Comments
10/08/2018
Market Update Tsys higher, yields 2-4bps lower with the 10Y below 2.90% (2.89 -3.5bps) before CPI on safe haven flows after the Turkish lira spiked to a new low and global equity markets weaken on contagion fears, S&P futures -13, Nasdaq -44. Core EGBs also higher in line with tsys, Sep bunds rising to a three-week high 163.15. GOCs higher before July employment data (17k exp vs 31.8k June, AHE 3.6% exp vs 3.5%).
News headlines
Trump Stays Quiet While Saudi Arabia-Canada Tensions Rise (Bloomberg) The Trump administration is privately trying to coax Saudi Arabia to dial back hostilities with Canada even as the U.S. maintains a hands-off public approach to the escalating dispute between the two key allies, a senior U.S. official said. The U.S. is now trying to do behind-the-scenes damage control after being caught off guard by Saudi Arabia Crown Prince Mohammad bin Salman’s move this week to expel the Canadian ambassador, freeze new trade deals and cancel direct flights to Toronto on its state airline, according to the official, who spoke on condition of anonymity.
Ontario Goes Dark in Bond Market, Setting Up Slew of Fall Sales (Bloomberg) One of the world’s biggest non-sovereign borrowers has gone quiet in the debt market. The province of Ontario hasn’t sold bonds since June 1, a few days ahead of an election that ended 15 years of Liberal Party rule. This 70-day drought is almost a month longer than the pause that followed Ontario’s prior change in 2003, according to National Bank of Canada. The result will be a flood of sales from Ontario in the fall that may weigh on performance, said Ryan Goulding, a fixed-income analyst at Vancouver-based asset manager Leith Wheeler Investment Counsel Ltd.
Canada Sees Return to Nafta Talks as U.S.-Mexico Near Auto Deal (Bloomberg) Canada could soon be returning to the Nafta talks as the U.S. and Mexico approach agreement on a deal over cars, according to one of Canada’s top diplomats. The U.S. and Mexico, which have been in bilateral negotiations for about three weeks, appear to be “getting close” to agreement over auto manufacturing, David MacNaughton, Canada’s ambassador to the U.S., said in an interview.
Stocks Fall With Euro on Turkey Contagion Concern: Markets Wrap (Bloomberg) European stocks fell the most in almost a month and U.S. equity futures slipped as investors awaited a speech from Turkey’s president that they hope will address concerns about the country’s financial ills spilling over into the euro zone and emerging markets. The common currency sank, while the dollar advanced alongside Treasuries. The Stoxx Europe 600 Index slid, dragged down by banks, after a news report said the ECB was concerned about the exposure of European lenders to Turkey. Investors are now looking to President Recep Tayyip Erdogan to calm their nerves when he speaks Friday for the first time since the latest sell-off began. Contracts on the S&P 500, Dow and Nasdaq declined alongside shares in Asia. The euro dropped to the weakest level in a year, while the dollar rallied with Treasuries and core European bonds. Turkey’s lira sunk to a fresh record low amid the diplomatic spat with the U.S.
TSX futures lower as Turkey turmoil roils global markets (Reuters) Canada’s main stock index futures edged lower on Friday as global stock markets tumbled following a slump in Turkey’s currency due to the country’s deepening rift with the United States. Investors scurried for safer assets such as dollar, yen and U.S. government bonds. The dollar index .DXY, which measures the greenback’s strength against a group of six major currencies, touched its highest level since July 2017. September futures on the S&P/TSX index SXFc1 were down 0.51 percent at 7:15 a.m. ET. Employment data for July is due at 8:30 a.m. ET. Canada’s main stock index rose on Thursday.
Big credit card firms agree to cut fees they charge merchants (BNN) Major credit card companies have struck an agreement with the federal government to trim the fees they charge to merchants in a move Ottawa hopes will provide a boost to small businesses. Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, MasterCard and American Express to cut fees by about 10 basis points. Finance Minister Bill Morneau, who unveiled the deal at an Ottawa grocery store, said he expects the agreements to help small and medium-sized businesses save a total of $250 million per year. “That’s a big difference for companies,” said Morneau, who billed the change as part of his department’s effort to listen to the concerns of Canadian business owners about staying competitive.
