Market Update
Tsys lower, yields 1.5-2.5bps higher, 10Y 1.52% (+2.5bps), avg volume in TY futures (390k). US equity futures rose in Asia with Asian equities, then continued in Europe, despite arrests of several prominent Hong Kong protesters. US July Personal Income & Spending, PCE , Univ of Mich sentiment highlight holiday shortened session with labor day Monday. Core EGBs mixed, bunds higher in the short end while UK gilts lower after first legal challenge to block suspension of parliament failed. In Canada, GOCs slightly lower before Q2 GDP – expected at 3.0% largely due to the strong contribution from exports to the US which rose to a record in May, with export volumes up 4.0% the largest monthly increase since August 2016.
News headlines
Stocks Jump, Treasuries Drop to End Volatile Month: Markets Wrap (Bloomberg) U.S. equity futures climbed alongside European stocks and Asian shares rallied on the final trading day of a tumultuous month dominated by the trade war. Treasuries retreated.
Canada stock futures rise on hopes of easing U.S.-China trade tensions (Reuters) Futures for Canada’s main stock index edged higher on Friday, tracking global markets, on cautious hopes for a rapprochement on trade between the United States and China.
Oil Heads for Biggest Weekly Gain in Seven on Trade War Optimism (Bloomberg) Oil headed for its biggest weekly increase since mid-July after a sizable drop in American crude inventories and an apparent pause in U.S.-China trade hostilities eased demand fears.
Canadian banks brace for tougher times as ‘Goldilocks’ era winds down (Reuters) Canadian banks face challenging times as souring macroeconomic conditions and trade uncertainties increase lending risk and weigh on profit margins, investors and analysts said on Thursday after major lenders wrapped up their quarterly earnings season.
Month of bond market milestones – How low can you go? (Reuters) August has turned out to be another month of milestones for bond markets as an escalating trade conflict fans recession fears, pushing borrowing costs deeper and deeper into negative territory.
China, U.S. trade negotiating teams maintaining ‘effective communication’: China (Reuters) Chinese and U.S. trade negotiating teams are maintaining effective communication, China’s Foreign Ministry said on Friday at a daily news briefing in Beijing.
Global stocks scale one-week high on trade hopes, yuan softens (Reuters) World stocks rose to a one-week high on cautious hopes for a rapprochement on trade between Beijing and Washington on Friday, though a perky dollar capped gains with China’s yuan softening again, on track for its weakest month in 2-1/2 decades.
Market Overview: US 10yr note futures are down -0.047% at 131-18, S&P 500 futures are up 0.58% at 2943.75, Crude oil futures are down -1.34% at $55.95, Gold futures are down -0.14% at $1534.7, DXY is up 0.04% at 98.544, CAD/USD is down -0.01% at 0.7526.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.354% | 2 Year | 1.534% |
| 5 Year | 1.192% | 5 Year | 1.416% |
| 10 Year | 1.153% | 10 Year | 1.518% |
| 30 Year | 1.405% | 30 Year | 1.985% |
US Economic Data
| 08:30 AM | Personal Income, Jul Survey: 0.30% Prior: 0.40% |
| Personal Spending, Jul Survey: 0.50% Prior: 0.30% | |
| Real Personal Spending, Jul Survey: 0.30% Prior: 0.20% | |
| PCE Deflator MoM, Jul Survey: 0.20% Prior: 0.10% | |
| PCE Deflator YoY, Jul Survey: 1.40% Prior: 1.40% | |
| PCE Core Deflator MoM, Jul Survey: 0.20% Prior: 0.20% | |
| PCE Core Deflator YoY, Jul Survey: 1.60% Prior: 1.60% | |
| 09:45 AM | MNI Chicago PMI, Aug Survey: 47.50 Prior: 44.40 |
| 10:00 AM | U. of Mich. Sentiment, Aug F Survey: 92.30 Prior: 92.10 |
Canadian Economic Data
| 08:30 AM | Quarterly GDP Annualized, 2Q Survey: 3.00% Prior: 0.40% |
| GDP MoM, Jun Survey: 0.10% Prior: 0.20% | |
| GDP YoY, Jun Survey: 1.40% Prior: 1.40% | |
| Industrial Product Price MoM, Jul Survey: 0.30% Prior: -1.40% | |
| Raw Materials Price Index MoM, Jul Survey: 1.50% Prior: -5.90% |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230