Commentaires

Market Update Tsys trading weaker, 10Y 2.84 (+2bps), heavy volume in TY futures(430k). Risk on with S&P futures on the verge of reaching above the highs of August, while in Europe peripheral spds narrow vs bunds. DXY index lower extending yesterday’s decline on Trump comments. Quiet day in terms of data, focus on FOMC minutes tomorrow & Fed Jackson Hole conference later this week. GOCs lower, outperforming tsys by 0.5bps, reversing part of yesterday’s ~2bp widening – BOC governor Wilkins speaking yest afternoon implied tighter monetary policy has been more impactful due to high debt levels. Provi spds wider again yest on little activity. Quebec released a pre lecection report outlining Quebec’s finances, which are ‘in good shape’ – the province ended the FY 2018 with a $2.3bln surplus vs $850mln projected in spring budget. 

News headlines

U.S. Heads for Best Growth Since 2005 on Robust Domestic Demand (Bloomberg) The U.S. economy looks set to forge ahead as fresh reservoirs of domestic demand carry it past turbulence overseas, keeping the Federal Reserve on course for further interest-rate hikes. Households have more cash to spend than thought, thanks to newly discovered pools of savings and President Donald Trump’s big tax cuts. Firms are ramping up production and rebuilding inventories after running them down by the most since 2009. And government spending finally looks set to swell, after Congress opened the floodgates in March with a $1.3 trillion package.

 China Reiterates It Won’t Use Yuan Rate as Tool in Trade War (Bloomberg) China won’t use competitive currency devaluation or the foreign exchange rate as a tool to cope with trade frictions, according to a senior central bank official. “The yuan’s exchange rate is decided by the market,” Li Bo, director of the People’s Bank of China’s monetary policy department, said at a press conference in Beijing. He said the currency has more flexibility this year and the central bank is confident of keeping the rate “basically stable at a reasonable equilibrium level.”

Microsoft Thwarts Russia Hackers Targeting GOP Critics of Trump (Bloomberg) Microsoft Corp. has detected and seized web domains created by cyber-attackers linked to the Russian military, in a potential attempt to manipulate and disrupt the U.S. midterm elections. The shadowy group, known as Strontium, created domains that mimicked organizations such as the International Republican Institute and Hudson Institute so intended victims would believe they were receiving emails or visiting real sites, Microsoft President Brad Smith said in a blog post. Microsoft said it’s sifting through evidence of the group’s intentions after getting a court order to take over those domains, effectively disrupting the hacking campaign.

Dollar Weakens on Trump Remarks; U.S. Futures Rise: Markets Wrap (Bloomberg) The dollar dropped with Treasuries on Tuesday after President Donald Trump criticized Federal Reserve interest-rate hikes. U.S. equity futures tracked gains in Europe and Asia, setting the scene for a potential S&P 500 record. Metals broadly advanced. Contracts for the Dow and Nasdaq also rose, but all eyes will be on the S&P 500 Index as it may head toward the January all-time closing high and equals the longest bull market on record. The greenback’s fourth day of declines drove the euro above the key $1.15 level amid thin summer liquidity after Trump was said to have lamented rising borrowing costs and complained that Jerome Powell hasn’t proved to be a cheap-money Fed chairman. Treasuries gave back some of Monday’s gains and European bonds were mixed before a meeting of the world’s central bankers later this week, with peripheral debt outperforming.

Britain can’t afford to close door to EU banks after Brexit (Reuters) Britain is expected to keep the door open for European Union banks and investors after Brexit to try to preserve London’s global financial clout, irrespective of whether it gets a good trade deal from the bloc, bankers and industry officials say. Nerves in the City of London financial district were rattled last month when the UK government proposed future financial services trade with the EU based on “reciprocal” arrangements.

Futures flat, investors await Sino-U.S. trade talks (Reuters) Futures for Canada’s main stock index were flat on Tuesday as investors awaited trade talks between the United States and China due to start later this week. Speculation that lower-level trade talks between the two countries might help ease trade tensions has shored up the broader equity markets over the past few sessions. September futures on the S&P/TSX index SXFc1 were up 0.02 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE closed up on Monday.

Air Canada group reaches deal to buy Aimia’s Aeroplan for $450M (BNN) An Air Canada-led consortium has reached a deal in principle to buy the Aeroplan loyalty program from Aimia Inc. for $450 million in cash, the companies said Tuesday.  Air Canada (), along with Toronto-Dominion Bank (), Canadian Imperial Bank of Commerce () and Visa Canada Corp. (), will also assume approximately $1.9 billion in Aeroplan points liability as part of the transaction. The deal was unanimously approved by Aimia’s () board of directors and Mittleman Brothers, the Montreal-based company’s largest shareholder.

