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Market Update

US tsys sharply higher on geopol risk after North Korea missile launch, US 10Y  2.105% (-5.2bps) ,  core Euro bonds also sharply higher on risk off, German bunds lagging the rally in gilts after a technically uncovered German Schatz auction.   In Canada, GOCs are higher, in line with tsys except in longs which are lagging by 1bp, curve 1bp steeper 10s30s @ 44.5.  The BOC will auction $750mln in Dec 2064 bonds at noon , followed by 2Y auction tomorrow –  $3.9bln in reopened Nov 19s (second auction of Nov 19s). The 64/48 is quoted @ -3.5/-4.0  which is 0.5bps richer than yest but in line with the -3bp average over the past yr. Provis opening another 0.5bps wider after closing 0.5bps weaker yest, Ont 48s traded 83.5, Ont 27s 72.5.  QC 48s 84/83 las trade 82.5 yest.  Alberta rumoured yest, could come this morning before ultra auction at noon.

News headlines 

North Korea Fires Missile Over Japan, Renewing Tensions in Asia (Bloomberg) North Korea fired an unidentified ballistic missile over Japan on Tuesday, rattling Asian markets as the U.S. and its allies weighed a response to Kim Jong Un’s latest provocation. The missile landed in the Pacific Ocean about 1,200 kilometers (745 miles) east of Japan’s northern island of Hokkaido, Chief Cabinet Secretary Yoshihide Suga told reporters. South Korean President Moon Jae-in ordered a show of force in response, with four F-15K jet fighters conducting bomb-dropping drills.

Oil prices dip as market grapples with hurricane damage (Reuters) Crude prices dipped on Tuesday as the market grappled with the shutdown of some 13 percent of refining capacity in the United States after a hurricane ripped through the heart of the country’s oil industry. The refinery closures helped push U.S. gasoline futures RBc1 to a two-year high of $1.7799 per gallon on Monday, although they had receded to $1.7078 by 0957 GMT on Tuesday.

Canadian oil producers and consumers set to feel Harvey’s wrath (Financial Post) Canadian oil producers and consumers are set to be lashed by the powerful storm that has battered Houston and the wider Gulf Coast region, a key oil and natural gas refining and processing hub.

Gold Is Shaken by a Mysterious 2 Million-Ounce Trade (Bloomberg) After weeks of relative slumber, gold traders were rudely awoken to a surge in volume and volatility. In a span of one minute, gold futures contracts equaling more than 2 million ounces traded — about 20 minutes before Federal Reserve Chair Janet Yellen was to address a gathering of policy makers in Jackson Hole, Wyoming.

Scotiabank joins peers with dividend hike as profit rises (TheGlobeAndMail) Bank of Nova Scotia hiked its dividend by nearly 4 per cent as third-quarter profit climbed faster than expected. Canada’s third-largest lender by assets reported profit of $2.1-billion for the quarter that ended July 31, up 7 per cent from $1.96-billion a year ago.

Bank of Montreal quarterly earnings beat expectations (TheGlobeAndMail) Bank of Montreal, Canada’s fourth-biggest lender, on Tuesday reported third-quarter earnings which were ahead of expectations, driven by strong growth from its Canadian retail and wealth management businesses.

Overnight markets 

Overview: US 10yr note futures are up 0.381% at 127-16, S&P 500 futures are down -0.61% at 2428.75, Crude oil futures are up 0.06% at $46.6, Gold futures are up 0.97% at $1328, DXY is down -0.41% at 91.826, CAD/USD is down -0.16% at 0.8008.

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 trading weaker, yields ~1bp higher curve 0.5bps steeper, US 10Y 2.175%, heavy volume in TY futures (>400k) mostly Sep/Dec roll. Equities basically unch in Europe, London on holiday, S&P futures +1.5, gold higher, WTI crude weaker (47.50 -0.35). Heavy auction calendar with the US selling $26bln in 2Y & $34bln in 5Y notes today.  Yet IG issuance expected to be quiet with Europe on holiday and in lead up to Labour Day holiday. German bunds mixed, bund curve steeper with longer maturities ~1bp higher in yield.  Yellen & Draghi’s lack of insight on monetary policy direction has kept the USD on the backfoot vs the euro, thou this week’s heavy data calendar including non farm payrolls Friday could change perceptions for future fed policy, considering that odds of a Dec rate hike have faded since July from over 50% to 30%.  In Canada, GOCs are lower in line with tsys, Q2 GDP the highlight this week scheduled for Thursday, with expectations of a solid 3.5-4.0% gain on top of Q1 3.7% increase.  On Tuesday the BOC auctions $750mln in ultra long bonds, reopening of the Dec 1 2064s – the roll at -3.5/-4.0bps vs Dec 48s has cheapened by ~1bp since mid August.

News headlines 

Europe Stocks Drop on Euro Strength; Dollar Steady: Markets Wrap (Bloomberg) European stocks started the week firmly on the back foot, with every sector retreating following Friday’s euro surge. U.S. equity futures and the dollar struggled and gold rose as investors weighed the damage from Tropical Storm Harvey.

