Commentaires

Market Update

US tsys opening higher after weaker PPI & initial claims, US 10Y 2.23% (-1.5bpts). Global stocks lower – Europe down 0.60% , S&P mini -9pts, crude higher for a second day, 49.90 (+0.70%). The US Tsy auctions $15bln in 30y bonds at 1:00PM, yesterday’s 10Y auction was weak (1.5bp tail) yet prices rallied on N. Korea jitters. Core Euro bonds mixed – German bund curve flatter with longer end  yields slightly lower, Italy & Spain giving underperforming bunds for a second day. GOCs higher in line with tsys, 10Y 1.90%, curve ~1bp flatter, provis seeing little trade with a weaker bias, rumors of City of Toronto 20Y deal.

News headlines 

U.K., Scotland Fail to Reach Agreement on Post-Brexit Powers (Bloomberg) Prime Minister Theresa May’s government failed to reach an agreement with Scotland’s administration over repatriation of powers after Britain leaves the EU, as Scottish lawmakers said they would continue to reject the Brexit bill in its current form.

U.S. Allies Warn North Korea Against Firing Missiles Toward Guam (Bloomberg) South Korea and Japan warned North Korea that it would face a strong response if it carried through with a threat to launch a missile toward the U.S. territory of Guam.

TSX futures fall as North Korea tensions brew (Reuters) Canada’s benchmark stock index was set to follow global markets lower on Thursday as investors sought refuge in safe-haven assets following exchange of more threats between the United States and North Korea.

Investors cool on Canadian banks, turn to insurers, amid housing fears (Reuters) Investors are losing enthusiasm for Canada’s banking stocks as a slowdown in the country’s housing market dents banks’ growth prospects, and they see insurance companies as a better bet to benefit from higher interest rates. Two of Canada’s biggest insurance companies on Wednesday reported second-quarter earnings that beat market expectations, benefiting in part from strong growth in Asia. Canadian insurance companies are expanding rapidly in Asia, selling products to the rapidly growing middle class. The strategy is helping the firms drive growth and diversify from domestic markets where competition is intense.

RBNZ Keeps Key Rate at Record Low on Weak Inflation Outlook (Bloomberg) New Zealand’s central bank held interest rates at a record low and said it doesn’t expect to raise them for two years amid weak inflation. The RBNZ’s surprisingly cautious tone in recent months has been justified by the latest data. Inflation has slowed more than economists forecast and economic growth has disappointed on the downside. The strong New Zealand dollar remains a headache for the bank, damping import prices and suppressing inflation.

Oil gains as inventory overhang erodes and Saudi cuts exports (Reuters) Oil prices rose on Thursday, lifted by a sustained decline in inventories and as Saudi Arabia prepared to cut crude supplies to its prized Asian customers.Crude is down nearly 7 percent so far this year, suppressed in large part by concern that OPEC and its partners may not be able to force global oil inventories to drop by cutting production. Saudi Arabia said on Tuesday it would cut supplies to most buyers in Asia – the world’s biggest oil-consuming region – by up to 10 percent in September.

China Needs to Act on $33 Trillion of Credit, China Banking Expert Chu Says (Bloomberg) China has made progress in slowing leverage in the economy, but still needs to do more with the total amount of financing expected to rise 13 percent this year, according to Autonomous Research analyst Charlene Chu. Total outstanding credit is expected to grow to 223 trillion yuan ($33 trillion) by December from 196.8 trillion yuan at the end of 2016, analysis by Chu shows. The estimated increase will be lower than last year’s 19 percent gain as the government’s campaign against leverage starts to bite, she said.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 126-13, S&P 500 futures are down -0.38% at 2463.5, Crude oil futures are up 1.11% at $50.11, Gold futures are up 0.74% at $1288.8, DXY is up 0.07% at 93.609, CAD/USD is down -0.09% at 0.7882.

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 rallying hard in NA trade on safe haven bid related to North Korea threat, yields 4-5 bps lower led by the 7Y ,10Y 2.21 (-5bps), volume in TY futures heavy (~350k) with a spike ~4:00am 20k contracts traded as prices eclipsed Tuesday’s high 126-09. Equities weakening in Europe with the DAX down 1.64%, S&P minis -11.5pts. US nonfarm prod 0.9% in Q2 vs 0.7% & ULC 0.6% vs 1.1%, but Q1 ULC revised sharply higher to 5.4% from 2.2%. Core Euro bonds outperforming, 10Y bund & gilt 6bps lower, bunds recovering from uncovered 5Y auction (0.77x). GOCs opening higher in line with tsys, 10Y at a two week low 1.885%. Provis better offered after closing weaker yest, Ont 27s 70/69 (68.5), Ont 48s 81/80 (80).