‘No safe harbour’ for Canadian workers as survey reveals 22% in precarious jobs (BNN) More than one-fifth of Canadian workers are in precarious jobs despite higher education and experience levels, according to a new survey from the Canadian Centre for Policy Alternatives. The report, released Tuesday, found that 22 per cent of Canadians are currently in jobs lacking economic security such as steady income, pension, benefits and sick pay. Of that group, 26 per cent work full time, 40 per cent are employed in the private sector, while 30 per cent are in the public sector.  The survey also found there was a higher rate of precarious workers aged 55 and older. “We tend to think of precarious work as something that happens in low-wage, low-skill jobs, but the findings from this national survey suggest that there is no safe harbour,” CCPA-Ontario Senior Researcher Ricardo Tranjan, said in a release. 

Overnight markets

Overview: US 10yr note futures are down -0.091% at 120-17, S&P 500 futures are up 0.15% at 2862.75, Crude oil futures are up 1.16% at $67.2, Gold futures are up 0.29% at $1198.1, DXY is down -0.26% at 95.649, CAD/USD is down -0.16% at 0.7678.

US Economic Data

There is no US economic data for today.

Canadian Economic Data

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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update: US tsys moving higher in recent trade 10Y below 2.84%(-2bps), light volume in TY futures, light data today with FOMC minutes on Wed along with Fed Jackson Hole Symposium. Stocks higher, S&P fur +5, Nasdaq +18, crude slightly lower 65.75. Core EGBs unch, German 10Y bund 0.30% low end of narrow 3bp range over the last two weeks with peripheral bonds narrower. GOCs higher, outperforming tsy by 0.5bps, curve 0.5bps flatter, the 10Y GOC @ 2.24% now below pre CPI levels. Provis unch to start, Ontario 10s @ 68bps –  where they issued last week. CMBs outpeforming since supply last week 10Y WI 40.5/ vs 41 at issue.

News headlines

Trudeau Says 2019 Canada Election Is Fight Against Polarization (Bloomberg) Justin Trudeau said the 2019 Canadian election will be a contrast between his Liberal Party’s push for a cleaner environment and fighting inequality, and Conservatives who’ll attempt to exploit divisions created by a global wave of populism. The prime minister made the remarks late Sunday afternoon in his home district in Montreal, turning attention back to campaign politics a few days after he rejected the idea of calling an early election. Trudeau’s Liberals have lost their earlier lead in public opinion polling, and are now essentially tied with the Conservatives led by Andrew Scheer.

Venezuela’s 95% Devaluation Adds to Chaos After Drone Attack (Bloomberg) Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend — a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain. One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days.

Inflation Unexpectedly Hits 3% in Test for Bank of Canada (Bloomberg) Canada’s inflation hit the 3 percent mark for the first time since 2011 in July, an unexpected surge that puts pressure on the Bank of Canada to accelerate interest-rate increases. The consumer price index recorded an annual pace of 3 percent, quickening from 2.5 percent a month earlier, Statistics Canada said Friday from Ottawa. Economists expected the inflation rate to remain unchanged.

U.S. Stock Futures Track Gains Across Europe, Asia: Markets Wrap (Bloomberg) U.S. equity futures and European stocks followed Asian shares higher on Monday as traders held onto hopes for an easing of the trade war ahead of a meeting of central bankers later in the week that may throw up clues on the outlook for markets. The dollar edged up and the euro fell. Contracts on the S&P 500, Dow and Nasdaq all pointed to a positive open, while miners climbed with metals to help the Stoxx Europe 600 Index gain in thin volumes. There were advances across most Asian equities, though Japan’s gauge bucked the trend. The dollar firmed after two days of declines and the 10-year Treasury yield was steady. The onshore yuan climbed amid signs China is propping up the currency just as it prepares to restart trade negotiations with the U.S. The euro slipped for the first time in four days.

Tesla sues Ontario over canceled electric vehicle rebate (Reuters) Electric vehicle-maker Tesla Inc is taking the Ontario government to court over the Canadian province’s cancellation of an electric vehicle incentive program, according to documents filed in court on Aug. 10. In July, shortly after coming to power in Ontario, the Progressive Conservative government under Doug Ford canceled a slew of green energy initiatives, including an Electric and Hydrogen Vehicle Incentive Program that provided rebates of up to C$14,000 ($10,640) for people who bought electric cars.

