Market Update
– Tsys open higher, US 10Y in risk off session as European stocks down 1.2% for a second day on more Deustche Bank concerns, Nikkei and HS down 1.0%. ING shares down 4.6% on reorg plans, DB off ~7.0%. The demand for US dollars has skyrocketed based on data from the ECB -$6.3bln in the latest week, the highest in four years. Month end extensions for Sept 30th +0.08 yrs for the Barclays Tsy index vs 0.14yrs in Aug & 0.11 12 mnth avg. GOCs slightly higher, 1-2bps wider vs tsys after July GDP came in above exp 0.5% vs 0.3% – most of the improvement attributed to rebound in the oil & gas sector after the May wildfires. Longs seem bid in the pullback, 10s30 0.5bps flatter at 66.5. GOC 10s have outperformed to such an extent recently that longs look cheap, esp off the run 41s. Provis opening 0.5bps wider on the bid, Ont 48s 97.5/97 after closing 1.5bps wider yest, thou all in yields still scraping the lows , Ont 10s ~1.82% .
News headlines
–Asia stocks slide as Deutsche sours mood, oil pulls back (Reuters) Asian stocks extended losses on Friday as worries about the health of Deutsche Bank weighed on financial shares and as oil prices inched back from near-one month highs on scepticism over OPEC’s new plan to curb output.
–Deutsche Bank Drops to Record as Some Clients Reduce Exposure (Bloomberg) Deutsche Bank AG Chief Executive Officer John Cryan rushed to shore up confidence in his beleaguered lender after concern some clients are reducing exposure to the company pushed shares to record lows.
–China September factory activity expands marginally as orders edge up-Caixin PMI (Reuters) China’s factory activity expanded in September as domestic and export orders picked up but the improvement was marginal and manufacturers continued to shed jobs, a private business survey showed on Friday.
–Japan’s Long and Winding Detour to Inflation (WSJ) The Bank of Japan may have shaken up its strategy to jump start inflation, but on the ground, there’s little sign change is coming. Headline consumer inflation remained negative in August, down 0.5% from the year earlier, making Japan the only major economy still so deeply in negative territory.
–Eurozone Inflation Picked Up in September (WSJ) The eurozone’s annual rate of inflation picked up to reach its highest level in almost two years during September, but a sustained rise toward the European Central Bank’s target remains in doubt as the number of people without jobs rose for the second time in three months.
–U.K. economy healthier than seen, GDP update shows (Market Watch) The U.K. economy performed better than previously thought in the period surrounding the nation’s referendum on membership of the European Union, according to a fresh batch of economic data Friday that will be welcomed by the country’s ruling Conservative Party ahead of its annual conference this weekend.
–Petronas weighs sale to exit $27 billion Canadian LNG project, sources say (Financial Post) Malaysian state oil firm Petroliam Nasional Bhd is considering selling its majority stake in a US$27 billion Canadian liquefied natural gas (LNG) plant, three people familiar with the matter said this week.
Overnight markets
– Overview: US 10yr note futures are up 0.0594% at 131-20, S&P 500 futures are up 0.12% at 2151, Crude oil futures are up 0.15% at $47.9, Gold futures are up 0.35% at $1330.7, DXY is up 0.28% at 95.8.
US Economic Data
-8:30 AM: Personal Income, Aug, 0.2%, est. 0.2% (prior 0.4%)
Personal Spending, Aug, 0.0%, est. 0.1% (prior 0.3%)
PCE Core, m/m, Aug, 0.2%, est. 0.2% (prior 0.1%)
PCE Core, y/y, Aug, 1.7%, est. 1.7% (prior 1.6%)
-9:45 AM: Chicago PMI, Sep, est. 52.0 (prior 51.5)
-10:00 AM: University of Michigan Sentiment, Sep F, est. 90 (prior 89.8)
Canadian Economic Data
-8:30 AM: GDP, m/m, Jul, 0.5%, est. 0.3% (prior 0.60%)
GDP, y/y, Jul, 1.3%, est. 1.0% (prior 1.10%)
Industrial Product Price, m/m, Aug, -0.5%, est. -0.1% (prior 0.2%)
Raw Materials Price Index, m/m, Aug, -0.7%, est. -1.0% (prior -2.7%)
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