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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

Market Update

Choppy trade by the open, long end rebounds to mildly higher after recent Block sale of -14k TYU 126-00 helped push entire curve to session lows. Some desks report better buying on net. Flow included Asian real$ buying in the short end, Asian real$ selling in the intermediates, credit acct buying out the curve, light fx-tied sales as USD inches higher,deal-tied flow in the mix w/potential large supply from BAT and AAPL, see 0804ET bullet.

News headlines 

Euro Shrugs Off German Data to Bounce; Crude Drops: Markets Wrap (Bloomberg) The euro resumed gains against the dollar even as data showed German industrial production unexpectedly fell in June. Crude dropped as OPEC nations met with their allies.

Oil slides from nine-week highs as market looks to OPEC (Reuters) Oil prices edged lower on Monday, sliding away from nine-week highs, as worries lingered over high production from OPEC and the United States. Global benchmark Brent crude futures LCOc1 were down 60 cents, or 1.14 percent, at $51.82 a barrel at 1113 GMT. They traded as low as $51.56 a barrel earlier in the day.

U.K. Economy Takes a Hit as Consumer Spending Slumps Further (Bloomberg) U.K. consumers cut back on spending for a third month in July as house-price growth slowed sharply, dealing yet another blow to the economy. The broad-based weakness is being blamed on a squeeze on pockets as inflation outpaces wage growth as well as concerns about the health of the economy.

Brexit negotiations have not begun well for UK, says former top diplomat (Reuters) Britain’s negotiations over leaving the European Union have not begun well due to disagreements among Prime Minister Theresa May’s team of ministers about the kind of deal they should be seeking, a former top British diplomat said.

German industrial output drops in June, up in second quarter (Reuters) German industrial production unexpectedly fell for the first time this year in June, data showed on Monday, though it increased in the second quarter overall. Output declined by 1.1 percent on the month after rising 1.2 percent in May, the Economy Ministry data showed. Expectations in a Reuters poll were for a 0.2 percent gain.

Swiss exporters cheer as more franc weakness on cards (Reuters) Swiss exporters may carry on benefiting from a relatively weak Swiss franc for some time, with economic, monetary and technical factors all suggesting the currency’s descent against the euro has further to run.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 126-02, S&P 500 futures are up 0.09% at 2474.25, Crude oil futures are down -1.15% at $49.01, Gold futures are down -0.17% at $1262.5, DXY is down -0.11% at 93.44, CAD/USD is up 0.23% at 0.7887.

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

Market Update

US tsys moving higher after rangebound session, US 10Y 2.24(-3bps) reacting to BOE 6-2 decision to leave rates unchanged, UK gilts 5-6bps lower across the curve, chance of rate hike in Nov at 36.5% vs 47.5% prior to announcement, GBP down 0.67%. Carney did mention that further tightening was needed at some point, yet the mkt more focused on the downgrading to growth – 1.7% this year vs. 1.9% May forecast, 2018 lowered to 1.6% from 1.7% and 2019 unch at 1.8%. The Bank also said real wages will decline by 0.5% this yr.  In Canada, GOCs higher, 10Y 1.915%, close to yesterday morning’s 1.91% low, spreads ~1bp wider vs tsys. Provis opening  unch after closing 1bp tighter yest., Ont 27s 68/67.5 – reopened at 68 yest.

News headlines 

Europe Stocks Struggle as Euro Slips, Pound Falls: Markets Wrap (Bloomberg) European equities struggled for traction, erasing first a decline and then an advance as the recent run of positive earnings continued and the euro pared some of Wednesday’s jump. The dollar was firmer as traders await U.S. labor-market data.

BOE Cuts Growth Forecasts as Rate Kept at Record Low (Bloomberg) The downgrades, linked to Brexit, were enough for the majority of the Monetary Policy Committee to keep their cautious stance, with the vote for no change coming in as expected at 6-2. Ian McCafferty and Michael Saunders maintained their push for a 25 basis-point increase, which would reverse the rate cut put in place a year ago this week.

Hedge fund short covering lifts oil prices: Kemp (Reuters) In recent weeks short covering, rather than long building, has driven oil prices higher, which suggests fund managers are becoming less bearish about prices rather than more bullish. Hedge funds and other money managers continued to reduce their short positions in crude and refined fuels in the week to July 25, pushing prices higher.

Investor Einhorn sees cash burn at Tesla, sticks with short bet (Reuters) Billionaire investor David Einhorn, who has been hurt by his bet against Tesla Inc, said on Tuesday that the electric car maker is over-valued and that the company is not adequately capitalized.

S&P says new U.S. sanctions have no immediate impact on Russia’s ratings (Reuters) The new round of U.S. sanctions against Moscow has “no immediate implications” for Russia’s sovereign credit ratings, S&P Global Ratings said on Thursday.

Toronto Home Prices Suffer Worst Monthly Decline in 17 Years (Bloomberg) Home prices in Canada’s largest city posted their biggest monthly drop in at least 17 years in July and sales plunged as government efforts to cool the market and the near-collapse of a mortgage lender made buyers leery.

Overnight markets 

Overview: US 10yr note futures are up 0.112% at 126-07, S&P 500 futures are down -0.04% at 2472.5, Crude oil futures are up 0.44% at $49.81, Gold futures are down -0.36% at $1273.8, DXY is up 0.07% at 92.901, CAD/USD is up 0.19% at 0.794.

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