Commentaires

Market Update

US tsys higher, TY futures in a narrow overnite range before FOMC, 10Y 2.23% (-1.4bps).  GOCs unch after giving up earlier gains with the 10Y 2.09%. GOCs wider by ~2bps vs tsys mostly in 2s, reversing recent outperformance, CAD +0.36% , WTI +1.1%, EUR higher for a fifth day.  Core Euro bonds higher, bund yields ~1bp lower, gilts lagging after significant beat for August UK retail sales (+2.8% vs 1.4%).  Fed unlikely to raise rates today yet odds of a Dec hike remain elevated at 53%,  while the issue of   balance sheet tapering will likely emphasize its gradualist nature.

News headlines 

Fed to Pack Up Crisis Tool, Debate Next Hike: Decision-Day Guide (Bloomberg) Will the Federal Reserve raise interest rates again this year? That’s the big question investors are hoping policy makers clarify when they conclude a two-day meeting Wednesday. Fed officials are widely expected to leave rates unchanged as they announce a start date for the gradual unwinding of the U.S. central bank’s $4.5 trillion balance sheet. That milestone, 10 years after the onset of the financial crisis, has been so well telegraphed by officials that it looks likely to be a non-event in financial markets.

Key Republican Says No Deal on Bipartisan Obamacare Fix Bill (Bloomberg) A crucial GOP senator says that after weeks of effort, there’s not enough agreement among lawmakers to advance a small package of bipartisan changes that would stabilize Obamacare’s health insurance markets.

U.K. Retail Sales Rise More Than Forecast as Consumers Stir (Bloomberg) U.K. retail sales rose in August at their fastest pace in four months, providing further evidence of a tentative pickup in consumer spending.

Carney’s Rate Message Is Slowly Resonating With Economists (Bloomberg) Economists are gradually starting to buy what Mark Carney is selling. After Bank of England policy makers said last week that an interest-rate increase may be needed in coming months, 11 firms now expect a hike in the fourth quarter of this year, according to a Bloomberg survey. While that’s still a minority, it’s up from three last month and may climb further as economists continue to tear up their forecasts in light of the bank’s hawkish shift.

Canada posts C$17.8 billion deficit in 2016-2017 (Reuters) Canada posted a budget deficit of C$17.8 billion ($14.5 billion) for the 2016-17 fiscal year, the Finance Department said on Tuesday, below the preliminary deficit of C$21.85 billion reported in May and well above the C$1.0 billion deficit the year before.

Volkswagen Comeback Pushes Europe Bond Sales Past Trillion Euros (Bloomberg) Volkswagen AG’s return from debt market exile following its 2015 diesel emissions scandal has helped propel European bond sales past 1 trillion euros ($1.2 trillion) one month earlier than in 2016.

ECB Stimulus Is Finally Reaching the Whole Euro Zone (Bloomberg) Back in 2013, when the region was reeling from recent debt crises, the European Central Bank’s monetary policy wasn’t being reflected in lending rates in the region’s south. Greece and Portugal were both about to see serious bouts of deflation, but the transmission of ECB interest rates – at the lowest level in the institution’s history to that point – to business loans in those countries had been virtually severed.

Overnight markets 

Overview: US 10yr note futures are up 0.074% at 126-03, S&P 500 futures are up 0.02% at 2505.25, Crude oil futures are up 1.17% at $50.06, Gold futures are up 0.43% at $1316.3, DXY is down -0.09% at 91.711, CAD/USD is down -0.37% at 0.8165.

US Economic Data

Canadian Economic Data

There is no economic data scheduled 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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys trading higher, yields 1-1.5bps lower led by the 3/5 year, with the 10Y 2.22 (-1bp).  US equity futures up slightly (1.5pts), crude extending gains above $50 as Iraq has raised the prospect of further production cuts while refiners delay maintenance on facilities. European govt bonds higher led by the peripherals on Reuters story that ECB is considering maintaining QE beyond October, the strong Euro’s dampening impact on inflation a concern to those ‘doves’ on the governing council. The Federal Reserve begins its two-day meeting with odds of a third rate hike having moved to 50% from ~30% at the start of the month. GOCs unch, 10Y 2.08% – big reversal yesterday afternoon after BOC Deputy Lane said the Bank was closely monitoring strength in the CAD. Ontario longs trading down @82.5 ,  ongoing talk of supply from BC & Alberta.

News headlines 

Wall Street’s Bond Gurus Have the Fed’s Balance-Sheet Unwind All Wrong (Bloomberg) On Wall Street, the conventional wisdom is that once the Federal Reserve finally starts to whittle down its crisis-era debt investments, U.S. Treasury yields will have nowhere to go but up. But to some bond investors, history suggests the consensus couldn’t be more wrong. During each of the Fed’s quantitative-easing cycles, yields rose when the central bank was buying and then fell after it stopped. That ran counter to what many expected based on simple supply and demand as the Fed amassed $4.5 trillion of debt and became the single biggest holder of Treasuries.

UK’s May to press Trump this week on Boeing/Bombardier dispute (Reuters) British Prime Minister Theresa May said on Monday she would press U.S. President Donald Trump this week about a trade challenge by Boeing Co that could endanger thousands of aerospace jobs in Northern Ireland. May and Prime Minister Justin Trudeau are worried about Boeing’s move against Bombardier Inc, which is the single largest manufacturing employer in Northern Ireland and Canada’s most important aerospace firm.

Carney Says U.K. Rate Hike Looms in Brexit-Hobbled Economy (Bloomberg) Brexit, which prompted Mark Carney to cut U.K. interest rates for the first time in seven years in 2016, is now pushing in the other direction. In a speech in Washington on Monday, the Bank of England governor said while the decision to leave the European Union has slowed growth, it’s also cut the economy’s potential. That reduced “speed limit” — as he has described it — increases the chance of overheating and partly explains why the Monetary Policy Committee now says it may need to raise rates soon.

