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Market Update

US tsys higher, yields 4-5bps lower across the curve, US 10Y 2.115% (-5bps) near low of o/n range on heavy volume in TY futures (~438k)- rallying on news Trump will sell military equipment to South Korea and Japan . Core Euro bonds lagging the rally in tsys in front of ECB & BOE decisions later this week as well as heavy supply – Austria sold E1.2bln in 10 & 30Y debt while the UK saw large demand for its 2.5% 2065 gilt syndication.  Light data week in the US , thou Fed speakers & IG corp supply expected to ramp up.  Gasoline futures, while down for a second day, still 20% higher in two weeks, little impact on front end TIPs breakevens so far. In Canada, GOCs are unch, short end yields 0.5bps higher, extending flattening move from last week ahead of BOC tomorrow. The BOC not expected to raise rates this week even as odds have risen sharply from ~25% mid August to over 50% at present. Provi spds 0.5 – 1bp wider on risk off, long supply from HQ & Alberta rumoured . John Deere (A2/A) issuing 5 & 10Y in the US  @ 70/95 (IPT).

News headlines 

Dollar Slips, Stocks Mixed Before Central Bankers: Markets Wrap (Bloomberg) The dollar slipped and European stocks were mixed as traders shifted focus from North Korea to a week packed with central-bank decisions, Federal Reserve speakers and economic data that will help illuminate the path of the global economy.

U.K. Economy Held Back as Services Weaken, Consumers Struggle (Bloomberg) Britain’s economy is failing to recharge after slowing sharply in the first half of the year. IHS Markit said its latest round of industry surveys suggest growth of about 0.3 percent this quarter, matching the pace of the previous three months. It published the forecast after its gauge of services, the biggest part of the economy, indicated the slowest expansion in almost a year in August. The index drop was bigger than economists had forecast.

Rate Hike Imminent as Poloz Takes Hawkish Turn (Bloomberg) No one doubts the Bank of Canada will raise interest rates again soon. The country’s economy has turned out to be much stronger than anyone was predicting only a few months ago, giving policy makers scope to bring rates back up to more normal levels.

South Korea seeks bigger warheads, North Korean ICBM reportedly on the move (Reuters) South Korea said on Tuesday an agreement with the United States to scrap a weight limit on its warheads would help it respond to North Korea’s nuclear and missile threat after it conducted its sixth and largest nuclear test two days ago.

China’s Oil Lifeline to North Korea Targeted After Nuclear Blast (Bloomberg) Even before North Korea detonated its most powerful nuclear bomb yet, Japan was calling for moves to cut off its oil supply. Afterward, U.S. President Donald Trump threatened to halt all trade with any country that does business with Kim Jong Un’s regime. China, which supplies most of its food and fuel, on Monday called the warning “unacceptable.”

Nafta Negotiators Are Said to Tackle Labor, Rules of Origin (Bloomberg) Officials from the U.S., Canada and Mexico will start to tackle some of the tougher issues in the North American Free Trade Agreement as they discuss labor, dispute resolution and rules of origin for products at a negotiating session in Mexico City, according to two people familiar with the schedule.

Watch for possible big moves by the Bank of Canada and the Fed (Financial Post) After a short respite from monetary movements, more could soon be on the way. And at least one of them might be “a biggie.” Both the Bank of Canada and the U.S. Federal Reserve will meet in the coming days and weeks to deal with some unfinished business. For Governor Stephen Poloz and his monetary team, the issue is whether the Canadian economy can embrace another rate hike after the July ice-breaker – the first increase in seven years.

Overnight markets 

Overview: US 10yr note futures are up 0.321% at 126-23, S&P 500 futures are down -0.24% at 2468.25, Crude oil futures are up 1.54% at $48.02, Gold futures are up 0.45% at $1336.4, DXY is down -0.16% at 92.487, CAD/USD is down -0.26% at 0.8076.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market Update

US tsys lower, yield 0.5 – 2bps higher across the curve, 10Y 2.133 (+1.6bps) before August Non-Farm Payrolls, ISM Man.  Below avg volume in TY futures overnight (230k), Sep/Dec roll done, quiet trading ahead of NFP.  Consensus is for a rise of 180k after July 209k increase, yet August seasonality tends to bias the figure lower reflecting back-to-school, lower summer response rates. Weakness in August tends to be revised higher the following months.  Core Euro bonds lower, 10 bund 0.38% (+2.5bps), French OATs lower after auction announcement for next Thursday, more duration than was expected. GOCs opening lower, flatter for second day after blowout Q2 GDP release, curve another 2bps flatter this morning on top of 2bps yest, longs outperforming,10s30s ~3bps narrower yest as longs were bid most of the session following GDP.  Provis opening unch after closing 0.5bps tighter yest on month end buying.

