Commentaires

Market Update Tsys slightly higher before payrolls, 10Y 2.78% (-1.2bps), futures near highs on heavy volume. European equities down 1.0%, S&P futures -16, gold weaker, crude unch. Deutsche Bank -5.0% on Q4 earnings & revenues miss. Core EGBs lower despite equities and weaker ECO data, 10Y gilt +3bp @ 1.56%. GOCs  slightly higher in line with tsys, 10Y 2.36%. Yesterday yields spiked higher, 10Y largest selloff since Sept to 2.38% the highest since May ’14, and underperforming the decline in tsys as the 30Y tsys rose above 3.0% for the first time since May. Provis fairly contained despite the move higher in GOC yields, rapid flattening in 10s30s.  

News headlines

Bond-Market Pain Reaches 30-Year Treasuries as Yield Breaches 3% (Bloomberg) The benchmark 10-year U.S. yield hurtled toward 2.8 percent, setting fresh highs since 2014, and the 30-year yield broke through 3 percent for the first time in eight months. Treasuries found little support throughout the trading session — no more month-end buyers like pensions and index funds to step in, and little sign of demand from Asian buyers. Most traders were content to let the bear-market narrative run its course after the worst January for the world’s biggest bond market since 2009.

Deutsche Bank Investors See No Silver Lining After Results Slump (Bloomberg) Deutsche Bank AG investors searching for good news after the bank’s third straight annual loss found little to give them optimism. The Frankfurt-based lender, which had already guided for a slump, surprised with revenue that fell to the lowest in seven years and declines at businesses from transaction banking to equity derivatives. Even cost control — a key feature of Chief Executive Officer John Cryan’s tenure — was worse than expected.

Dollar Gains Before Jobs Data; Stocks Extend Drop: Markets Wrap (Bloomberg) Stocks in Europe declined as a bond selloff deepened across the continent. The dollar rebounded from three days of losses and Treasuries steadied before U.S. jobs data that may give further clues on the Federal Reserve’s rate path. The Stoxx Europe 600 Index dropped for a fifth straight day, the longest streak since November, as heavyweights Deutsche Bank AG and BT Group Plc slumped after disappointing results. Germany’s DAX gave up the year’s gains, capping the worst weekly decline since 2016. Futures on the S&P 500 also slipped. Bund yields reached a two-year high as core European bonds fell along with gilts, while the euro and pound weakened. Japanese debt gained and the yen declined after the Bank of Japan intervened to stem the rise in rates.

Oil Near $70 as U.S. Shale Surge Looms Over Bullish Banks (Bloomberg) Brent crude traded near $70 a barrel as the specter of expanding U.S. supply was weighed against Wall Street banks’ growing faith in a price rally. The benchmark grade is on course to end the week lower, after being whipsawed by concern about rising American production and optimism over rosy outlooks painted by forecasters including Goldman Sachs Group Inc.

Scotiabank expects up to $6.5 billion excess capital by 2020 (Reuters)  Bank of Nova Scotia expects to generate C$7 billion to C$8 billion ($6.5 billion) of excess capital by 2020, giving it the opportunity to return capital to shareholders or make acquisitions, its chief financial officer said.

Canada manufacturing growth strongest in nine months in January (Reuters) The pace of growth in the Canadian manufacturing sector picked up at the start of the year to its highest level in nine months as measures of new orders and employment rose in January, data showed on Thursday.

Stock futures edge lower as gold falls (Reuters) Stock futures pointed to a slightly lower opening for Canada’s main stock index on Friday as spot gold prices edged lower, led by a rise in the U.S. dollar.

