Comments
29/01/2018
Market Update
Global govt bonds selling off this morning, US tsy& bund yields 3-6bps higher, muted rise in gilt yields 0.5-2bps. Tsy yields easily breaching resist, 10s above 2.70% for the first time since April 2014 on heavy volume in TY futures (>860k), despite month end extensions, FOMC/labor mkt data, and the potential for rebalancing out of equities into tsys. Slight uptick in tsy after Personal Income/Spending data. GOCs lower, outperforming tsy by 102 bps, longs outperforming – 6bps vs tsys over the week with 5s & 10s unch.
News headlines
German Five-Year Yield Rises to Highest Level in Over Two Years (Bloomberg) German five-year bond yields broke above zero percent for the first time since December 2015 after a member of the European Central Bank Governing Council said there isn’t a single reason anymore to continue with quantitative easing.
Treasuries Slide, Dollar Gains as Busy Week Begins: Markets Wrap (Bloomberg) U.S. Treasuries extended a selloff that’s taken yields to the highest since early 2014 as traders gear up for a hectic week of data and policy announcements. The dollar climbed and stocks edged lower as the euro, Swiss franc, yen and pound all retreated.
British Lords Get Ready to Disrupt Brexit (Bloomberg) The bumpy journey toward Brexit reaches another fork in the road this week as the upper chamber of the British parliament plans to rewrite a key piece of Prime Minister Theresa May’s legislation.
Hedge Funds Are Betting Big on Oil (Bloomberg) Hedge funds reported record wagers on continued price increases for both U.S. and global oil benchmarks, along with gasoline and diesel. Meanwhile, producers are hedging production at record rates as oil experiences its best January since 2006.
Russian Bonds Retreat Before Long-Awaited U.S. Sanctions Report (Bloomberg) Russian bonds slid, with some yields climbing to the highest in two months, and UBS Group AG recommended taking profit on the ruble before a U.S. Treasury report gauging the impact of possible sanctions on the nation’s sovereign debt.
U.S. lawmakers at NAFTA talks express optimism about modernizing trade pact (Reuters) U.S. lawmakers attending NAFTA talks in Montreal expressed optimism on Sunday that efforts to update the trade pact would avoid collapse and start gaining momentum and said they urged negotiators not to bind themselves to a specific deadline.
U.S. trade body backs Canadian plane maker Bombardier against Boeing (Reuters) A U.S. trade commission on Friday handed an unexpected victory to Bombardier Inc against Boeing Co, in a ruling that allows the Canadian company to sell its newest jets to U.S. airlines without heavy duties, sending Bombardier’s shares up 15 percent.
ICBC posts $935M in net losses in first nine months of fiscal year (BNN) The financial crisis at British Columbia’s public auto insurer is deepening, as $1.3 billion in net losses are now projected by the end of the current fiscal year. The Insurance Corporation of B.C. said the “sizable and significant loss” is evidence of the growing financial pressures from a rapid increase in the number of collisions in the province, as well as the rising costs of those claims.
Overnight markets
Overview: US 10yr note futures are down -0.32% at 121-22, S&P 500 futures are down -0.24% at 2867.5, Crude oil futures are down -0.7% at $65.68, Gold futures are down -0.69% at $1347.9, DXY is up 0.32% at 89.348, CAD/USD is up 0.16% at 0.8105.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.835% | 2 Year | 2.142% |
| 5 Year | 2.096% | 5 Year | 2.516% |
| 10 Year | 2.298% | 10 Year | 2.712% |
| 30 Year | 2.364% | 30 Year | 2.961% |
US Economic Data
| 8:30 AM | Personal Income, Dec 0.4% est 0.3% (0.3% prior) |
| Personal Spending, Dec 0.4% est 0.4% (0.6% prior) | |
| Real Personal Spending, Dec 0.3% est 0.4% (0.4% prior) | |
| PCE Deflator MoM, Dec 0.1% est 0.1% (0.2% prior) | |
| PCE Deflator YoY, Dec 1.7% est 1.7% (1.8% prior) | |
| PCE Core MoM, Dec 0.2% est 0.2% (0.1% prior) | |
| PCE Core YoY, Dec 1.5% est 1.5% (1.5% prior) | |
| 10:30 AM | Dallas Fed Manf. Activity, Jan est 25.4 (29.7 prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Jan 26th (60 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
26/01/2018
Market Update
Tsys weaker, 10Y 2.64%,(+2.4bps), above avg volume in TY futures, reversing some of yest late aft rally. Equities firmer (S&P fut + 9.25), gold higher, crude unch 65.60 , USD weaker reversing Trump bounce on Trump. Tsys lower with bunds after Draghi sounded optimistic on EU growth , while ECB member Coeure noted inflation is picking up with wages, while the ECB remains data dependent. GOCs lower in line with tsys, 10Y 2.26%, longs continue to outperform on the curve 10s30s @ 8bps, the flattest relative to the US since October. Provincial spds unch yest, longs 1bp wider as the GOC curve narrows. Dollarama in the mkt with a 3Y FRN @ 27 yest, now 25/23.
