Market Update

US tsys paring earlier  losses following comments from ECB that Draghi’s comments yesterday were misinterpreted, tys yields now ~1.5bps lower in the short end, slightly higher out the curve, 10Y 2.21 (+0.7bps), heavy volume in TY1 futures (600k). Overnite tsy prices once again relatively flat in Asia then pressured lower in EGBs in continuation of yest post Draghi selloff. 10Y bund yield hit 0.40% before reversing lower, now 0.35% (-2.2bps).  Gilts lower, extending the bear steepening move from yest was close to 1.15% -highest since May 16th  before ECB clarification. GOCs are lower, underperforming tsys as the curve bear flattens as BOC Poloz reiterated that rate cuts ‘have done their job’ in interview on CNBC, the CAD above 0.76 for first time since Feb. Provis tightened 1bp yest , Ontario issued 10Y @ 73 yest ,now 72/71, Ontario credit curve flatter out to 10Y on higher all in yields. In corps, financials under pressure on issuance, BNS 7Y dep note @90.4 – 4-5bps conc., now 89/87.

News headlines 

Euro Extends Gain, Bonds Drop; Europe Stocks Slump: Markets Wrap (Bloomberg) The euro touched a one-year high and government bond yields climbed as investors digested a series of hawkish messages from central banks. European stocks sank as the global selloff in technology companies spread.

Japan, EU press ahead on free trade pact to counter U.S. protectionism (Reuters) Japanese and European Union negotiators meeting in Tokyo aim to reach a free trade deal that would stand against a protectionist tide threatening the global economy, and make the United States think twice over pursuing inward-looking policies.

Oil Snaps Longest Gain in a Month on Signs U.S. Supplies Rose (Bloomberg) Oil fell, snapping the longest run of gains in a month, as U.S. industry data showed crude stockpiles rose. Futures lost as much as 1.3 percent in New York after climbing 4 percent the previous four sessions. U.S. stockpiles expanded by 851,000 barrels last week, the American Petroleum Institute was said to report on Tuesday. That runs counter to expectations for government inventory data due to be published Wednesday, which is forecast to show inventories extended declines.

Cyber attack hits property arm of French bank BNP Paribas (Reuters) A global cyber attack has hit the property arm of France’s biggest bank BNP Paribas (BNPP.PA), one of the largest financial institutions known to be affected by an extortion campaign that started in Russia and Ukraine before spreading.

Fed’s Yellen expects no new financial crisis in ‘our lifetimes’ (Reuters) U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash.

Five questions still facing Home Capital ahead of its annual general meeting (Financial Post) Executives at Home Capital Group Inc. will face the company’s shareholders Thursday for the first time since a crisis of confidence pushed the alternative mortgage lender to the brink of collapse last month.

Overnight markets 

Overview: US 10yr note futures are down -0.062% at 126-07, S&P 500 futures are up 0.28% at 2427.25, Crude oil futures are down -0.36% at $44.08, Gold futures are up 0.36% at $1251.4, DXY is up 0.06% at 96.452, CAD/USD is down -0.69% at 0.763.

US Economic Data 

7:00 AM MBA Mortgage Applications, Jun 23, -6.2% (prior 0.6%)
8:30 AM Advance Goods Trade Balance, m/m, May,-$65.9b, est. -$66.0b (prior -$67.6b, revised -$67.1b)
Wholesale Inventories, m/m, May P, 0.3%, est. 0.2% (prior -0.5%, revised -0.4%)
Retail Inventories, m/m, May, 0.6%,  (prior -0.3%, revised -0.2%)
10:00 AM Pending Home Sales, m/m, May, est. 1.0% (prior -1.3%)
Pending Home Sales NSA, y/y, May, est. 0.5% (prior -5.4%)

Canadian Economic Data 

There is no 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