Overnight markets
Overview: US 10yr note futures are up 0.287% at 120-02, S&P 500 futures are down -0.45% at 2841, Crude oil futures are up 0.73% at $67.3, Gold futures are up 0.11% at $1221.2, DXY is up 0.64% at 96.12, CAD/USD is up 0.27% at 0.7642.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.107% | 2 Year | 2.625% |
| 5 Year | 2.228% | 5 Year | 2.77% |
| 10 Year | 2.314% | 10 Year | 2.891% |
| 30 Year | 2.326% | 30 Year | 3.044% |
US Economic Data
| 8:30 AM | CPI MoM, Jul 0.2% est 0.2% (0.1% prior) |
| CPI Ex Food and Energy MoM, Jul 0.2% est 0.2% (0.2% prior) | |
| CPI YoY, Jul 2.9% est 2.9% (2.9% prior) | |
| CPI Ex Food and Energy YoY, Jul 2.4% est 2.3% (2.3% prior) | |
| Real Avg Weekly Earnings YoY, Jul 0.1% (0.2% prior) | |
| Real Avg Hourly Earnings YoY, Jul -0.2% (0.0% prior) | |
| 14:00 PM | Monthly Budget Statement, Jul -76.0b (-42.9b prior) |
Canadian Economic Data
| 8:30 AM | Net Change in Employment, Jul 54.1k est 17.0k (31.8k prior) |
| Unemployment Rate, Jul 5.8% est 5.9% (6.0% prior) | |
| Hourly Earnings Permanent Empl YoY, Jul 3.0% est 3.6% (3.5% prior) | |
| Full Time Employment Change, Jul -28.0 (9.1 prior) | |
| Part Time Employment Change, Jul 82.0 (22.7 prior) | |
| Participation Rate, Jul est 65.4 (65.5 prior) |
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
09/08/2018
Market Update Tsys mixed before PPI, curve steeper10Y 2.95%narrow 3 tick range in TY futures on low volume (220k), little movement in EGBs as well with no major news overnite. The US tsy auctions $18bln 30Y notes at 1:00ET while Fed Evans, a noted dove, speaks this aft as well. GOCs in a narrow range over the past week, 10Y off the lows just under 2.36%. 2Y auction yest went well with the Nov20/2Y roll tighter (3/2.6) – which still appears 0.5 cheap to us. AT&T priced $2bln tranche long 7 & 30Y@ 170.5, 277 – both deals over subscribed breaking 1bp tighter.
News headlines
Saudis Play Hardball With Their Checkbook by Bashing Canada (Bloomberg) For Saudi Arabia, a new version of checkbook diplomacy is taking shape. The kingdom used to pursue a behind-the-scenes foreign policy, deploying its oil wealth as a carrot. Crown Prince Mohammed Bin Salman is ready to wield it like a stick. That’s the implication of his shock move to penalize Canada for criticizing Saudi treatment of women activists. With diplomatic ties and new business deals frozen, and the managers of Saudi wealth funds under orders to sell Canadian holdings, the measures were unexpected and sweeping.
Inflation Doubts Don’t Stop Global Central Banks Following Fed (Bloomberg) Some of the world’s biggest central banks are taking baby steps on the path away from easy money despite uncertain inflation outlooks that suggest they need to tread more carefully. The Bank of England raised interest rates last week to the highest since 2009, even as Governor Mark Carney fretted about the “uncomfortably high” chance of a hard Brexit. The European Central Bank, while worried about trade protectionism, is ending bond purchases and preparing for a possible rate hike next year. The Bank of Japan is sticking to a massive stimulus program amid feeble inflation but giving bond yields more room to rise.
U.S. Oil Vanishing From China Tariffs Reveals American Clout (Bloomberg) The removal of U.S. crude from goods targeted by Chinese tariffs is a sign that America has become too big to ignore in the oil market. Less than two months after threatening to impose levies on imports of U.S. crude, the world’s biggest oil buyer has now spared the commodity. Only fuels such as diesel, gasoline, propane will be hit with duties on Aug. 23, according to China’s commerce ministry. That’s after the nation’s buyers, including top refiner Sinopec, began shunning American supplies to avoid the risk of tariffs.
Stocks Mixed Amid Trade Salvos; Dollar Advances: Markets Wrap (Bloomberg) Stocks were mixed Thursday, with European shares slipping and U.S. index futures flat, after a mostly positive session in Asia that saw Chinese equities shrug off the tariff to-and-fro between Beijing and Washington. The dollar gained, while crude oil hovered near a seven-week low. Energy majors led the decline in the Stoxx Europe 600 Index as futures on the S&P 500, Nasdaq and Dow Jones drifted before the release of jobs and price data later Thursday. Chinese and Hong Kong stocks firmed earlier as earnings reports offered a respite from the recent sell-off, while Japanese shares dropped. Treasuries were steady. Emerging-market currencies weakened for a second day, with Turkey’s lira and Russia’s ruble extending their slump as disputes with the U.S. deepened.
