Comments

Market Update

US tsys slightly lower, 10Y 2.275 (+0.5bps), TY futures in narrow 5 tick range on avg. volume. Equities firmer (eminis +4),  gold lower for third day, crude 47.70 +0.30% after API reported US crude inventories fell 9.2mln bbls. Core Euro bonds lower, underperforming tsys by 2.5-3bps in 10s. UK gilt curve 2bps steeper, 10Y 1.12%. UK employment came in stronger, unemployment fell to 4.4% and wages rose 2.1% still lagging inflation by 0.5%. Bunds lower, 10Y 0.454% (+2.6bps), giving back the brief bounce after Draghi was said not to deliver any policy changes at the upcoming Jackson Hole symposium. GOCs lower in line with tsys, curve unch, longs lagging with $1.2bln long bond auction at noon,  what should be the last reopening of the Dec 48s considering outstanding will reach $14.5bln. Provis closed relatively unch on no issuance, CMB 10Y pricing this morning ~44.5, WI 44.4/43.5. Apple (Moody’s Aa1) priced its inaugural maple issue yest – $2.5bln 7Y with orders in excess of $3.5bln, spd 81.4, opened 82/80.

News headlines 

Growth Outlook Boosts Europe Stocks; Dollar Steady: Markets Wrap (Bloomberg) European stocks advanced amid growing optimism over the region’s economy. The dollar and Treasuries were largely steady as investors tread water before the release of the latest Federal Reserve minutes.

Oil edges up on falling U.S. crude stocks (Reuters) Oil prices edged up on Wednesday, lifted by declining U.S. crude inventories, although markets were still restrained by excess supply.

UK unemployment falls again to lowest since 1975, wage growth still muted (Reuters) Britain’s labor market outperformed tepid growth in the rest of the economy in the second quarter as the unemployment rate unexpectedly fell to its lowest since 1975, official data showed on Wednesday.

Euro zone Q2 annual growth estimate upgraded (Reuters) The economy in the 19 countries sharing the euro currency expanded by more than previously forecast in the second quarter compared to the same quarter in 2016, the European Union’s statistics office Eurostat said on Wednesday.

IMF warns China over ‘dangerous’ growth in debt (TheGuardian) China’s credit-fuelled economic strategy has been branded as dangerous by the International Monetary Fund in a strongly-worded statement warning that its approach risks financial turmoil.

Metro warns of price hikes as labour costs rise (TheGlobeAndMail) Grocers could be forced to raise their prices next year as a result of Ontario’s plan to boost minimum wages, the head of Metro Inc. warns. Montreal-based Metro will work hard to offset the rise in labour costs, but that may not be enough to prevent supermarkets from raising prices, chief executive officer Eric La Flèche said on Tuesday.

Overnight markets 

Overview: US 10yr note futures are down -0.05% at 126-03, S&P 500 futures are up 0.19% at 2468.5, Crude oil futures are up 0.15% at $47.62, Gold futures are down -0.15% at $1277.8, DXY is up 0.09% at 93.938, CAD/USD is down -0.2% at 0.7855.

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 for a second day, moving lower still after July retail sales rose 0.6%, core 0.5% – both well above expectations, 10Y closing in on 2.30%, now 2.28% (+6bps).  Empire Manufacturing 25.2 in August vs 10 exp., prices paid 31 vs 21.3, new orders 20.6 vs 13.3. Overnite  tensions defused as NK  said to have put off plans to attack Guam, triggering a rally in risk assets with the USD higher, gold down ~1.0% &  Euro equities up 0.40%.  Long tsys also pressured by Amazon announcing its 7 part bond offering to fund all/most of its $13.7bln purchase of Whole Foods. Moody’s  has assigned a Baa1 rating to Amazon saying the deal would be ‘credit positive’ according to an article in MW. GOCs lower in mostly in line with tsys except in 10s which are ~1bp wider, 2s10s 4bps steeper, 10Y 1.94% (+7bps). Little change in any of the long rolls (48/45 -2.6, 45/41 1.6) before tomorrows $1.2bln Dec 2048 auction –  at 2.38% thirty year yields are ~25bps higher than at the last long auction on May 17th.

News headlines 

Dollar Extends Gain as Havens Slump; Bonds Decline: Markets Wrap (Bloomberg) Traditional haven assets including gold and the yen slumped and bonds across Europe declined with Treasuries as the prospect of war between the U.S. and North Korea receded. The dollar extended its advance, while European stocks struggled for traction following Monday’s strong gains.

North Korea’s Kim holds off on Guam missile plan; Seoul says will prevent war (Reuters) North Korea’s leader has delayed a decision on firing missiles towards Guam while he waits to see what the United States does next, the North’s state media said on Tuesday, as South Korea’s president said Seoul would seek to prevent war by all means.

