cti2015header-morning comments web

Market update 

US tsys slightly higher, recovering from earlier losses which saw the 10Y go above 1.54% after yesterday afternoon selloff, 10Y now 1.51%. GOCs higher, in line with tsys – both tsys/GOCs bid on drop in crude below $49, reversal in European equities. Little reaction to Apr GDP which came in as exp ( 0.1%, 1.5% y/y). Core Euro bonds underperforming with the German yield curve 1bp steeper on better than exp German unemp data & higher Eurozone CPI. JGBs lower, curve 4bps steeper after the BOJ left amt of govt bond purchases for July unch from June at 8-12T yen. Provis narrowed further yest, Ont 48 issue @ 104 closed 102/101, hit at 102 early this morn. Ont 46/26 roll 13/12.5 3bps wider over the week.

News headlines

  • World stocks poised for worst month since January (Reuters) European stocks and the pound held on to a third day of gains as the immediate market flurry over Britain’s vote to pull out of the European Union settled. The rebound was not enough, however, to offset the sharp losses suffered in the aftermath of last week’s vote which have put global stocks on track for their worst monthly performance since January.
  • Exclusive: China to tolerate weaker yuan, wary of trade partners’ reaction – sources (Reuters) China’s central bank is willing to let the yuan fall to 6.8 per dollar in 2016 to support the economy, which would mean the currency matching last year’s record decline of 4.5 percent, policy sources said. The yuan is already trading at its lowest level in more than five years, so the central bank will aim to ensure a gradual decline for fear of triggering capital outflows and criticism from trading partners such as the United States, said government economists and advisers involved in regular policy discussions.
  • China central bank criticizes media for publishing ‘inaccurate information’ on yuan rate (Reuters) China’s central bank criticized the media on Thursday, saying some media continuously publish “inaccurate information” on the yuan foreign exchange rate, which help some “speculative forces” short the yuan. Recent media reports on the yuan interrupt normal operation of the foreign exchange market, the People’s Bank of China said in a notice on its website, adding that China does not intend to compete in international trade by depreciating the yuan.
  • German economy’s domestic strength seen cushioning Brexit fallout (Reuters) German retail sales rose in May and unemployment fell further in June as upbeat consumers and local firms drive growth in Europe’s largest economy, where the renowned engineering sector sees no immediate impact from the ‘Brexit’ vote. Economists have warned that Britain’s decision to leave the European Union is likely to hit German exports and reduce growth by as much as half a percentage point next year.
  • Soros Says Brexit Has ‘Unleashed’ a Financial-Markets Crisis (Bloomberg) Britain’s decision to leave the European Union has “unleashed” a crisis in financial markets similar to the global financial crisis of 2007 and 2008, George Soros told the European Parliament in Brussels. “This has been unfolding in slow motion, but Brexit will accelerate it. It is likely to reinforce the deflationary trends that were already prevalent,” the billionaire investor said on Thursday.
  • Bell Canada loses second attempt to limit competitor access to its fibre networks (Reuters) Canada’s telecom regulator quashed Bell Canada’s second attempt to make it harder for competitors to buy wholesale access to its high-speed networks, a decision that will enable indie Internet providers to buy and resell access to ultra-fast fibre Internet connections. In a decision released Wednesday, the Canadian Radio-television and Telecommunications Commission (CRTC) denied Bell’s application to place restrictions on which companies could buy access to its disaggregated wholesale high-speed service. The ruling means any service provider — typically those without enough cash to lay fibre themselves — will be able to purchase access to the expensive new fibre networks that connect directly to consumers’ homes.
  • Taiwan’s central bank cuts rates for fourth time to revive economy (Reuters) Taiwan’s central bank trimmed interest rates for the fourth consecutive meeting on Thursday, saying fiscal stimulus and economic restructuring were also needed to revive the economy. The widely expected rate cut comes a week after Britain voted to leave the European Union, setting off unprecedented market volatility and clouding global growth prospects that will likely be a drag on Taiwan’s technology sector.                                         

Overnight markets     

Overview: US 10yr note futures are down -0.1761% at 132-27, S&P 500 futures are up 0.02% at 2067.25, Crude oil futures are down -1.98% at $48.89, Gold futures are down -0.38% at $1321.8, DXY is down -0.03% at 95.736.                                                                                                                         

US Economic Data

  • 8:30 AM: Initial Jobless Claims, June 25, 268k, est. 267k (prior 259k, 258k)
    •      Continuing Claims, June 18, 2120k, est. 2151k (prior 2142k, 2140k)
  • 9:45 AM: Chicago Purchasing Manager Index, June, est. 51.0 (prior 49.3)
    •       Bloomberg Consumer Comfort Index, June 26,  (prior 49.3)

Canadian Economic Data

  •  8:30 AM :  GDP, m/m, April, 0.1%, est. 0.1% (prior -0.2%)
    •         GDP, y/y, April, 1.5%, est. 1.4% (prior 1.1%, revised 1.2%)
    •         Industrial Product Price, m/m, 1.1%, est. 0.3% (prior -0.5%)
    •         Raw Materials Price Index, May, 6.7%, est. 5% (prior 0.7%)


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