Saudi Arabia reassures Canada on oil supplies in row over jailed activists (Reuters) A row over human rights in Saudi Arabia will not have any impact on Saudi oil supplies to Canada, its energy minister said on Thursday, reassuring customers after Riyadh froze new trade with Canada and ruled out mediation efforts. Saudi Arabia, infuriated by Canada’s demand last week that jailed activists in the kingdom be released immediately, expelled the Canadian ambassador on Sunday, blocked imports of Canadian grain and ended state-backed educational and medical programs in Canada.
Rio Tinto considers float of Canadian iron ore business-sources (Reuters) Rio Tinto, the world’s second largest listed mining company, is exploring a public listing of its Iron Ore Company of Canada business, banking and industry sources said, as it focuses on boosting revenue from its flagship Australian assets. Iron ore, which accounts for most of Rio’s profit and is used in making steel, has provided healthy margins for years but the outlook is uncertain as major buyer China is expected increasingly to rely on recycling rather than importing raw material.
Overnight markets
Overview: US 10yr note futures are up 0.078% at 119-19, S&P 500 futures are up 0.11% at 2858.5, Crude oil futures are down -0.01% at $66.93, Gold futures are up 0.27% at $1224.3, DXY is up 0.14% at 95.221, CAD/USD is up 0.1% at 0.7672.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.116% | 2 Year | 2.662% |
| 5 Year | 2.261% | 5 Year | 2.825% |
| 10 Year | 2.352% | 10 Year | 2.949% |
| 30 Year | 2.364% | 30 Year | 3.106% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Aug 4th est 220k (218k prior) |
| Continuing Claims, Jul 28th est 1730k (1724k prior) | |
| PPI Final Demand MoM, Jul est 0.2% (0.3% prior) | |
| PPI Ex Food and Energy MoM, Jul est 0.2% (0.3% prior) | |
| PPI Ex Food, Energy, Trade MoM, Jul est 0.2% (0.3% prior) | |
| PPI Final Demand YoY, Jul est 3.4% (3.4% prior) | |
| PPI Ex Food and Energy YoY, Jul est 2.8% (2.8% prior) | |
| PPI Ex Food, Energy, Trade YoY, Jul (2.7% prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Aug 5th (58.6 prior) |
| 10:00 AM | Wholesale Inventories MoM, Jun est 0.0% (0.0% prior) |
| Wholesale Trade Sales MoM, Jun est 0.2% (2.5% prior) |
Canadian Economic Data
| 8:15 AM | Housing Starts, Jul est 219.0k (248.1k prior) |
| 8:30 AM | New Housing Price Index MoM, Jun est 0.1% (0.0% prior) |
| New Housing Price Index YoY, Jun est 0.8% (0.9% prior) |
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
08/08/2018
Market Update Treasuries slightly lower, 10Y 2.977, volume in TY futures ~50% of avg (212k), US equity futures slightly lower little reaction to Trump imposing 25% tariffs on Chinese goods. UK gilts outperforming, curve flatter, decent demand for 10Y gilt auction and continued weakness in the GBP. Focus on US 10Y auction this aft, $26bln August 2028 with the WI 2.975% . GOCs moving higher on news Saudis starting to divest cdn assets, CAD tumbling 50pps above 1.31, ontarios trading down on the news as well.
News headlines
Energy Deals Decline in Canada as Oil Rally Heals Slump’s Scars (Bloomberg) Investors have been pushing Canadian energy companies to merge so they can cut costs and combine resources. That isn’t going so well this year. The value of deals involving Canadian oil, natural gas and pipeline companies slumped 29 percent to $45.5 billion in the first seven months of the year, according to data compiled by Bloomberg. Exclude $22.3 billion in Enbridge Inc. outlays to absorb subsidiaries, and this year’s decline2 widens to 64 percent.
