Commentaires

Market Update

US tsys continuing to selloff this morning, US 10Y 2.582% (+2.9bps), tsy curve another 4bps steeper led by the long end, heavy volume in TY futures (>900k). Tsys dropped sharply in Asia after Bloomberg headline out of China that officials there are wary of treasury buying due to supply, trade tensions..  Block trade steepener in 10Y/ ultras with a DV01 of $565k . US auctions $20bln in reopened 10Y notes at 1:00PM. EGBS lagging the move lower in tsys, ,10Y bund future unch, despite a technically uncovered 10Y benchmark bund auction, results coming out right after the China tsy news however. GOCs lower, spreads 1bp narrower vs tsys. BOC auctions $3.6bln in reopened Feb 2020s at noon. 

News headlines

China May Halt Purchases of U.S. Treasuries (Bloomberg) China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market. Officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter. Benchmark bonds reversed earlier gains on the news, with the yield on 10-year Treasuries climbing for a fifth day.

Trump’s Willingness to Deal on Immigration Adds Urgency to Talks (Bloomberg) Congressional Republicans got the green light from President Donald Trump to negotiate an immigration deal with Democrats, potentially clearing a stalemate that’s stalled action on multiple issues, including funding to keep the government from shutting down next week.

EU Risks Global Bank Crisis If It Blocks Brexit Deal, U.K. Warns (Bloomberg) The European Union risks opening the door to another global financial crisis if it refuses to give London’s bankers a good trade deal, two senior U.K. ministers said, as the finance industry emerged as a key battleground for Brexit talks.

Stocks Retreat as Dollar Declines With Treasuries: Markets Wrap (Bloomberg) European stocks dropped on Wednesday and U.S. equities were poised to follow suit as investors digested a surge in bond yields, the flip side to synchronous global growth and potentially rising inflation. The dollar retreated against all G-10 peers.

Canada housing starts fall in December as condos decline: CMHC (Reuters) Canadian housing starts fell in December, as expected, as a sharp decline in multiple unit urban starts outweighed a rise in single-detached starts, data from the Canada Mortgage and Housing Corporation showed on Tuesday.

NAFTA breakup poses biggest risk to Canadian railways, experts say (Financial Post) The potential dismantling of the North American Free Trade Agreement poses the biggest risk to Canada’s railways not benefiting this year from healthy economies and higher demand to move crude oil, say industry observers.

Trump policies loom large for Canadian banks (Financial Post) NAFTA renegotiations and recently passed corporate tax cuts were among the policies of U.S. President Donald Trump that loomed large over a get-together of Canada’s top bank CEOs Tuesday.

Overnight markets

Overview: US 10yr note futures are down -0.19% at 122-26, S&P 500 futures are down -0.33% at 2743.25, Crude oil futures are up 0.89% at $63.52, Gold futures are up 0.78% at $1323.9, DXY is down -0.49% at 92.078, CAD/USD is down -0.1% at 0.803.

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

Tsys trading mixed on decent volume w/Japan back from extended weekend (TYH>340k), long end underperforming/curves steepening. Equities inch higher (emini +2.0, 2748.5), gold weaker (XAU -6.28, 1514.19), West Texas crude firmer (WTI +.37, 62.10). The Bank of Japan on Tuesday reduced the amount of its buying in Japanese government bonds with 10 to 25 years left to maturity and those with 25 to 40 years to maturity by 10 billion yen from its previous operations. The BOJ offered to buy 190 billion yen of 10-25 year JGBs, compared to 200 billion yen previously, and 80 billion yen of 25-40 year JGBs, compared to 90 billion yen in the past. The announcement has placed pressure on JGBs, helping to lift yields and the yen as a consequence. John Williams, president of the Federal Reserve Bank of San Francisco, thinks the central bank needs new tools to fight chronically low inflation. Chronically low inflation points to a labor market that is still operating well below its full potential despite a 17-year low unemployment rate of 4.1%. 

News headlines

China Changes the Way It Manages Yuan After Currency’s Jump (Bloomberg) China’s central bank has made a change to the regime used to manage the yuan, effectively removing a component used by banks to calculate their submissions to the currency’s daily reference rate, according to people familiar with the matter.

 OPEC Doesn’t Want Brent Over $60 a Barrel, Says Iran’s Oil Minister (Bloomberg) A key OPEC minister has warned that the group risks overheating the oil market as crude prices head toward $70 a barrel. “Members of the Organization of Petroleum Exporting Countries are not keen on increased Brent crude prices above $60 a barrel because of shale oil, » Iran Oil Minister Bijan Namdar Zanganeh said, according to the ministry’s news service Shana. Prices have climbed in recent days because of production cuts and increased demand for petroleum products due to cold weather, he said.

Euro-Area Jobless Rate Drops to Lowest Level in Almost 9 Years (Bloomberg) Joblessness in the euro area declined to the lowest level since early 2009 last month as the labor market continued to benefit from a resurgent economy growing the fastest in a decade.

Europe Stocks Extend Rally; Dollar, Yen Strengthen: Markets Wrap (Bloomberg) The upward march in global stock markets continued, with European equities extending a rally as economic data underpinned growth. The yen was the only G10 currency to rise against the dollar after the Bank of Japan pared bond purchases.