Oil slips on strong dollar, OPEC and China weigh (Reuters) Oil prices slipped on Tuesday, extending a heavy sell-off after a surge in the dollar and weighed down by signs of weaker demand in China, the world’s second-largest consumer. Benchmark Brent crude LCOc1 was down 30 cents at $50.43 a barrel by 1050 GMT. U.S. light crude CLc1 was 20 cents lower at $47.39.

Solid German growth gives Merkel election tailwind (Reuters) Strong household and state spending consolidated Germany’s role as the euro zone’s growth engine in the second quarter, helping Chancellor Angela Merkel to burnish her economic credentials less than six weeks before an election.

UK inflation holds steady in July as price pressures ease (Reuters) British consumer price inflation unexpectedly held steady last month as fuel prices fell amid other signs that the squeeze on households’ spending power may slowly be starting to level off. Official figures on Tuesday showed the pace at which manufacturers’ raw material costs are rising slowed by the most in over five years as the initial impact of June 2016’s vote to leave the European Union dropped out of annual comparisons.

Three More CEOs Turn Backs on Trump as Merck, Intel Quit Council (Bloomberg) Could America’s first CEO president lose America’s CEOs? It was a question that came to the fore again Monday when first Merck & Co.’s Kenneth Frazier, then Under Armour Inc.’s Kevin Plank and Intel Corp.’s Brian Krzanich stepped down from a White House business group set up to advise Donald Trump.

What to Expect From Nafta 2.0 Negotiations: QuickTake Scorecard (Bloomberg) Sparks could fly when trade negotiators for U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto meet Aug. 16-20 in Washington. Their task: Begin renegotiating the North American Free Trade Agreement.

Overnight markets 

Overview: US 10yr note futures are down -0.395% at 126-02, S&P 500 futures are up 0.23% at 2469.25, Crude oil futures are down -0.9% at $47.16, Gold futures are down -1.29% at $1273.8, DXY is up 0.66% at 94.028, CAD/USD is up 0.33% at 0.7834.

US Economic Data 

Canadian Economic Data

There is no major economic data release 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

Market Update

US tsys weaker, just off lows on moderate volume (254k)  as tensions between the US & North Korea ease, US 10Y  2.217% (+2.8bps). European equities up 1.0%, crude -0.50%, gold weaker (-6,1288). Core Euro bonds lower , German bund curve ~5bps steeper , 10Y 0.42%, giving back 3bps of last week’s 8bp rally. Italian debt well bid spds vs bunds ~4bps narrower on report Italian banks NPLs declining due to rapid sales. GOCs lower, underperforming tsys by 0.5bps, 10Y 1.886% (+3.6bps). The data calendar is relatively clear this week, July CPI the highlight on Friday. Provi spreads closed the week 1-2bps wider led by longer maturities with no new issuance, spds opening unch, Ont 27s 70/69 , Ont 48s 81/80.

News headlines 

Stocks Bounce and Havens Drop as Korea Fears Abate: Markets Wrap (Bloomberg) The risk-off mood that gripped markets last week showed signs of easing, with shares in Europe following Asian equities higher and American stock futures advancing as the prospect of a war between the U.S. and North Korea receded. Havens including gold, Treasuries and the yen fell.

Japan second-quarter GDP blows past expectations on robust domestic demand (Reuters) Japan’s economy grew in the second quarter at the fastest pace in more than two years as consumer spending and capital expenditure both rose at the fastest in more than three years, highlighting stronger domestic demand.

Robust China economic growth shows signs of fading in July (Reuters) China’s strong economic growth showed visible signs of fading in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree.

Oil prices slip on Chinese demand concerns, rising U.S. activity (Reuters) Oil prices fell on Monday as a slowdown in Chinese refining raised concerns about demand in the world’s second-biggest consumer, while an increase in U.S. drilling capacity could deepen a global supply glut.

Toronto Has More Housing Than You Thought (Bloomberg) When it comes to Toronto’s runaway housing prices, the most important question remains the extent to which speculation is driving demand. Ideally, fundamentals such as demographics and employment are at play, and the price gains reflect natural household growth getting ahead of supply. If that’s true, the market should eventually stabilize once new supply kicks in.

Delta Memo Signals Plan for New Bombardier Jet in L.A., New York (Bloomberg) Delta Air Lines Inc. is eyeing New York and Los Angeles as the main bases for Bombardier Inc.’s new jetliner next year, offering a glimpse of how carriers can add service economically with the midsize aircraft.

Overnight markets 

Overview: US 10yr note futures are down -0.197% at 126-18, S&P 500 futures are up 0.56% at 2453.75, Crude oil futures are down -0.45% at $48.6, Gold futures are down -0.42% at $1288.6, DXY is up 0.26% at 93.308, CAD/USD is up 0.17% at 0.7874.

US Economic Data

There is no major economic data release for today.

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