Nafta Talks Enter Third Week With Focus on Cars, Sunset Clause (Bloomberg) As Nafta negotiators from the U.S. and Mexico meet for a third straight week in a push to complete a deal on cars, they’re also preparing for a showdown over a clause sought by the Trump administration that could end the agreement altogether. The nations are nearing an accord on content and salaries for auto manufacturing, and the issue remains their top focus, according to two people familiar with the talks. But as teams become more optimistic that a cars deal can come together, attention is starting to pivot to the so-called sunset clause pushed by U.S. Trade Representative Robert Lighthizer — another make-or-break issue.
Pound Falls to Lowest Level Since October Versus Euro (Bloomberg) The pound fell to the lowest level against the euro in more than nine months amid growing concern that the U.K. could end up leaving the European Union with no agreement for future economic ties. Sterling dropped for the third day versus Europe’s common currency and weakened against most of its Group-of-10 peers. U.K. International Trade Secretary Liam Fox said over the weekend that the risk of a no-deal Brexit had increased to as much as 60 percent.
Stocks Mixed Amid New Trade Duties; Dollar Steady: Markets Wrap (Bloomberg) European shares drifted in thin trading on Wednesday, with U.S. futures pointing to an almost flat opening as earnings disappointments and concern over global trade kept markets in check. The dollar erased an earlier decline. Contracts on the S&P 500, Dow and Nasdaq were steady, with Tesla Inc. shares set to be closely watched after Elon Musk suggested taking the company private. The Stoxx Europe 600 Index pared an earlier decline, with volume 27 percent below the 100-day average for the time of day. Earnings reports from Glencore and Novo Nordisk disappointed. Asia’s markets were mixed as shares in China notched the biggest declines.
Canada to ask allies to help cool Saudi dispute; U.S. offers no aid (Reuters) Canada plans to seek help from the United Arab Emirates and Britain to defuse an escalating dispute with Saudi Arabia, sources said on Tuesday, but close ally the United States made clear it would not get involved. The Saudi government on Sunday recalled its ambassador to Ottawa, barred Canada’s envoy from returning and placed a ban on new trade, denouncing Canada for urging the release of jailed rights activists. Riyadh accused Ottawa on Tuesday of interfering in its internal affairs.
Chinese exports accelerate even as Trump escalates trade war (Reuters) China’s exports surged more than expected in July despite U.S. duties and its closely watched surplus with the United States remained near record highs, as the world’s two major economic powers ramped up a bitter dispute that some fear could derail global growth. In the latest move by President Donald Trump to put pressure on Beijing to negotiate trade concessions, Washington is set to begin collecting 25 percent tariffs on another $16 billion in Chinese goods on Aug. 23.
Saudi dispute poses ‘real economic impacts that will bite’: MacKay (BNN) Former foreign affairs minister Peter MacKay is urging the federal government to ensure the Canadian oil industry is top of mind in whatever it decides to do in its escalating diplomatic dispute with Saudi Arabia. MacKay warned in an interview with BNN Bloomberg Tuesday that Canada’s deteriorating relations with Saudi Arabia could have a detrimental effect on the economy if it escalates further – especially considering the country’s reliance on Saudi oil. “What’s alarming is this has escalated so quickly, and the [Saudi Crown Prince Mohammed bin Salman] has proven himself to be very aggressive,” MacKay said.
Snap sees users drop for first time in Q2; sales beat estimates (BNN) Snap Inc. (SNAP.N) reported its first-ever quarterly drop in daily Snapchat users, signaling that a controversial redesign of the social-media app earlier this year is still hindering growth. Still, revenue topped projections as demand increased for the company’s mobile advertisements. Second-quarter daily average users fell 2 per cent from the previous period to 188 million, missing the average analyst estimate of 193 million. The period that ended in June was the first full quarter in which all users shifted to a new version of Snapchat that separates content from a user’s friends and content from public figures.
Overnight markets
Overview: US 10yr note futures are down -0.026% at 119-14, S&P 500 futures are down -0.04% at 2858.5, Crude oil futures are down -0.84% at $68.59, Gold futures are down 0% at $1218.3, DXY is up 0.15% at 95.327, CAD/USD is up 0.29% at 0.7639.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.136% | 2 Year | 2.67% |
| 5 Year | 2.278% | 5 Year | 2.841% |
| 10 Year | 2.371% | 10 Year | 2.977% |
| 30 Year | 2.385% | 30 Year | 3.122% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Aug 3rd -3.0% (-2.6% prior) |
Canadian Economic Data
| 8:30 AM | Building Permits MoM, Jun est -0.1% (4.7% prior) |
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