News headlines
Trump Woos CEOs in Davos Debut While Others Consider Boycott (Bloomberg) It was a scene more reminiscent of President Donald Trump’s own Cabinet meetings than a staid forum of global elites in the Swiss Alps: Trump, at a table of top executives from Europe’s most important companies, holding court as they took turns trying to impress him.
Trump Says Dollar to Strengthen, Mnuchin ‘Taken Out of Context’ (Bloomberg) President Donald Trump declared that the dollar would continue to strengthen and that remarks made by his Treasury secretary suggesting support for a weaker U.S. currency the day before had been taken out of context.
U.K. Economy Remains a Laggard Even as GDP Beats Forecasts (Bloomberg) The 0.5 percent expansion in the fourth quarter announced on Friday was better than the 0.4 percent forecast by economists in a Bloomberg survey. For the full year, growth slowed to 1.8 percent, the weakest in five years, as consumers and companies felt the repercussions of the 2016 vote to the leave the European Union.
Trump Rallies Dollar as Stocks Wobble, Crude Falls: Markets Wrap (Bloomberg) President Donald Trump waded into the unusual public debate over currency valuations, roiling markets after he said that he favored a strong greenback just a day after his Treasury secretary endorsed a weak dollar.
Oil Set for Weekly Gain as Crude Stockpiles and Dollar Decline (Bloomberg) Futures have climbed 3.8 percent in New York this week after reaching the highest since December 2014 on Thursday. Crude stockpiles fell for a 10th week to the lowest level since February 2015, according to Energy Information Administration data Wednesday. The weaker dollar has made oil more attractive to investors.
Bombardier expected to lose U.S. trade dispute: Canadian government source (Reuters) Planemaker Bombardier Inc is expected to lose a hotly contested U.S. trade dispute this week, a Canadian government source told Reuters on Thursday, likely inflaming tensions between the two countries during talks to modernize NAFTA.
World stocks set for 10th straight week of gains, euro jumps (Reuters) World stocks were set for their 10th straight week of gains on Friday, while the euro jumped more than half a percent as comments by U.S. officials this week advocating their support for a weak dollar reverberated through currency markets.
Dividend increases predicted as energy companies prepare 4th-quarter reports amid oil price rebound (CBC) A rally in oil prices that started late last year and shows no signs of stopping in 2018 is expected to pave the way for bigger payouts for long-suffering Canadian energy investors as fourth-quarter reporting season gets underway in the next month.
Overnight markets
Overview: US 10yr note futures are down -0.166% at 122-08, S&P 500 futures are up 0.33% at 2850.75, Crude oil futures are up 0.05% at $65.54, Gold futures are down -0.91% at $1355.6, DXY is down -0.37% at 89.057, CAD/USD is down -0.52% at 0.8123.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.816% | 2 Year | 2.108% |
| 5 Year | 2.059% | 5 Year | 2.447% |
| 10 Year | 2.261% | 10 Year | 2.638% |
| 30 Year | 2.347% | 30 Year | 2.894% |
US Economic Data
| 8:30 AM | Advance Goods Trade Balance, Dec est -68.9b (-69.7b prior) |
| Wholesale Inventories MoM, Dec est 0.4% (0.8% prior) | |
| Retail Inventories MoM, Dec (0.1% prior) | |
| GDP Annualized QoQ, 4Q est 3% (3.2% prior) | |
| Personal Consumption, 4Q est 3.7% (2.2% prior) | |
| GDP Price Index, 4Q est 2.3% (2.1% prior) | |
| Core PCE QoQ, 4Q est 1.9% (1.3% prior) | |
| Durable Goods Orders, DEc est 0.8% (1.3% prior) | |
| Durables Ex Transportation, Dec est 0.6% (-0.1% prior) | |
| Cap Goods Orders Nondef Ex Air, Dec est 0.6% (-0.2% prior) | |
| Cap Goods Ship Nondef Ex Air, Dec est 0.4% (-0.1% prior) |
Canadian Economic Data
| 8:30 AM | CPI NSA MoM, Dec est -0.3% (0.3% prior) |
| CPI YoY, Dec est 1.9% (2.1% prior) | |
| Consumer Price Index, Dec (131.3 prior) | |
| CPI Core Common YoY%, Dec (1.5% prior) | |
| CPI Core Median YoY%, Dec (1.9% prior) | |
| CPI Core Trim YoY%, Dec (1.8% 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
25/01/2018
Market Update
Tsys trading higher, avg volume in TY futures (lowest this week ~ 300k), 10Y 2.2.632% (-1.5bps). Core Euro bonds higher since mid morning, 10Y bund 1.5bps lower, prices bid after ECB left rates unch but stmt dovish in that ECB ready to increase app ‘if conditions warrant’. Draghi press conference at 8:30 -look for any reference to QE taper, Draghi may want to cool speculation of early QE exit given rapid appreciation in the EUR. GOCs maintaining slight gains after retail sales rose 0.2% in Nov vs 0.8% gain exp, as sales of cars/parts fell 3.6% reversing October’s gains.
