Commentaires

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.

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

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.

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

Market Update Tsys yields 1-2 bps higher on very light volume (223k TY fut),  10Y 2.954 (+1.5bps), S&P futures higher (+5.25) as Chinese stocks rose 1.5% after the S&P rose back to the  Jan highs yest.  USD index lower, USD/JPY at one-week lows as BOJ is considering raising rates this year according to BB. The GBP rose off the lows, concerns over no Brexit deal continue to weigh on the xcy while the Turkish lira is stronger. The US auctions $34bln in 3Y notes this aft, ahead of $44bln in 10Y & 30Y supply tomorrow and Thursday.  GOCs lower in line with tsys, 1bp tighter in 10s, very little movement in provis despite higher GOC yields, no supply. 

News headlines

Saudi Blowback Over Women’s Rights Gives Trudeau a Rare Boost (Bloomberg) Justin Trudeau’s attempts to export his “sunny” progressive ways have hit another roadblock, this time with Saudi Arabia. Yet unlike in recent spats with China and India, Canada’s prime minister may get a slight boost at home for his support of women’s rights. Saudi Arabia suspended diplomatic ties and halted new trade dealings late Sunday following comments by Canadian Foreign Minister Chrystia Freeland criticizing the kingdom for arrests of women’s rights activists. The standoff pits Trudeau, an outspoken champion of women’s advancement, against a Saudi government that’s taking a harder line more recently after making some reforms to help women.

Banks After Tax Cuts: Loan Growth Slows and 3,200 Jobs Disappear (Bloomberg) Banks were among the top beneficiaries when Republicans slashed corporate taxes in December to stoke the U.S. economy. So how are the nation’s largest financial institutions treating employees, customers and investors? Twenty-three firms deemed most important by the Federal Reserve saved, on average, $388 million each in the first half of this year, based on declines in their reported tax rates. Over the same period, members of the group said they collectively eliminated 3,200 jobs.

Trump’s Iran Sanctions Spook Europe as Daimler Halts Investments (Bloomberg) U.S. President Donald Trump’s desire to isolate the Iranian economy seems to be working. Within hours of Washington unveiling its first round of restrictions, German carmaker Daimler AG dropped plans to expand sales of Mercedes Benz vehicles in the Islamic republic. That even after the European Union, trying to salvage the Iran nuclear deal, introduced measures to protect firms from Trump’s assault.

Stocks Jump as Focus Turns to Results; Dollar Dips: Markets Wrap (Bloomberg) Most major stocks gauges advanced on Tuesday as earnings season continued, helping buoy investor sentiment against a backdrop of trade angst and geopolitical noise. The dollar slipped and Treasuries edged lower. Futures on the Dow, S&P and Nasdaq all pointed to a higher open, while miners were among the big winners in the Stoxx Europe 600 Index as commodities climbed. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment. The greenback headed for the largest drop in more than a week while the British pound trimmed some of its recent losses. The lira — which has been rocked by a diplomatic spat between Turkey and the U.S. — clawed its way back from a record low, only to later give up most gains. The country’s 10-year bonds touched a record high yield.

Futures gain on higher oil prices (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices rose with renewed U.S. sanctions against Iran that are expected to tighten global crude supply. The new sanctions took effect on Tuesday, and U.S. President Donald Trump, who defied Washington’s allies to impose them, pledged that firms doing business with Tehran would be barred from doing business with the United States. September futures on the S&P/TSX index SXFc1 were up 0.33 percent at 7:15 a.m. ET. Ivey PMI data for July is due at 10:00 a.m. ET. Canada’s main stock index edged lower on Friday, dragged by losses in financial names and as China’s retaliatory tariffs on U.S. goods revived trade war concerns.

‘Realm of ridiculousness’: Top Aimia shareholder slams Air Canada’s Aeroplan offer (BNN) Aimia Inc.’s top shareholder has picked apart Air Canada’s attempt to buy its loyalty program Aeroplan as « blatantly inadequate. » Christopher Mittleman, chief investment officer of Mittleman Brothers – which holds 17.6 per cent of Aimia’s shares – made his argument in an open letter to Aimia’s board less than a week after it rejected the approach by Canada’s largest airline and its buyout partners. « The offer for Aeroplan from the Air Canada-TD-CIBC-Visa consortium was misleading, coercive, and blatantly inadequate, » Mittleman wrote in the letter. « I applaud the board for note acquiescing and continuing negotiations. »

Why China may be Tim Hortons’ most challenging global expansion yet (BNN). Tim Hortons wants to transport “the best of Canada” to China with its aggressive expansion plan, but with many players already jockeying for a bigger share of the Chinese coffee market, the Canadian coffee-and-doughnut chain may be facing its most challenging global expansion yet. The Oakville, Ont.-based company said in July it will partner with Cartesian Capital Group in a joint venture that aims to open 1,500 Tim Hortons restaurants in China over the next decade. The expansion into the world’s second-largest economy is part of a global strategy that has seen Tim Hortons open more than 4,700 restaurants around the world, entering Spain, Philippines, the U.K. and Mexico last year. 

Overnight markets

Overview: US 10yr note futures are down -0.117% at 119-19, S&P 500 futures are up 0.21% at 2856, Crude oil futures are up 1.09% at $69.76, Gold futures are up 0.38% at $1222.3, DXY is down -0.31% at 95.063, CAD/USD is down -0.3% at 0.7713.

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