cti2015header-morning comments web

Market update 

US tsys mixed, curve flatter US 10Y unch @1.47%, longs well bid for a second day, 10s30s 2bps flatter.  Global stocks higher with the Nikkei +1.59% and Euro stocks ~2%. Commodities higher – crude up another 0.65% after 3% increase yest on API data which showed larger decline in inventories than exp.  Tsys fell in Asia trade as the Nikkei rose for a third day, expectations for further stimulus from the BOJ are fairly high after retail sales posted their third straight y/y decline. GOCs opening weaker, curve flatter, GOC 10Y 1.09% with 1.06% being the post Brexit low Friday. BOC auctions $3.9bln in 2Y notes at noon-reopened 0.25% May 1 18s. Provis tighter again today by 0.5bps after narrowing yest, expect supply with early close tomorrow.

News headlines                                                                                                                                       

  • Merkel Says No Way Back From Brexit as Cameron Regrets Loss (Bloomberg) European Union leaders said there could be no turning back for the U.K. after Prime Minister David Cameron used his last EU summit to express disappointment at his failure to win the referendum he called on Britain’s membership. “As of this evening, I see no way back from the Brexit vote,” German Chancellor Angela Merkel told reporters after the meeting in Brussels on Tuesday. “This is no time for wishful thinking, but rather to grasp reality.”
  • Stock futures tread higher as Brexit fears ebb (Reuters) U.S. stock index futures were higher for a second day as the initial panic surrounding Britain’s vote to leave the European Union settled and investors sought out bargains. The “Brexit” verdict on Friday sent shockwaves through global markets and wiped out about $3 trillion in a two-day selloff.
  • Draghi sees Brexit vote hitting euro zone growth by up to 0.5 percent over three years: official (Reuters) European Central Bank President Mario Draghi told EU leaders on Tuesday that Britain’s decision to leave the EU could reduce euro zone growth by a cumulative 0.3 to 0.5 percent compared to previous estimates over the next three years, an EU official said. Earlier this month, before Britain’s June 23 EU referendum, the ECB estimated that the euro zone would grow in annual terms by 1.6 percent in 2016 and by 1.7 percent in 2017 and 2018.
  • Japan’s May retail sales fall more than expected on gloomy recovery outlook (Reuters) Japan’s retail sales fell more than expected in May in a third straight month of annual declines, data showed on Wednesday, keeping policymakers under pressure for more stimulus to support a fragile economic recovery. Retail sales fell 1.9 percent in May from a year earlier, more than a median market forecast for a 1.6 percent declines, data from the Ministry of Economy, Trade and Industry showed.
  • German inflation picks up in June, state data suggest (Reuters) German consumer prices rose slightly in June, regional data indicated on Wednesday, suggesting price pressures in Europe’s largest economy are slowly picking up, but they remain weak despite the European Central Bank’s ultra-loose monetary policy. Economists have said Britain’s decision to leave the European Union would further dampen growth and inflation across the euro zone, raising expectations the ECB may beef up its monetary stimulus to mitigate the impact.
  • CIBC to Buy Privatebancorp in Deal Valued at $3.8 Billion (Bloomberg) Canadian Imperial Bank of Commerce agreed to buy PrivateBancorp Inc. and one of its units to boost its U.S. presence. CIBC will pay $18.80 in cash and 0.3657 of a CIBC common share for each PrivateBancorp share, it said in a statement on Wednesday. Based on the June 28 closing price of CIBC’s stock, the transaction value is about $3.8 billion, it said.


Overnight markets

  • Overview: US 10yr note futures are down -0.0938% at 133-4, S&P 500 futures are up 0.74% at 2043.5, Crude oil futures are up 1.02% at $48.34, Gold futures are up 0.48% at $1324.2, DXY is down -0.43% at 95.827.

US Economic Data

  • 8:30 AM: Personal Income,  May, 0.2%, est. 0.3% (prior 0.4%, revised 0.5%)
    • Personal Spending, May, 0.4%, est. 0.4% (prior 1.0%, revised 1.1%)
    • PCE Core, m/m, May, 0.2%, est. 0.2% (prior 0.2%)
    • PCE Core, y/y, May, 1.6%, est. 1.6% (prior 0.6%)
  • 10 :30 AM : Pending Home Sales, m/m, May,  est. -1.1% (prior 5.1%)

Canadian Economic Data 

  • There is 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