Oil markets roiled as Harvey hits U.S. petroleum industry (Reuters) Oil markets were roiled on Monday after Tropical Storm Harvey wreaked havoc along the U.S. Gulf Coast over the weekend, crippling Houston and its port, and knocking out several refineries as well as some crude production.

China says sanctions won’t help as Trump targets Venezuela (Reuters) Venezuela’s close ally China said on Monday that history shows external interference and unilateral sanctions only make things more complex and will not help resolve problems, after the United States imposed new sanctions on Venezuela.

Don’t count on Canada’s over-the-top economic growth continuing for much longer (Financial Post) Blink and you may miss it, but the beginning of the end of over-the-top economic growth is just around the corner. That might sound alarmist, but most economists and policymakers are setting the stage for a weaker performance in the second half of 2017 and beyond.

Central Bankers Shun Policy Clues as Trade Pervades Jackson Hole (Bloomberg) Leaders of the world’s most powerful central banks defended post-crisis reforms at their annual retreat in Jackson Hole, Wyoming, while discussing the causes and consequences of populist waves that have reshuffled the political order in the U.S. and Europe.

Cohn or Yellen? Bond Traders Say Same Difference (Bloomberg) Bond traders are betting that no matter who’s leading the Federal Reserve come February, policy makers won’t stray from the path they’ve been laying out for months. With Janet Yellen coming off what may have been her final address as Fed chair at the central bank’s annual Jackson Hole gathering, investors are starting to look ahead to who might follow her.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 126-28, S&P 500 futures are up 0.17% at 2446.75, Crude oil futures are down -0.71% at $47.53, Gold futures are up 0.48% at $1304.1, DXY is down -0.33% at 92.438, CAD/USD is down -0.24% at 0.8031.

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 trading weaker, US 10Y 2.20% after stronger July core Durable Goods Orders (0.5% vs 0.4%) and before Jackson Hole speeches from Yellen (10:00am) and Draghi (3:00pm).   Core European bond yields 1-2 bps lower, heavy selling in German 5Y futures around 6:00am, 14k contracts equivalent to E1.7bln 5Y bonds.  GOCs lower in line with tsys, 10Y  1.90% (+1.5bps), curve 0.5bps steeper 2s10s.  Provis finished unch yest  on light volume, expectations of new issuance weighing on GOCs mid morning. Quebec 48s 1bp wider this week , 81/80 from 80 reopening on Wed, Que/Ont 48 unch @ -1.2bps.

News headlines 

Stocks Rise as Dollar Slides Before Bankers Speak: Markets Wrap (Bloomberg) Stocks advanced as a commodity rally boosted shares of raw-material producers. The dollar slipped against most major peers and bonds declined before Janet Yellen and Mario Draghi speak in Jackson Hole.

Oil up as U.S. rigs and refineries brace for hurricane (Reuters) Oil prices rose on Friday as the U.S. petroleum industry braced for Hurricane Harvey, which may become the biggest storm to hit the U.S. mainland in more than a decade. Harvey became a category 2 storm as it crossed the Gulf of Mexico with winds of 105 mph (169 kph), 220 miles (355 km) off Corpus Christi, Texas, the National Hurricane Center said.

UK consumer morale edges up but gloom over finances deepens: YouGov/Cebr (Reuters) British consumer morale improved slightly in August but remained subdued overall as households became gloomier about their finances, a survey showed on Friday. The monthly consumer confidence index from pollster YouGov and consultancy Cebr rose to 107.6 from 107.2 in July, aided by an increase in its measures of job security and house prices.

Price slump, tight cash wreak havoc in Canada’s top housing market (Reuters) The sharp reversal in Toronto’s home prices has thrown Canada’s biggest property market into chaos, with scores of buyers suddenly short of money and desperate to get out of deals that looked good just a few months ago.

Citi Sees the Sun Rising in Japan Even as Inflation Stays Tepid (Bloomberg) The upbeat chorus for Japan’s economy is growing louder. Spurred by robust second quarter growth, Citigroup Inc. economists led by Willem Buiter have upgraded their 2017 growth forecast from 1.6 percent to 2 percent, “well above the potential growth rate of the Japanese economy.” That’s quite an outlook for an economy finally showing traction after decades of stagnation.

Canada ramps up deportations amid growing migrant influx (Reuters) As an influx of asylum seekers crossing from the United States strains Canada’s immigration system, the country is ramping up its deportation of migrants, government data shows. Deportations of Mexicans, who have flocked to Canada in growing numbers after a visa requirement was lifted in December, was already 66 percent higher in the first eight months of 2017 than the total from the previous year.

Overnight markets 

Overview: US 10yr note futures are down -0.025% at 126-21, S&P 500 futures are up 0.22% at 2446, Crude oil futures are up 0.46% at $47.65, Gold futures are down -0.08% at $1291, DXY is down -0.04% at 93.239, CAD/USD is down -0.08% at 0.7993.

US Economic Data 

Canadian Economic Data

There is no major 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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