month low in the hours before the decision.
  • Bombardier Inc wins $5.6-billion Delta order in key boost to CSeries program (Financial Post) Delta Air Lines Inc. agreed to buy at least 75 CSeries narrow-body jets from Bombardier Inc., giving the Canadian manufacturer the marquee U.S. customer it has been seeking for months. Deliveries of the first jets will begin in 2018, Montreal-based Bombardier said Thursday in a statement. Based on published list prices, the order would be valued at about $5.6 billion, the company said, though carriers typically negotiate discounts. Delta also has options for an additional 50 planes.
  • New Zealand central bank keeps cash rate unchanged, retains easing bias (Reuters) New Zealand’s central bank kept its benchmark interest rate unchanged on Thursday at 2.25 percent but reiterated further easing may be needed given weak inflation. “Monetary policy will continue to be accommodative. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range,” said Governor Graeme Wheeler in a statement.
  • Greece’s lenders say working on policy package to close bailout review (Reuters) Greece’s official lenders said on Thursday that important progress has been made in talks with Athens on a bailout review that can pave the way for debt sustainability discusssions
  • What CMHC says about every major housing market in Canada (GlobeAndMail) CMHC’s quarterly study on what’s hot and what’s not highlights how many residential real estate markets are more hot than not. As The Globe and Mail’s Tamsin McMahon reports, Canada Mortgage and Housing Corp. flagged 10 markets for various measures and, for the first time, warned that Vancouver was looking frothy. That’s no surprise to many observers who have oft warned of overvaluation in Canada’s two hottest markets, Vancouver and Toronto.
  • Analysts Are Loving Facebook’s Latest Earnings Report (Bloomberg) Facebook Inc. just knocked the ball out of the park at a time when other technology companies are reporting less than stellar quarters. Both sales and profits beat Wall Street’s expectations as companies opt to focus more advertising dollars  on Facebook’s mobile app. Meanwhile, analysts are optimistic on newer platforms and initiatives such as Instagram and video. While shares had been trading in-line with the S&P 500 so far this year, they are poised for a 10 percent rise at the open of trading in New York.


Overnight markets

  • Overview: US 10yr note futures are down -0.0241% at 129-24, S&P 500 futures are down -0.62% at 2077.75, Crude oil futures are up 0.29% at $45.46, Gold futures are up 0.6% at $1257.9, DXY is down -0.53% at 93.891.      

US Economic Data 

  • 8:30 AM:    Initial Jobless Claims, April 23, 257k, est. 259k (prior 247k)
    • Continuing Claims, April 16, 2130k, est. 2136k (prior 2137k)
    • GDP Annualized, q/q, 0.5%, est. 0.7% (prior 1.4%)
    • Personal Consumption, 1Q A,  1.9% , est. 1.7% (prior 2.4%)
    • GDP Price Index, 1Q A,  0.7%, est. 0.5% (prior 0.9%)
    • Core PCE, q/q, 1Q A, 2.1%, est. 1.9% (prior 1.3%)
  • 11 :00 AM: Kansas City Fed Manufacturing Activity (prior -6)

Canadian Economic Data 

  • There no major economic data 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