US tsys are higher after rising for most of the o/n session, with a muted reaction to weaker July Pers spending data. US 10Y 2.16 (-3bps), European equities lower despite the surge in China (4.8%). Focus on various Fed speakers at the Jackson Hole symposium. Fed Bullard , Mester leaning towards Sep rate hike while Kocherlakota believes it is premature. Hilsenrath article in the WSJ (see above) notes foreign bankers are urging the Fed not to waiver and raise rates already. In Canada, GOCs are higher led by the 10Y (~5bps), reversing half of this week’s cheapening, spds ~1bp tighter vs tsys after mixed wholesale inflation data. Provis opening 0.5bps tighter, long Onts lifted @ 99.5, the 45/25 bx tighter as well 11.3/11.1. QC/Ont 45 rl unch 6/5.5.
- Overseas Bankers, Officials Urge Fed Not to Waver on Interest-Rate Rise (WSJ) After months of forewarning by Federal Reserve officials that they are preparing to raise short-term interest rates, some international officials attending the Fed’s annual retreat here this week have a message: Get on with it already.
- Greece’s Economy Surged as Tsipras Fought With EU Over Aid Deal (Bloomberg) Greece’s economy grew more than initially estimated in the second quarter as consumption surged during Prime Minister Alexis Tsipras’s battle with the euro area over financial aid.
- GDP data reveal surprising lift in UK trade figures (FT) Net trade made an unexpectedly big contribution to UK economic growth in the second quarter of the year, as the overall quarterly rate was confirmed at 0.7 per cent.
- This doesn’t look like a slowing economy to me’ (BI) The US economy is rolling along. In a note to clients following the market close on Thursday, Deutsche Bank economist Torsten Sløk, who has been notably bullish on the US economy over the last year, circulated a chart showing that when you look at R&D spending trends, the economy appears solid.
- Concern over waning use of covenants in debt markets (FT) Just two or three beers will give most drinkers enough Dutch courage to take risks they would avoid sober. But after seven years at the Federal Reserve’s open bar, a lingering thirst for yield among lenders has stoked concern they are not taking out enough protection on the loans they make.
- TD profit tops forecasts as Canada’s banks defy low oil prices, economic worries (G&M) Toronto-Dominion Bank continued a trend among Canada’s big banks this week, reporting strong profit growth in the third quarter despite widespread concerns about the impact of low oil prices and a contracting Canadian economy.
- Overview: IG24 5Y 78.5/79.5 (+0.75), US 10yr note futures are up +0.15% at 128-04+, S&P 500 futures are down -0.62% at 1977.0, Crude oil futures are down -1.13% at 42.08, Gold futures are up +0.36% at $1126.6, DXY is flat at 95.608.
- US BANK CDS (5yr): BAC 76/81 (+0), GS 95/100 (+0), MS 86/91 (+0), C 88/93 (+1), JPM 77/82 (+0), WFC 55/60 (-1)
US Economic Data
- Personal income came in at 0.4% MoM in July compared to June 0.4%.
- Personal spending grew 0.3% MoM in July versus previous month 0.3%.
- PCE came in at 0.1% MoM (0.3% YoY) in July versus June 0.2% MoM (0.3% YoY).
- PCE core increased 0.1% MoM (1.2% YoY) in July compared to 0.1% MoM (1.3% YoY) in June.
- University of Michigan confidence (Final) is expected at 93.0 in August 0.1 point higher than preliminary report.
Canadian Economic Data
- Industrial product price increase 0.7% MoM in July after climbing in June 0.5%.
- Raw materials price index came in at -5.9% MoM in July versus +0.2% for previous month.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240