German investor morale unfazed by election, stronger euro (Reuters) German investor morale is unfazed by Sunday’s federal election and a strengthening of the euro, the ZEW institute said on Tuesday after publishing an index which showed morale had improved in September. Financial market experts are more upbeat because of Germany’s solid economic growth figures in the second quarter, a surge in bank lending and increased investment by both the government and private firms, ZEW head Achim Wambach said.

Markets Are Betting That Japan’s Abe Would Win If Snap Election Is Called (Bloomberg) Markets are suggesting that any snap election called by Japanese Prime Minister Shinzo Abe would take advantage of his opponents’ weakness and see him retain power. A victory would ensure the continuation of Abenomics, the recipe of mega monetary easing, flexible fiscal policy and selective deregulation that’s helped Japan’s economy to its longest sustained expansion since before the global crisis. Abe, who’s expected to decide on the early ballot after returning from a U.S. trip, is capitalizing on growing public support for his management of the North Korean crisis.

Flattest Curve in Developed World Tells the Bond Market’s Tale (Bloomberg) Canada’s two-to-30-year spread is narrower than Japan’s Inflation ‘dead for so long’ it’s hard to see it returning. To get a sense of how blasé investors are about inflation look no further than Canada, which sports both the fastest growth among its developed peers and the flattest yield curve.

Russia and Belarus Hold Joint Drills, and Tensions Emerge (WSJ) War games that Russia and neighboring Belarus are currently staging have sharpened tensions with the West—and exposed a rift between Moscow and its closest military ally.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 126-04, S&P 500 futures are up 0.05% at 2504, Crude oil futures are up 0.96% at $50.39, Gold futures are up 0.05% at $1311.4, DXY is down -0.21% at 91.853, CAD/USD is down -0.16% at 0.8149.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys trading lower, narrow overnite range on very light volume in TY1 (146k), 10Y 2.213% (+1bp). S&P futures +3.5pts, European equities up 0.40%, crude 49.63 unch.  Core EGBs also lower, German bund yields 1bp higher, gilts outperforming slightly, recovering some of the sharp selloff from last week. Portugal upgraded by S&P to investment grade has taken the Portugal/Germany 10Y spread 28bps tighter  to  203bps –  the spd was closer to 400bps in March. GOC yields higher underperforming tsys by 1-1.5bps, 10Y above 2.10% for the first time since Nov 2014- 2.115%. Provis opening unch, long Alberta rumoured, Alta/Ont 48 roll close to recent narrows 8.5/8.0. The market sees a 47.7% chance the Fed hikes rates again in 2017, Bloomberg data shows.

News headlines 

Wall Street hits record highs, S&P 500 pierces 2,500 (Reuters) Wall Street reached record highs on Friday, with the S&P 500 surpassing 2,500 points as telecommunications shares rose and technology bounced back after two days of declines. The S&P 500’s breach of the 2,500-mark came less than four months after it closed above 2,400, and brought 2017’s gain to nearly 12 percent. U.S. stocks haven’t had a 5% correction in more than 400 days. S&P 500’s 269% rally since a 2009 low is third strongest ever.

Dollar Rebounds as FOMC Meeting Makes Case for Profit Taking (Bloomberg) The Fed is getting ready for its ‘biggest meeting of the year.’ The Fed is widely expected to announce the start of a reduction in its $4.4 trillion balance sheet at the conclusion of its meeting on Wednesday, September 20.

Euro Zone Inflation Confirmed at 1.5 Percent in August (NYTimes) Euro zone headline inflation hit its highest level in four months in August, official data showed on Monday, confirming the European Union statistics office’s earlier flash estimate. Eurostat said consumer prices in the 19 countries sharing the euro rose in August by 1.5 percent year-on-year and by 0.3 percent on the month, in line with the average forecast of economists polled by Reuters.

Chinese capital bans winter construction to improve air quality (Reuters) Beijing will suspend construction of major public projects in the city this winter in an effort to improve the capital’s notorious air quality, official media said on Sunday, citing the municipal commission of housing and urban-rural development. All construction of road and water projects, as well as demolition of housing, will be banned from Nov. 15 to March 15 within the city’s six major districts and surrounding suburbs, said the Xinhua report.

Brent Oil Holds Near 5-Month High on Signs of Tightening Supply (WSJ) Oil prices nudged higher Monday, holding on to recent gains that pushed prices to a five-month high last week, buoyed by recent data showing tightening supplies. Brent crude, the global oil benchmark, rose 0.5% to $55.87 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.7% at $50.21 a barrel.

WestJet, Oilers, Flames among Alberta businesses warning against proposal to end daylight time changes (Globe and Mail) Alberta businesses are coming out against a proposal from a member of Premier Rachel Notley’s government to create a new time zone for the province. WestJet Airlines Ltd., as well as the Edmonton Oilers and Calgary Flames, are warning of early-morning flights and late-night hockey games if a private member’s bill working its way through Alberta’s legislature is approved. The bill, which would end the ritual of springing forward and falling back, would leave the province in Mountain Daylight Time year-round in a renamed time zone that would be known as Alberta Standard Time.

Overnight markets 

Overview: US 10yr note futures are down -0.074% at 126-07, S&P 500 futures are up 0.18% at 2501.75, Crude oil futures are down -0.6% at $49.59, Gold futures are down -0.72% at $1315.6, DXY is up 0.1% at 91.963, CAD/USD is up 0.11% at 0.8193.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230