News headlines 

European Shares Climb With Metals Before Jobs Data: Markets Wrap (Bloomberg) European shares advanced, with mining companies extending gains as industrial metals continued a rally fueled by positive economic data surprises this week. The dollar and Treasuries were steady as investors await a U.S. jobs report for clues on the Federal Reserve’s policy-tightening path.

U.S. job growth likely slowed in August; wages seen tepid (Reuters) U.S. job growth likely slowed in August after two straight months of robust gains, but the pace of increase should be more than sufficient for the Federal Reserve to announce a plan to start trimming its massive bond portfolio.

Euro zone factory activity rises in August on strong demand: PMI (Reuters) Euro zone manufacturing activity accelerated in August, clocking the fastest rise in export orders since February 2011 despite a strengthening currency, a business survey showed. Along with evidence of slowly-rising pricing power for businesses, the data may bolster confidence in the European Central Bank to make – and go ahead with – plans to reel back its massive asset purchases program later this year.

IEA still sees no need to release oil stocks (Reuters) The International Energy Agency (IEA) still sees no need for a coordinated international release of oil stocks after Hurricane Harvey disrupted a large chunk of U.S. refining and some production facilities, it said on Friday.

Oil Firms That Cheered Regulatory Rollback Are Quaking on Nafta (Bloomberg) The Trump administration is easing environmental regulations and opening up territory for drilling as part of the president’s bid to unleash the “vast energy wealth” of the U.S. Yet Donald Trump’s push to rewrite the North American Free Trade Agreement could have the opposite effect.

Want an investment with a 10% return or a $600K salary? Surprise, property in Vancouver still your best bet (Financial Post) In the spring of 2012, Dustan Woodhouse, then a 40-year-old Vancouver mortgage broker, broke the cardinal rule of saving for retirement: he liquidated his retirement fund, took the tax hit and plowed the rest into the local real estate market.

Overnight markets  

Overview: US 10yr note futures are down -0.025% at 126-31, S&P 500 futures are up 0.23% at 2475.75, Crude oil futures are down -0.15% at $47.16, Gold futures are up 0.28% at $1325.9, DXY is down -0.08% at 92.59, CAD/USD is down -0.31% at 0.8036.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market Update

US Treasuries open NY lower, with 2/30Y and 5/30Y flatter after overnight consolidation followed Tuesday safe-haven bid gains tied to N.Korea firing of missile over Japan. US ADP sees 237,000 for August Private Payrolls. Risk-on mood means European equities firmer, as are US stock index futures. 2Q GDP rev up to +3.0% SAAR (expected +2.7%) from +2.6% in the advance estimate on strong upward revisions to PCE (both goods and services) and nonresidential fixed investment.

News headlines 

Stocks Rebound as Korean Fears Abate; Gold Steady: Markets Wrap (Bloomberg) European stocks followed most Asian equities higher as tensions surrounding North Korea eased. The yen dropped as demand for safe-haven assets began to fade, although gold and the Swiss franc held Tuesday’s gains.

Crude slips, gasoline jumps as storm shuts a fifth of U.S. fuel output (Reuters) Crude oil slid and gasoline futures hit their highest since mid-2015 on Wednesday as flooding and damage from Tropical Storm Harvey shut over a fifth of U.S. refineries, curbing demand for crude while raising the risk of fuel shortages.

North Korea launch increases focus on risky U.S. shootdown option (Reuters) North Korea’s firing of a ballistic missile over Japan could increase pressure on Washington to consider shooting down future test launches, although there is no guarantee of success and U.S. officials are wary of a dangerous escalation with Pyongyang.

Dollar Rebound Threatens Euro’s Jackson Hole Breakout Level (Bloomberg) The Bloomberg Dollar Spot Index extended its Asia session gain with investors continuing to unwind their short dollar exposure across the board as the gauge rebounded from its lowest level since January 2015.

Euro-Area Economic Confidence Jumps to Decade-High (Bloomberg) Euro-area economic confidence rose to the highest level in a decade as European Central Bank policy makers prepare for a discussion next week about whether and how to pare back stimulus.

CMHC says new mortgage rules are shrinking the size of the insured housing market (Financial Post) Canada Mortgage and Housing Corp., the crown corporation that is the largest mortgage default insurer in the country, is paying Ottawa a $240 million dividend.

Overnight markets 

Overview: US 10yr note futures are down -0.16% at 126-32, S&P 500 futures are down 0% at 2447, Crude oil futures are down -0.78% at $46.08, Gold futures are down -0.45% at $1313, DXY is up 0.46% at 92.673, CAD/USD is up 0.43% at 0.7958.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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