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Market Update

US tsys volatile after July ADP +178k vs 190k exp (June revised to 191k from 158k) and  tsy refunding announcement – $62bln in 3, 10 & 30Y notes as expected, notably the Treasury made no mention of ultra-long bonds in the statement which is giving the mkt a bit of a lift – 30K TY lifted from 126-00 to 126-04, as flatteners  being put on according to MNI. GOCs lower , spds another 1-2bps tighter vs tsys after yesterday’s strong outperformance (2-3bps) led by the 7 to 10Y on strong buying in CGBs, provis opening unch in 5s, 0.5bps wider in 10s & longs

News headlines 

Commodity Dip, Euro Gain Hit Stocks; Gold Drops: Markets Wrap (Bloomberg) Miners weighed on Europe’s benchmark equity index as most industrial metals traded lower and a surge in the euro added a further headwind. Oil fluctuated after retreating from its brief rise above $50 a barrel.

Euro hits 2-1/2 year highs as warning signs grow (Reuters) The euro climbed to a fresh 2-1/2 year high against the dollar on Wednesday as investors added long bets in the single currency though some analysts advised caution as some signals such as interest rate differentials were flashing a warning sign.

Trump close to decision on addressing Chinese trade practices (Reuters) U.S. President Donald Trump is close to a decision on how to respond to what he considers China’s unfair trade practices, a senior Trump administration official said on Tuesday.

China issues rules to curb state firms’ overseas investment risks (Reuters) China’s finance ministry has issued guidelines on overseas investment of state-owned enterprises (SOEs), amid a campaign to tighten controls on outbound investment and financial risks.

Barclays leases more office space in Dublin ahead of Brexit (Reuters) Barclays (BARC.L) has signed a lease agreement for more office space in Dublin as the bank prepares to expand its operations in the Irish capital to cope with the impact of Britain’s exit from the European Union.

In Canada, a nation of realtors braces for the end of the boom (Reuters) Canada’s long housing boom has drawn thousands into the sector, from realtors and home stagers to construction workers, and a looming slowdown threatens to trigger an exodus that could wipe out many of those jobs and force the economy to shift down.

Overnight markets 

Overview: US 10yr note futures are down -0.136% at 126-01, S&P 500 futures are up 0.1% at 2474.75, Crude oil futures are down -0.12% at $49.1, Gold futures are down -0.79% at $1269.3, DXY is up 0% at 93.047, CAD/USD is up 0.23% at 0.7957.

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 slightly lower, yields ~1bp higher across the curve, 10Y 2.30%, little reaction to as expected June core PCE 0.1%, 1.5% y/y (exp 1.4%), pres income unch vs 0.4% exp. Overnight, tsys under some pressure as Ex Fed chair Greenspan said bonds were in a bubble as rates were ‘unusually low’, a corrective move higher could happen ‘fast’.  Core Euro bonds outperforming tsys, German bund yields 1.5-2 bps lower on month end bid – Bloomberg reporting seasonal support bunds into August as well as  decline in supply. Solid 10Y gilt auction (b/c 2/56 vs 2.28 prev July 6th) also supportive of longs while front end weighed by stronger UK Man PMI. GOCs slightly higher, long end lagging on the curve once again. Provis unch after closing tighter yest.

News headlines 

Stocks Gain as Earnings Roll In; Dollar Steadies: Markets Wrap (Bloomberg) Global stocks advanced following the latest set of corporate results, with European shares tracking a jump in Asian peers on both earnings and promising economic data. The U.S. dollar edged higher after Monday’s drop, as investors digested the latest developments in Washington.

Senate Democrats offer Republicans help on tax reform – with conditions (Reuters) U.S. Senate Democrats offered to work with Republicans on a bipartisan tax reform package on Tuesday but only if it does not cut taxes for the wealthy, add to the federal deficit or allow Republicans to enact legislation on their own.

