cti2015header-morning comments web

Market update

US tsys trading higher, flatter US 10Y 2.206 (-2.2bps). Weakness in crude for a second day weighing on global equities, Euro stocks -1.4%. Core Euro bonds higher led by 10Y bunds. GOCs trading higher, outperforming tsys in the short end as the Cda curve bull steepens ~3bps led by 5s. The US auctions $24bln in 3Y notes at 1:00PM with the 3Y close to multi year highs, while the latest primary dealer pos data showed dealers net short $3.0bln in the 2-3Y sector. Provis opening wider in risk off environment, Ont 46 107/106 (+1.5bps), Alb/Ont 46 3/0 as oil continued to slide. Supply also a factor as Ont, Alb, NB all rumoured.

News headlines

  • Brent Oil Falls Below $40 a Barrel (WSJ) Oil prices continued sliding Tuesday, with Brent, the global benchmark, falling below $40 a barrel for the first time since March 2009.
  • Japan’s G.D.P. Grows, Avoiding a Recession (NYT) Japan’s latest recession turns out not to have been a recession at all. The government said on Tuesday that the economy grew at a relatively robust pace last quarter, reversing a more pessimistic estimate it published three weeks ago.
  • Moody’s sticks with ‘negative’ outlook for Canadian banks in 2016 (G&M) Moody’s Investors Service is sticking with its “negative” outlook for Canadian banks in 2016, pointing to challenges emanating from the struggling Canadian economy and a changing regulatory framework in the financial sector – even as the big banks continue to diversify abroad.
  • China import decline reflects manufacturing weakness (FT) Weak demand at home and overseas dented Chinese imports and exports alike last month, reflecting ongoing weakness in the economy. Imports fell 8.7 per cent in US dollar terms in November compared with a year earlier, trimming losses after a 12.6 per cent drop in October, customs data showed on Tuesday. Exports for November fell 6.8 per cent year-on-year, steeper than the 5 per cent fall in October.
  • Bond investors look for greener pastures (FT) How do I know what you see as green is the same as what I see as green? The question is of limited interest to philosophers but has a new relevance for investors as debt issuers attempt to shape the nascent market for green bonds — debt instruments aimed at socially conscious investors who want their money to fund environmentally friendly projects.

 Overnight markets

  • Overview: IG24 5Y 82.016/82.783 (+2.655), US 10yr note futures are up +0.12% at 126-16, S&P 500 futures are down -1.03% at 2059.0, Crude oil futures are down -2.26% at 36.80$, Gold futures are down -0.55% at $1069.3, DXY is down -0.17% at 98.486.

 US Economic Data

  • NFIB Small Business Optimism Index for November came in at 94.8 compared to the consensus of 96.4 and prior month (96.1).
  • JOLTs job openings are forecast at 5500 in October compared to September 5526.
  • IBD/TIPP economic optimism is forecast at 45.1 in December 0.4 point lower than November (45.5).

Canadian Economic Data

  • Housing starts came in at 211.9K in November versus October revised 197.7K.
  • Building permits came in at 9.1% MoM in October versus -6.6% in September (revised from -6.7%).


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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230