Market Update
US tsys moving lower after PCE, 10Y 2.263%, on heavier than avg volume in TY1 futures, 470k vs ~600k last two days. Treasuries rose with EGBs into month/qtr end, 10Y bund 1bp lower 0.44% , +20bps wk/wk, 10Y bund/tsy spd just off recent narrows @ 182bps. Tsy/bund curves steepened this week after several months of flattening, despite seemingly coordinated efforts from central banks to prepare mkts for tightening/unwinding of stimulus into a low inflation environment. GOCs lower, extending underperformance vs tsys after Apr GDP 0.2% as exp, 3.3% y/y vs 3.4% – highest since June 2014. Crude oil higher for 7th day, longest streak in 6 months, on drop in crude production & gas inventories.
News headlines
Stock futures slightly higher ahead of consumer spending data (Reuters) U.S. stock index futures were slightly higher on Friday, a day after Wall Street fell sharply, as investors awaited a slew of economic data, including on consumer spending, a key indicator for U.S. economy.
Oil Set for Longest Rally This Year as Oversupply Concerns Ease (Bloomberg) Oil headed for the longest run of gains in six months as a drop in U.S. crude production and gasoline stockpiles eased concern that OPEC-led supply curbs were proving ineffective. Futures added as much as 1 percent in New York, advancing for a seventh session. U.S crude output last week fell by the most in almost a year amid field maintenance in Alaska and tropical storm Cindy, while gasoline inventories fell for a second week.
Euro zone inflation eases less than expected, core measure up (Reuters) Euro zone inflation eased in June because of more moderate energy price rises, but the slowdown was less than expected by markets and the core measure of price growth the ECB keenly watches increased by more than anticipated.
Japan’s Inflation Edges Up But Remains Far From BOJ’s Target (Bloomberg) The BOJ is betting that a growing economy and the tightest labor market in decades will eventually fuel acceleration in wage gains and inflation. So far pay has risen only modestly, and the key inflation gauge has only turned positive since January.
CMHC to give Ottawa a special $4 billion dividend, has too much capital on its books (Financial Post) Canada Mortgage and Housing Corp., is paying the federal government a special $4 billion dividend, a move the Crown corporation says is driven by the fact it has more cash than it needs to back its obligations.
Canada public pension fund commits up to $1 billion to buy U.S. oil, gas assets (Reuters) Canada Pension Plan Investment Board (CPPIB), the country’s biggest public pension fund, plans to invest up to $1 billion to buy oil and gas assets in the United States in a partnership with Encino Energy Ltd.
Trudeau Versus Trump Is a Win for Toronto Tech and Innovation (Bloomberg) Silicon Valley startups are tapping into Toronto’s tech talent. Okta Inc., which JPMorgan Chase & Co. calls one of the fastest growing public software firms, opened a 60-seat office this month on trendy King Street West. Lured by a deepening pool of engineers in a city routinely ranked among the world’s most innovative, the company is following peers such as Uber Technologies Inc. and Amazon.com Inc. across the border.
Overnight markets
Overview: US 10yr note futures are down -0.087% at 125-23, S&P 500 futures are up 0.12% at 2423, Crude oil futures are up 0.69% at $45.24, Gold futures are down -0.41% at $1240.7, DXY is up 0.14% at 95.762, CAD/USD is down -0.18% at 0.7703.
US Economic Data
| 8:30 AM | Personal Income, May, 0.4%, est. 0.3% (prior 0.4%, revised 0.3%) |
| Personal Spending, May, 0.2%, est. 0.1% (prior 0.4%) | |
| Real Personal Spending, May, 0.1%, est. 0.2% (prior 0.2%) | |
| PCE Core, m/m, May, 0.1%, est. 0.1% (prior 0.2%, revised 0.1%) | |
| PCE Core, y/y, May, 1.4%, est. 1.4% (prior 1.5%) | |
| 9:45 AM | Chicago Purchasing Manager, Jun, est. 58.0 (prior 59.4) |
| 10:00 AM | University of Michigan Sentiment, Jun F. est. 94.5 (prior 94.5) |
Canadian Economic Data
| 8:30 AM | GDP, m/m, Apr, 0.2%, est. 0.2% (prior 0.5%) |
| GDP, y/y, Apr, 3.3%, est. 3.4% (prior 3.2%) | |
| Industrial Product Price, m/m, May, -0.2%, est. 0.4% (prior 0.6%) | |
| Raw Materials Price Index, m/m, May, -1.8%, est. 0.0% (prior 1.6%) | |
| 10:30 AM | Business Outlook Future Survey, 2Q, (prior 21.00) |
| BoC Senior Load Officer Survey, 2Q, (prior -1.9) |
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