News headlines
ECB Debates If 270 Billion-Euro QE Pledge Will Be Enough (Bloomberg) When Mario Draghi addresses reporters on Thursday, he’ll probably repeat that returning inflation to target relies on the European Central Bank’s pledge to add at least another 270 billion euros ($330 billion) in stimulus.
Mnuchin Defends Weaker Dollar Comments as ‘Clear,’ ‘Consistent’ (Bloomberg) Treasury Secretary Steven Mnuchin said he isn’t concerned about short-term fluctuations in the dollar and that there are economic pros and cons to where the exchange rate now is, a day after he suggested a weaker U.S. currency would help trade.
Mueller Almost Done With Obstruction Part of Trump Probe, Sources Say (Bloomberg) Special Counsel Robert Mueller is moving at a far faster pace than previously known and appears to be wrapping up at least one key part of his investigation — whether President Donald Trump obstructed justice, according to current and former U.S. officials.
Dollar Extends Drop; Euro Steady as ECB Holds Rate: Markets Wrap (Bloomberg) The dollar’s miserable week continued, with the greenback slipping against most major peers as traders digest the latest comments from White House officials. The euro was steady and European stocks rose as the region’s central bank kept interest rates unchanged, while crude gained.
Oil Extends Three-Year High After Record Pullback in Stockpiles (Bloomberg) Futures added as much as 1.3 percent in New York after climbing 1.8 percent on Wednesday. A weaker U.S. dollar helped to underpin oil’s gain. Supplies slid to the lowest level since February 2015 and edged toward the five-year average, according to Energy Information Administration data. American producers are pumping crude at the highest rate in more than three decades.
Canada unveils ideas to save NAFTA, Trudeau lobbies U.S. firms (Reuters) Canadian negotiators at the NAFTA talks on Wednesday unveiled ideas to address contentious American demands for revamping the 1994 pact while Prime Minister Justin Trudeau urged top U.S. executives to back free trade.
Caterpillar profit beats estimates as sales surge 35 percent (Reuters) Caterpillar Inc beat estimates for fourth-quarter profit on Thursday as revenues surged 35 percent compared to a year earlier on the back of strong global demand for its construction and mining equipment.
Poloz says even he doesn’t know future of rate hikes (BNN) Bank of Canada Governor Stephen Poloz said on Thursday that even he did not know what potential there may be for further interest rate hikes this year, reiterating that policymakers remained both data dependent and alert to developments with NAFTA.
Overnight markets
Overview: US 10yr note futures are up 0.115% at 122-11, S&P 500 futures are up 0.29% at 2849.25, Crude oil futures are up 0.99% at $66.26, Gold futures are up 0.22% at $1364.4, DXY is down -0.12% at 89.102, CAD/USD is down -0.2% at 0.8115.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.814% | 2 Year | 2.076% |
| 5 Year | 2.05% | 5 Year | 2.422% |
| 10 Year | 2.252% | 10 Year | 2.632% |
| 30 Year | 2.362% | 30 Year | 2.911% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Jan 20th 233k est 235k (220k prior) |
| Continuing Claims, Jan 13th 1937k est 1925k (1952k prior) | |
| 9:45 AM | Bloomberg Consumer Confidence, Jan 21st (53.8 prior) |
| 10:00 AM | New Home Sales, Dec est 675k (733k prior) |
| New Home Sales MoM, Dec est -7.9% (17.5% prior) | |
| Leading Index, Dec est 0.5% (0.4% prior) | |
| 11:00 AM | Kansas City Fed Manf. Activity, Jan est 14 (14 prior) |
Canadian Economic Data
| 6:27 AM | CFIB Business Barometer, Jan 62.7 (59.1 prior) |
| 8:30 AM | Retail Sales MoM, Nov 0.2% est 0.8% (1.5% prior) |
| Retail Sales Ex Auto MoM, Nov 1.6% est 0.9% (0.8% 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