Market Update

Treasuries open NY lower, after overnight two-way flows including Asian safe-haven bid amid another N.Korea ICBM missile firing. German Bund decline on higher than expected German retail sales, surprise Eurozone core inflation rise. Also selling in Tsy TYU futures, while real$ and bank portfolio accts did 2-way 10Y flows. Real$ sold long end Tsys. Bloomberg Barclays US Tsys index 0.06 yrs for month-end advance estimate. Today is settlement for recent 2y, 5Y, 7Y, 2Y FRN auctions of last week. And some cited need to sell US stocks mildly/vs. buy bonds mildly into month-end.

News headlines

Stocks Advance as Growth Optimism Boosts Metals: Markets Wrap (Bloomberg) European stocks headed for the first gain in three days, spurred by raw-material producers on optimism the global economy is gathering momentum. Industrial metals including copper climbed after manufacturing data from China showed another expansion.

Tale of two economies: Why the gulf between the Bank of Canada and the Fed is growing (Financial Post) Canada and the United States may be joined at the hip geographically, yet from an economic and monetary policy perspective, the gulf between the two countries is becoming apparent once again.

Euro zone core inflation unexpectedly picks up in July (Reuters) A key measure of euro zone inflation accelerated to a four-year high this month and euro zone unemployment fell to its lowest since 2009 in June, data showed on Monday, in two encouraging signs for the European Central Bank as it considers reducing its monetary stimulus.

China central bank to ensure smooth, orderly deleveraging, assistant governor says (Reuters) China’s central bank will continue to force financial institutions to cut debt but ensure the process is smooth and orderly to limit its impact on market liquidity, an assistant central bank governor said in remarks published on Monday.

Republicans Face Tough Choice: Repeal Obamacare or Cut Taxes (Bloomberg) After the collapse of Obamacare repeal, Republicans may have to choose between pursuing another health bill or pushing through a tax overhaul this year, because there’s almost certainly not enough time to do both.

Canadian heavy oil plugs gap left by OPEC, Latam (Reuters) Canada’s struggling oil market has found something of a lifeline as traders scramble for heavy crude due to OPEC production cuts and sinking Latin American output. Output has fallen in Organization of the Petroleum Exporting Countries and non-OPEC Latin American countries such as Mexico and Colombia, leading refiners as far away as China to look to Alberta’s oil sands to fill the gap.

Overnight markets 

Overview: US 10yr note futures are down -0.05% at 125-29, S&P 500 futures are up 0.14% at 2473.75, Crude oil futures are down -0.64% at $49.39, Gold futures are down -0.07% at $1274.4, DXY is up 0.25% at 93.488, CAD/USD is up 0.39% at 0.8012.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.328% 2 Year 1.347%
5 Year 1.657% 5 Year 1.832%
10 Year 2.051% 10 Year 2.294%
30 Year 2.469% 30 Year 2.906%

US Economic Data 

9:45 AM Chicago Purchasing Manager Index, Jul, est. 60.0 (prior 65.7)
10:00 AM Pending Home Sales, m/m, Jun, est. 1.0% (prior -0.8%)
Pending Home Sales NSA, y/y, Jun, (prior 0.5%)
10:30 AM Dallas Fed Manufacturing Activity, Jul. est. 13.0 (prior 15.0)

 Canadian Economic Data

7:00 AM MLI Leading Indicator, m/m, Jun, est. 0.2% (prior 0.1%, revised 0.2%)
8:30 AM Industrial Product Price Index, m/m, Jun, -1.0%, est. -0.3% (prior -0.2%, revised 0.1%)
Raw Materials Price Index, m/m, Jun, -3.7%, est. -3.3% (prior -1.8%, revised -1.7%)
10:00 AM Bloomberg Nanos Confidence Index, Jul 28 (prior 58.8)


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