Overnight markets

Overview: US 10yr note futures are down -0.026% at 121-06, S&P 500 futures are down -0.62% at 2805, Crude oil futures are down -0.12% at $65.72, Gold futures are up 0.07% at $1348.9, DXY is up 0.2% at 88.846, CAD/USD is up 0.39% at 0.812.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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

Market Update Tsys weaker across the curve, 5Y above 2.55, 10Y 2.75%, futures near o/n lows on heavy volume (600k TY). Tsys lower with EGBs as Spanish & French supply weighed, 10Y bund above 0.73% . Stocks in Europe reversing gains unable to recover after a three day selloff, S&P futures -3.5, the USD also reversing post FOMC rally to trade close to low 88.96.  GOCs lower in line with tsys, 10s leading with 2s10s 2bps steeper, CGBS breaking Monday’s low below 132. Provis opening unch, MP long deal yest @ Onts +8, well received, now 7.5 bid.  Central One (AH) priced an 3Y FRN @ CDOR+35 which looked cheap vs DOLCN (BBB) 3Y @27 . BNS 10Y deposit note @ 80 traded slightly tighter in secondary. 

News headlines

Janet Yellen’s Fed Era Ends With Unanimous Vote of No Rate Hike (Bloomberg) Federal Reserve officials, meeting for the last time under Chair Janet Yellen, left borrowing costs unchanged while adding emphasis to their plan for more hikes, setting the stage for an increase in March under her successor Jerome Powell.

Euro-Area Manufacturers Start Year With Near-Record Momentum (Bloomberg) Manufacturing in the euro area grew at one of the fastest paces on record in January, with high demand fueling inflationary pressures. A Purchasing Managers’ Index for the sector slipped to 59.6 — matching a previous flash estimate — from 60.6 in December, IHS Markit said on Thursday. Companies raised selling prices by the most in almost seven years, partially due to a steep increase in energy costs, the London-based company said.

America Winning ‘Cold Currency War’ to Weaken Dollar, Pimco Says (Bloomberg) The U.S. is fighting — and winning — a “cold currency war” as it seeks to weaken the dollar, according to Pacific Investment Management Co. The greenback’s nearly 12 percent plunge since the start of 2017 is being fueled by fiscal and monetary policies as well as rhetoric intended to debase the U.S. currency, Pimco global economic adviser Joachim Fels wrote in a blog post. Central banks from Japan to Europe have refrained from pushing back too hard amid fears over increased protectionism from the Trump administration.

Europe Stocks Advance as Treasuries Lead Bond Drop: Markets Wrap (Bloomberg) Stocks in Europe and Asia kicked off February with gains, as investors decided the outlook for growth and corporate earnings was strong enough to quell concerns about the recent jump up in bond yields. Treasuries resumed a slide and the dollar edged higher.

Top iPhone Suppliers Warn of Slower Sales Ahead of Apple Results (Bloomberg) Qualcomm Inc. and Broadcom Ltd., key suppliers to Apple Inc., have implied that orders related to the iPhone tailed off more than normal at this time of year. Some of Apple’s iPhones are built with Qualcomm’s modems, which are chips for connecting to cellular networks. The San Diego-based chipmaker said Wednesday that orders from a large “thin modem” customer tailed off at worse-than-typical levels in the quarter. It was widely interpreted that the customer is Apple.

Canada PM says doesn’t think Trump will pull U.S. out of NAFTA (Reuters) Canadian Prime Minister Justin Trudeau on Wednesday said he did not think U.S. President Donald Trump would pull out of NAFTA, despite slow progress at negotiations to update the $1.2 trillion trade pact.

Canada economy picks up in Nov with broad-based growth (Reuters) The Canadian economy accelerated in November by the most in six months, with activity broad-based across a number of sectors including manufacturing and keeping the Bank of Canada on track to raise interest rates again before long.

Bitcoin skids to lowest since November after worst month in three years (Reuters) Bitcoin, the world’s largest cryptocurrency, skidded 9 percent on Thursday to its lowest level since late November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market rattled investors.

Overnight markets

Overview: US 10yr note futures are down -0.141% at 121-13, S&P 500 futures are down -0.21% at 2819.75, Crude oil futures are up 1.13% at $65.46, Gold futures are down -0.01% at $1343, DXY is down -0.15% at 89, CAD/USD is up 0.06% at 0.8116.