China shifts to Iranian tankers to keep oil flowing amid U.S. sanctions (Reuters) Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States. The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

Big banks poised for strong quarter amid housing stability, rate hikes (BNN) Canada’s biggest banks are expected to report yet another strong quarter as the country’s housing market shows signs of stability and rising interest rates add to their bottom line. Royal Bank of Canada is the first lender to report its fiscal third-quarter results on Wednesday, and most analysts are expecting « solid » growth across the industry, with estimates of earnings-per-share growth as high as 10 per cent year-over-year. « We believe the earnings environment sets up well for a strong second half… With the Canadian housing market behaving itself, investors can turn their attention away from that and towards earnings, which have been supported by (profit) margin expansion, operating leverage, and growth in the expansion segments, » said Robert Sedran, an analyst with CIBC Capital Markets in a research note. Canadian Imperial Bank of Commerce will be the next to report its earnings for the three-month period on Thursday, followed by Bank of Nova Scotia and Bank of Montreal on Aug. 28, National Bank of Canada on Aug. 29 and Toronto Dominion Bank on Aug. 30.

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-12, S&P 500 futures are up 0.15% at 2856.5, Crude oil futures are up 0.05% at $65.94, Gold futures are up 0.79% at $1193.6, DXY is up 0.12% at 96.22, CAD/USD is up 0.07% at 0.7651.

US Economic Data

There is no US economic data for today.

Canadian Economic Data

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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update Tsys higher on ‘risk off’ as Turkish lira falls for the first day in four, US Tsy sec Mnuchin threatening further sanctions on Turkey. Also reports Germany/Turkey talked about IMF rescue. US equity futures lower, S&P -7, Nasdaq – 27. GOCs higher before July CPI -consensus calling for a 2.5% increase. Provis trading down to start, Ont 28s @ 68, Ont 48s @82. Ontario back in the mkt yesterday after an extended hiatus selling $1bln 10Y bonds @68 and $2.65bln 5Y Aug 21 2023 FRN @ 3M CDOR +5bps. Both deals went well, 10s closed 67/66 while the FRNs were upsized from $2bln, and @ 3M CDOR +5 looked expensive vs. Ont 5Y fixed ASW. Bell Canada issued $750mln in new 10Y @ 155.5 (vs 158 init guid),closed 154/151. 

News headlines

Canada annual inflation rate rises to 3 percent in July (Reuters) Canada’s annual inflation rate in July rose to 3.0 percent as prices in all eight major components increased year-over-year, Statistics Canada said on Friday.

Trump Pushes China for Better Deal With Trade Talks Set to Resume (Bloomberg) President Donald Trump prodded China to offer more at the bargaining table as the two countries prepared for their first major negotiation in more than two months in an effort to head off an all-out trade war.

Turkey’s lira weakens more than 6 percent on threat of more U.S. sanctions (Reuters) Turkey’s battered lira weakened more than 6 percent against the dollar on Friday, after a U.S. warning that Ankara should expect more economic sanctions unless it hands over detained American evangelical pastor Andrew Brunson. Turkish banks moved to ease access to credit for companies as the prospect of further U.S. sanctions and a review of the nation’s debt sent new convulsions through financial markets. 

Trump asks SEC to mull half-year corporate filings vs quarterly (Reuters) U.S. President Donald Trump said on Friday he has asked the U.S. Securities and Exchange Commission to study the impact of allowing companies to file reports with the financial regulator every six months instead of every quarter.

Russian oil industry would weather U.S. ‘bill from hell’ (Reuters) Stiff new U.S. sanctions against Russia would only have a limited impact on its oil industry because it has drastically reduced its reliance on Western funding and foreign partnerships and is lessening its dependence on imported technology.

Greece set to exit bailout, still faces daunting challenges. (Reuters) Greece exits the last of its three bailouts on Aug. 20 and hopes to be able to borrow again in international markets after a nearly nine-year debt crisis that shrank the economy by a quarter and forced it to implement painful austerity measures. 

Investors flee risk as bear markets multiply: BAML (Reuters) Investors pulled billions from equities this week, shifting into bonds and high dividend-yielding sectors as Turkey’s currency crisis sparked a global selloff and emerging markets entered bear territory, an analysis of fund flows showed on Friday. 

Overnight markets

Overview: US 10yr note futures are up 0.078% at 120-12, S&P 500 futures are down -0.24% at 2838, Crude oil futures are up 0.82% at $66, Gold futures are up 0.08% at $1184.9, DXY is down -0.26% at 96.392, CAD/USD is down -0.64% at 0.7649.

US Economic Data

Canadian Economic Data

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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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