Market update
US tsys trading higher yet well off earlier highs, US 10Y 2.144 (-2bps). Personal income , PCE came in as exp for August. Equities weaker on story ECB will no longer buy VW backed auto loans and Glencore shares continue to collapse. NY Fed Dudley saying Fed will likely raise rates this year, Oct is ‘live meeting’. GOCs are higher, led by 10s, 2s/10s ~2bps flatter @ 96. Provis opening wider, reversing Friday’s ~1bp tightening after Thurs 2-3bp hamering… We continue to see some picking away at the Ont 20/19 rl (19s look exp).
News headlines
- Alcoa to Split Into Two Companies (WSJ) Struggling Aluminum maker Alcoa Inc. said Monday that it would split into two publicly traded companies next year, joining the recent wave of companies looking to spur growth by breaking up.
- Big US banks lose patience with Fed (FT) Janet Yellen’s decision to delay an interest rate rise has worsened the outlook for big US banks, prompting them to try to eke out profits by shifting excess cash into longer-term assets.
- German Prosecutors Investigating Winterkorn, Volkswagen’s Ex-Chief (NYT) German prosecutors said on Monday that they had begun an investigation of Martin Winterkorn, who until last week was the chief executive of Volkswagen, based on complaints from unidentified people that he should be held responsible for a widening scandal linked to diesel-emissions.
- Investors Pull Back From Junk Bonds (WSJ) Investors are pulling back from the junk-bond market, in a shift that threatens to slow the global mergers-and-acquisitions boom. Tepid demand forced European cable company Altice NV and U.S. chemical producer Olin Corp. in recent days to reduce the size of bond sales and boost interest payments.
- The More Yellen Talks Up Inflation, the Less Traders Believe Her (Bloomberg) The bond market isn’t buying what Federal Reserve Chair Janet Yellen is selling on inflation.
Overnight markets
- Overview: IG24 5Y 86.429/86.979 (+2.597), US 10yr note futures are up +0.18% at 128-02+, S&P 500 futures are down -0.55% at 1908.75, Crude oil futures are down -2.01% at 44.78, Gold futures are down -1.15% at $1132.4, DXY is up +0.09% at 96.360.
US Economic Data
- Personal income came in at 0.3% MoM in August compared to July 0.5%.
- Personal spending grew 0.4% MoM in August versus previous month 0.4%.
- PCE came in at 0.0% MoM (0.3% YoY) in August versus July 0.1% MoM (0.3% YoY).
- PCE core increased 0.1% MoM (1.3% YoY) in August compared to 0.1% MoM (1.2% YoY) in July.
- Pending home sales are forecast at 0.4% MoM (8.1% YoY) in August versus July 0.5% MoM (7.2% YoY).
- Dallas Fed is forecast at -10.0 in September higher than August -15.8.
Canadian Economic Data
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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
Fax: (514)-861-3230