Market Update
US Treasuries open NY lower, with 2/30Y and 5/30Y flatter after overnight consolidation followed Tuesday safe-haven bid gains tied to N.Korea firing of missile over Japan. US ADP sees 237,000 for August Private Payrolls. Risk-on mood means European equities firmer, as are US stock index futures. 2Q GDP rev up to +3.0% SAAR (expected +2.7%) from +2.6% in the advance estimate on strong upward revisions to PCE (both goods and services) and nonresidential fixed investment.
News headlines
Stocks Rebound as Korean Fears Abate; Gold Steady: Markets Wrap (Bloomberg) European stocks followed most Asian equities higher as tensions surrounding North Korea eased. The yen dropped as demand for safe-haven assets began to fade, although gold and the Swiss franc held Tuesday’s gains.
Crude slips, gasoline jumps as storm shuts a fifth of U.S. fuel output (Reuters) Crude oil slid and gasoline futures hit their highest since mid-2015 on Wednesday as flooding and damage from Tropical Storm Harvey shut over a fifth of U.S. refineries, curbing demand for crude while raising the risk of fuel shortages.
North Korea launch increases focus on risky U.S. shootdown option (Reuters) North Korea’s firing of a ballistic missile over Japan could increase pressure on Washington to consider shooting down future test launches, although there is no guarantee of success and U.S. officials are wary of a dangerous escalation with Pyongyang.
Dollar Rebound Threatens Euro’s Jackson Hole Breakout Level (Bloomberg) The Bloomberg Dollar Spot Index extended its Asia session gain with investors continuing to unwind their short dollar exposure across the board as the gauge rebounded from its lowest level since January 2015.
Euro-Area Economic Confidence Jumps to Decade-High (Bloomberg) Euro-area economic confidence rose to the highest level in a decade as European Central Bank policy makers prepare for a discussion next week about whether and how to pare back stimulus.
CMHC says new mortgage rules are shrinking the size of the insured housing market (Financial Post) Canada Mortgage and Housing Corp., the crown corporation that is the largest mortgage default insurer in the country, is paying Ottawa a $240 million dividend.
Overnight markets
Overview: US 10yr note futures are down -0.16% at 126-32, S&P 500 futures are down 0% at 2447, Crude oil futures are down -0.78% at $46.08, Gold futures are down -0.45% at $1313, DXY is up 0.46% at 92.673, CAD/USD is up 0.43% at 0.7958.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.246% | 2 Year | 1.341% |
| 5 Year | 1.514% | 5 Year | 1.735% |
| 10 Year | 1.846% | 10 Year | 2.154% |
| 30 Year | 2.278% | 30 Year | 2.757% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Aug 25, -2.3% (prior -0.5%) |
| 8:15 AM | ADP Employment Change, Aug, 237k, est. 185k (prior 178k, revised 201k) |
| 8:30 AM | GDP Annualized, q/q, 2Q S, 3.0%, est. 2.7% (prior 2.6%) |
| Personal Consumption, 2Q S, 3.3%, est. 3.0% (prior 2.8%) | |
| GDP Price Index, 2Q S, 1.0%, est. 1.0% (prior 1.0%) | |
| Core PCE, q/q, 2Q S, 0.9%, est. 0.9% (prior 0.9%) |
Canadian Economic Data
| 8:30 AM | Current Account Balance, 2Q, -$16.32b, est. -$17.40b (prior -$14.05b, revised -12.92b) |
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