China Caixin manufacturing PMI rises again (Market Watch) A private gauge of China’s factory activity rose for a second straight month in July and hit its highest level in four months, indicating a faster pace of expansion despite official data showing renewed weakness in production and demand.

Banks May Need $50 Billion New Capital After Brexit (Bloomberg) Banks may need to find $30 billion to $50 billion of additional capital to support new European units in the aftermath of a hard Brexit, and some smaller firms may abandon their operations on the continent altogether as profitability plunges, according to Oliver Wyman Inc.

Nafta Battle Will Test Strength of Renewed Canada-Mexico Ties (Bloomberg) Free trade between Canada and Mexico is in part an accident of history: two nations, each the other’s afterthought, came together in their shared race to capitalize on the U.S. market.

Air Canada just blew away earnings expectations with a record profit (Financial Post) Air Canada’s second-quarter profit smashed past analysts’ estimates as it flew more passengers at lower costs. Passenger traffic rose 13.6 per cent in the quarter ended June 30, while revenue from passengers increased 11.9 per cent to $3.52 billion.

Overnight markets 

Overview: US 10yr note futures are down -0.112% at 125-24, S&P 500 futures are up 0.28% at 2475, Crude oil futures are down -0.62% at $49.86, Gold futures are down -0.05% at $1272.8, DXY is up 0.12% at 92.972, CAD/USD is up 0.03% at 0.801.

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

Treasuries open NY lower, after overnight two-way flows including Asian safe-haven bid amid another N.Korea ICBM missile firing. German Bund decline on higher than expected German retail sales, surprise Eurozone core inflation rise. Also selling in Tsy TYU futures, while real$ and bank portfolio accts did 2-way 10Y flows. Real$ sold long end Tsys. Bloomberg Barclays US Tsys index 0.06 yrs for month-end advance estimate. Today is settlement for recent 2y, 5Y, 7Y, 2Y FRN auctions of last week. And some cited need to sell US stocks mildly/vs. buy bonds mildly into month-end.

News headlines

Stocks Advance as Growth Optimism Boosts Metals: Markets Wrap (Bloomberg) European stocks headed for the first gain in three days, spurred by raw-material producers on optimism the global economy is gathering momentum. Industrial metals including copper climbed after manufacturing data from China showed another expansion.

Tale of two economies: Why the gulf between the Bank of Canada and the Fed is growing (Financial Post) Canada and the United States may be joined at the hip geographically, yet from an economic and monetary policy perspective, the gulf between the two countries is becoming apparent once again.

Euro zone core inflation unexpectedly picks up in July (Reuters) A key measure of euro zone inflation accelerated to a four-year high this month and euro zone unemployment fell to its lowest since 2009 in June, data showed on Monday, in two encouraging signs for the European Central Bank as it considers reducing its monetary stimulus.

China central bank to ensure smooth, orderly deleveraging, assistant governor says (Reuters) China’s central bank will continue to force financial institutions to cut debt but ensure the process is smooth and orderly to limit its impact on market liquidity, an assistant central bank governor said in remarks published on Monday.

Republicans Face Tough Choice: Repeal Obamacare or Cut Taxes (Bloomberg) After the collapse of Obamacare repeal, Republicans may have to choose between pursuing another health bill or pushing through a tax overhaul this year, because there’s almost certainly not enough time to do both.

Canadian heavy oil plugs gap left by OPEC, Latam (Reuters) Canada’s struggling oil market has found something of a lifeline as traders scramble for heavy crude due to OPEC production cuts and sinking Latin American output. Output has fallen in Organization of the Petroleum Exporting Countries and non-OPEC Latin American countries such as Mexico and Colombia, leading refiners as far away as China to look to Alberta’s oil sands to fill the gap.

Overnight markets 

Overview: US 10yr note futures are down -0.05% at 125-29, S&P 500 futures are up 0.14% at 2473.75, Crude oil futures are down -0.64% at $49.39, Gold futures are down -0.07% at $1274.4, DXY is up 0.25% at 93.488, CAD/USD is up 0.39% at 0.8012.

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