News headlines 

Havens Jump on North Korea Tension; Stocks Slide: Markets Wrap (Bloomberg) A risk-off tone gripped markets on Wednesday, with gold, the Japanese yen and bonds rising as tension grew between the U.S. and North Korea. European stocks slumped following declines across most of Asia.

North Korea considers missile strike on Guam after Trump’s ‘fire and fury’ warning (Reuters) North Korea said on Wednesday it is considering plans for a missile strike on the U.S. Pacific territory of Guam, just hours after President Donald Trump told the North that any threat to the United States would be met with « fire and fury ».

France calls on all sides to de-escalate North Korea situation (Reuters) France called on all the concerned parties to act responsibly and de-escalate the situation regarding North Korea, after North Korea said it was considering plans for a missile strike on the U.S. Pacific territory of Guam.

Shorting the short: Investors bet against Icahn’s oil refiner after biofuel trade (Reuters) Investors have built up a large short position in investor Carl Icahn’s oil refining company, CVR Energy (CVI.N), in the past three months, according to Reuters data, as evidence mounts that the company’s gamble on the biofuels market is going sour.

Brexit transition period desirable for UK and EU banks: BoE (Reuters) The Bank of England said a transition period after the Britain leaves the European Union would give banks more time to make orderly changes as Brexit poses risks to financial stability. With UK due to leave the bloc in March 2019, the BoE’s Prudential Regulation Authority (PRA) said it faces heavy demands from Brexit fallout on banks and insurers.

Overnight markets 

Overview: US 10yr note futures are up 0.384% at 126-16, S&P 500 futures are down -0.32% at 2464.75, Crude oil futures are up 0.71% at $49.52, Gold futures are up 1.36% at $1279.8, DXY is down -0.04% at 93.607, CAD/USD is up 0.22% at 0.7878.

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 slightly lower in a 2-tick range o/n, extremely light volume in TY1 (123k) so far, 10Y 2.26% (+0.7%).  Core EGB yields ~1bp higher after yesterday’s ~3bp rally yesterday brought 10Y gilt yield close to one-month lows @ 1.15%, rate hike expectations have been pushed out further to 2019 in the wake of last week’s BOE forecasts for growth & inflation.  US Data calendar relatively thin until Thur PPI. US Tsy will auction $24 in 3Y notes at 1:00PM. No Fed speakers today – Bullard & Kashkari both sounded dovish yest.  GOCs higher in catch-up mode to yest tsy rally , Can/US 1bp tighter, extending recent outperformance . Canada employment was strong but mkt more focused on weak trade numbers.

News headlines 

Euro Extends Gain as Stocks Struggle; Gold Climbs: Markets Wrap (Bloomberg) Europe’s common currency strengthened and the dollar fell back in a lackluster trading session on Tuesday. European stocks erased a drop to trade sideways, while gold climbed with oil and bonds were mixed.

Oil prices steady as Saudi cuts September supplies (Reuters) Oil prices steadied on Tuesday after news of lower crude supplies from Saudi Arabia offset higher output from other large producers including the United States. Saudi state oil company Aramco will cut allocations to its customers worldwide in September by at least 520,000 barrels per day (bpd), sources familiar with the matter told Reuters on Tuesday.

OPEC holds second day of compliance talks, to issue statement: sources (Reuters) OPEC and non-OPEC officials were holding a second day of meetings in Abu Dhabi to discuss ways to boost compliance with their oil output-cutting pact, sources familiar with the talks said.

Dollar slips back toward lows on Fed rate hike doubts (Reuters) The dollar weakened again on Tuesday, but clung on to most of its gains from last week’s strong U.S. jobs data despite doubts that the Federal Reserve will hike rates again in 2017.

China’s Debt Crackdown Gets a Big Shrug From Global Investors (Bloomberg) The Chinese leadership has this year made its strongest commitment yet to curb financial risks and rein in spendthrift local officials, yet the campaign has spurred barely a ripple of concern among global investors.

SNC Targets Canadian Projects as Trudeau’s Plan Gets Jump on Trump’s (Bloomberg) Canada’s biggest builder is keeping its focus at home even as U.S. President Donald Trump pledges to ramp up infrastructure spending next door. SNC-Lavalin Group Inc. is bidding on projects such as light-rail lines in Ottawa and Toronto and a C$6 billion ($4.7 billion) rapid-transit system for Montreal, as Prime Minister Justin Trudeau follows through on a pledge to invest C$120 billion on infrastructure over 12 years. Trump’s plan is “still to be confirmed,” said SNC Chief Executive Officer Neil Bruce.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 126-07, S&P 500 futures are down -0.14% at 2474, Crude oil futures are up 0.18% at $49.48, Gold futures are up 0.37% at $1269.4, DXY is down -0.17% at 93.271, CAD/USD is down 0% at 0.7887.

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