Commentaires

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

Market Update

Treasuries opened NY lower across the curve with the US intermediates now leading lower esp. 5Y note amid 5/30Y curve flattening; 10Y yield is now at 2.334% vs. 2.309% at 3pm ET Thursday. Traders await 8:30am ET US Q2 GDP report; MNI poll median estimate is for 2.7% gain. US stock index futures lower on soft tech stocks; but Amazon shares lower while Intel higher. Analysts at Societe Generale eyed the « debt ceiling vs balance-sheet unwinding » and quipped, « let the games begin. »  They say that the Fed « is likely to announce a change in its reinvestment policy at the September meeting. The debt ceiling deadline in late September might throw a wrench in the Fed’s plans. We look at the debt ceiling playbook and trades likely to perform if the negotiations are contentious. While we still favor summer carry trades, we remain on guard, and hold 6-9m forward 5s/30s and 3m forward 5s10s bear steepeners. »

News headlines 

Tech, Automakers Drag Down Stocks as Euro Climbs: Markets Wrap (Bloomberg) A selloff in global technology shares sent benchmark indexes tumbling from Sydney to Paris amid heightened concerns about corporate earnings. The dollar halted a rebound.

Obamacare Repeal Collapses as Senate GOP Blocks Health Bill (Bloomberg) A months-long effort by Senate Republicans to pass health legislation collapsed early Friday after GOP Senator John McCain joined two of his colleagues to block a stripped-down Obamacare repeal bill.

Oil extends gains, on track for biggest weekly gains this year (Reuters) Oil prices edged higher on Friday, reaching fresh two-month highs and on track to post the strongest weekly gains this year as investors digested signs of an easing oversupply picture.

Japan household spending jumps but weak inflation weighs on BOJ (Bloomberg) Japanese household spending hit its highest for two years in June as unemployment fell and job availability reached a 43-year peak, official figures showed, but inflation gave little sign of getting much closer to the Bank of Japan’s price target.

Alberta Is About to Be Canada’s Fastest Growing Economy Again (Bloomberg) Alberta’s economy is more than just back on its feet, it’s about to run faster than any other region in Canada. Gross domestic product in the western province will rise by 2.9 percent this year, according to a Bloomberg survey of economists, up from an April estimate of 2.5 percent. That matches forecasts for neighboring British Columbia, and in 2018 Alberta comes out on top with a 2.4 percent expansion that would be tops among Canada’s 10 provinces.

Swiss franc set for biggest monthly drop versus euro in divergence trades (Reuters) The Swiss franc fell for a fourth consecutive day on Friday and is on track to post its biggest monthly drop in six years against the euro EURCHF= as some hedge funds sold the currency after it broke through major technical levels this week.

Overnight markets 

Overview: US 10yr note futures are down -0.186% at 125-19, S&P 500 futures are down -0.26% at 2465.5, Crude oil futures are up 0.1% at $49.09, Gold futures are down -0.09% at $1265.4, DXY is down -0.2% at 93.672, CAD/USD is down -0.06% at 0.7971.

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