TD acquires Toronto-based AI startup Layer 6 (Globe and Mail) Toronto-Dominion Bank is acquiring artificial intelligence startup Layer 6 AI for an undisclosed amount as financial services companies increasingly look to tap the technology’s potential.

Minimum wage hike has rocky start in Canada’s Ontario province (Reuters) A steep minimum wage increase that went into effect on Jan. 1 in Ontario, Canada’s most populous province, has had a rocky start as some employers cut workers’ hours and benefits to reduce its impact on the bottom line.

Bank of Canada sees capacity pressure, setting up another rate hike (Reuters) Canadian companies remain optimistic about future sales despite some moderation from highs, and signs of capacity pressures and labor shortages have picked up, the Bank of Canada said on Monday, reinforcing expectations for an interest rate hike.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 123-15, S&P 500 futures are up 0.07% at 2748.75, Crude oil futures are up 0.55% at $62.07, Gold futures are down -0.36% at $1315.7, DXY is up 0.16% at 92.503, CAD/USD is up 0.04% at 0.8048.

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

Tsy futures trading firmer, top end of narrow range on light volume (TYH<180k); yld curves unwinding portion of Friday’s steepening w/2s10s -0.284 at 50.952, 2s30s -.450 at 84.207, 5s30s -.217 at 51.809. Equities little weaker after making new all-time highs Fri (emini -5.75, 2736.75), gold little weaker (XAU -0.16, 1319.19), West Texas crude firmer but still off last week’s 2.5yr highs (WTI +.19, 61.63). Data this week with focus on CPI Friday (0.1% est vs. 0.4% prior), 3-, 10- and 30Y Tsy auctions two re-opening), and several Fed speakers through week (blackout period begins on Saturday, Jan 20). SF Fed pres Williams and Boston Fed pres Rosengren will touch on monetary policy and ecomic outlook at separate events Mon. Annual meeting of American Economic Assn Sat, Reuters quoted Fed president Williams that three hikes in 2018 « makes sense » while the U.S. economy « will be ‘in a very positive place two years from now: I think we’ll be at 2 percent inflation and around 4 percent unemployment' ». Minn Fed pres Kashkari speaks Tuesday, Chi Fed pres Evans and StL Fed pres Bullard at separate events on Wed. NY Fed pres Dudley will address the 2018 economic outlook Thu at a SIFMA event in NY Thursday while Bost Fed pres Rosengren rounds out wk touching on Money/Models/Innovation at an event in La Jolla, California Friday evening.

News headlines 

Trump Warns Democrats Again: No Mexican Border Wall, No DACA (Bloomberg) President Donald Trump said Congress should enact a measure to provide legal status to young, undocumented immigrants, provided other proposals, including funding for a wall on the U.S. border with Mexico, are also adopted — a compromise Democratic lawmakers have already rejected.

Stronger May Finally Ready for U.K. Cabinet Reshuffle (Bloomberg) Theresa May bid farewell to 2017 by firing her deputy and is starting the new year with a Cabinet reshuffle, a sign the British prime minister is intent on seeing Brexit to completion and fighting another election.

Euro-Area Economic Confidence Soars to Nearly Two-Decade High (Bloomberg)  Confidence in the euro area continued its advance at the end of 2017, capping what was probably the strongest year for the economy in a decade. The European Commission’s measure of sentiment touched its highest since late 2000 in December. The reading of 116 was above the median forecast of 114.8 in a Bloomberg survey and was based on an improvement in the outlook for industry and services.

Stocks Extend Rally Before Earnings; Dollar Climbs: Markets Wrap (Bloomberg) Global stocks advanced before the start of an earnings season that’s expected to produce strong enough profit outlooks to support near-record-high equity prices. The dollar strengthened against the euro and the pound.

U.S. Added Fewer Jobs Than Expected in December (Bloomberg) U.S. payroll gains slowed by more than forecast in December, wages picked up slightly and the jobless rate held at the lowest level since 2000, adding to signs of a full-employment economy.

Montreal’s real estate market sizzles in 2017, sales hit 10-year high (Globe and Mail) Montreal was one of Canada’s hottest real estate markets last year as low unemployment and economic growth translated into the area’s best sales growth in a decade.

Lululemon shares climb as it hikes forecasts on strong holiday sales (Globe and Mail) Lululemon Athletica Inc said on Monday the holiday shopping season was even better that it had expected and raised its profit and revenue forecasts for the fourth quarter, sending the Canadian yoga and leisure apparel maker’s shares up.

Oil approaches 2015 highs on fewer U.S. rigs, OPEC (Reuters) Oil prices rose on Monday, coming close to new three-year highs on a slight decline in the number of U.S. rigs drilling for new production and sustained OPEC output cuts.

Overnight markets

Overview: US 10yr note futures are up 0.063% at 123-19, S&P 500 futures are down -0.13% at 2739, Crude oil futures are up 0.37% at $61.67, Gold futures are down -0.11% at $1320.8, DXY is up 0.37% at 92.29, CAD/USD is up 0.07% at 0.805. 

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