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

Market Update

US tsys higher, US 10Y 2.705 (-1.5) despite stronger Jan ADP (234k vs 185k) and the US Treasury raising auction sizes for  3, 10 & 30 yr qrtly refunding. Tsy curve pairing back yesterday’s steepening as well, 2bps flatter led by the long end. Busy day with month end extensions a factor, Chicago PMI and FOMC this aft. Yellen expected to acknowledge the pickup in growth and inflation prospects in her final FOMC. US equity futures +12, Boeing blew past estimates forQ4, core eps $4.80 vs $2.90 exp on better than exp revenues, shares up ~6% pre-mkt. GOCs higher, wider vs tsys after Nov GDP came in as exp 0.4%, goods producing 0.8% – largest increase since May ’17 on oil&gas, utilities. 

News headlines

Inflation Debate Grips Fed as Yellen Exits: Decision-Day Guide (Bloomberg) As Janet Yellen prepares to hand over the leadership of the Federal Reserve to Jerome Powell, the central bank is gripped by the same issue that’s marked her four-year term as chair: puzzlingly low inflation. The rate-setting Federal Open Market Committee is likely to maintain the range of its benchmark lending rate at 1.25 percent to 1.5 percent at the conclusion of a two-day meeting in Washington on Wednesday. It releases a statement at 2 p.m. and no press conference is scheduled to follow.

Euro-Area Inflation Slowdown Highlights ECB’s Uphill Battle (Bloomberg) Inflation in the euro area slowed at the start of the year, highlighting the hurdles faced by the European Central Bank as it attempts to foster price growth in a region still beleaguered in places by high unemployment. Consumer prices rose 1.3 percent in January, the European Union’s statistics office said on Wednesday. The reading exceeds the median forecast of 1.2 percent in a Bloomberg survey but is below December’s rate of 1.4 percent.

Trump Connects Presidency With Prosperity in ‘American Moment’ (Bloomberg) Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing that the U.S. has arrived at a “new American moment” of wealth and opportunity. The president largely dispensed with his trademark antagonism in a bid for bipartisanship, portraying his administration — marked in his first year by discord — as working to build a “safe, strong and proud America.” In contrast with polling that shows most Americans consider him divisive, he promised to unify the country “as one team, one people and one American family.”

Stock Declines Ease as Dollar Drops; Oil Retreats: Markets Wrap (Bloomberg) The global stock declines that have shaped the week showed signs of easing on Wednesday, with U.S. futures climbing and European equities edging higher. The dollar slump deepened in the wake of President Donald Trump’s State of the Union address, and the euro rose after inflation data.

Oil Pares Strongest January Since 2013 on U.S. Supply Outlook (Bloomberg) Oil slipped for a third day in New York, continuing its retreat from a three-year high, on estimates that U.S. crude stockpiles increased last week. West Texas Intermediate futures fell 0.5 percent, bringing their monthly advance to 6.2 percent. Data from the U.S. Energy Department is forecast to show that inventories probably rose by 900,000 barrels to 412.5 million, according to a Bloomberg survey.

Toronto, Vancouver drive overvaluation in Canada housing (Reuters) Canada’s housing market still shows evidence of overvaluation, particularly in and around Toronto and Vancouver, despite slowing growth in prices, the federal housing agency said on Tuesday.

Japan’s Fujifilm to take over Xerox in $6.1 billion deal, create joint venture (Reuters) Japan’s Fujifilm Holdings is set to take over Xerox Corp in a $6.1 billion deal, combining the U.S. company into their existing joint venture to gain scale and cut costs amid declining demand for office printing.

Canadian drillers moving rigs south to chase better prospects in Texas oilfields (BNN) A growing number of Canadian drilling rigs are being moved south of the border to take advantage of brighter prospects in the United States — and observers say it’s unlikely they will ever return home. A week ago, Calgary-based Akita Drilling Ltd., primarily a Canadian driller, announced it would deploy its first rig into the prolific Permian Basin in West Texas by moving one from Western Canada.

Overnight markets

Overview: US 10yr note futures are up 0.051% at 121-23, S&P 500 futures are up 0.42% at 2836.5, Crude oil futures are down -0.6% at $64.11, Gold futures are up 0.46% at $1346.1, DXY is down -0.3% at 88.89, CAD/USD is down -0.49% at 0.8145. 

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