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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

Market Update

Treasuries open NY weaker after overnight two-way flows followed US post-FOMC rally. Tsy 1pm ET $28B 7Y auction. 10Y Tsy yld 2.3bp higher at 2.305%; 2/10Y curve steeper, 5/30Y flatter by 0.60 bps. Today, is the heaviest day for company earnings announcements and will add to a fairly decent data calendar that includes jobless claims and durable goods orders.

News headlines 

Stocks Mixed Amid Slew of Earnings; Dollar Steady: Markets Wrap (Bloomberg) European stocks struggled for traction on one of the busiest days for earnings of the year, after a series of positive corporate results spurred equities across Asia. The dollar steadied after slumping in the wake of the Federal Reserve’s latest decision.

Senate poised for healthcare showdown (Reuters) U.S. Senate Republicans begin their final push on Thursday to unravel Obamacare, seeking to wrap up their seven-year offensive against former Democratic President Barack Obama’s signature healthcare law that extended insurance coverage to millions.

Britain and Australia urge China to do more on North Korea threat (Reuters) Britain and Australia urged China on Thursday to do more to persuade North Korea to drop its nuclear and missile programs. Earlier this month North Korea, which has warned Australia could be the target of a strike, said it had conducted its first test of an intercontinental ballistic missile, which experts say could reach Alaska.

CMHC keeps red flag hoisted on housing as new problems emerge (Financial Post) Canada Mortgage and Housing Corp. continues to give the national housing market its worst possible rating saying there still is “strong evidence of problematic conditions” — an assessment first made three quarters ago.

Is there anywhere to hide in Toronto’s falling housing market? Just maybe (Financial Post) Is there anywhere to hide in Toronto’s falling housing market? Just maybe. A report from RE/MAX INTEGRA Ontario-Atlantic Region out Thursday looked at just detached homes in 65 neighbourhoods in the Greater Toronto Area over the first half of 2017, comparing the first quarter to the second quarter. The second quarter was impacted by Ontario’s 16-point housing plan.

Loblaw taking stock of ‘very compelling threat’ of Amazon: CEO (Financial Post) Loblaw’s business is being challenged by rising competition, the lingering effects of food deflation, minimum wage hikes and drug reform, but none of the threats seemed to loom as large in the grocery company’s second-quarter conference call as the potential impact of Amazon’s acquisition of Whole Foods on the industry.

Overnight markets 

Overview: US 10yr note futures are down -0.149% at 125-29, S&P 500 futures are up 0.21% at 2478.5, Crude oil futures are down -0.72% at $48.4, Gold futures are up 1% at $1268.1, DXY is up 0.03% at 93.697, CAD/USD is up 0.31% at 0.8032.

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 higher after Tuesday selloff after overnight two-way flows and a market creep up since about 2:30am ET; Tsys curves mixed after Tuesday steepen. Tsy will sell 11:30am ET US$13B 2Y FRN auction and a 1pm ET US$34B 5Y note auction, which occurs one hour before 2pm ET FOMC post-meeting announcement. Australia’s ASX (+0.97%) led the overnight charge, and Britain’s FTSE (+0.66%) is out front in Europe. The S&P 500 is on track to open little changed near 2,478. Markets are pricing in a 0% chance that the Federal Reserve will hike interest rates at Wednesday’s meeting, according to World Interest Rate Probability data provided by Bloomberg. Instead, market participants will be looking for details about the Fed’s plan to unwind its massive balance sheet.

News headlines

Stocks Lifted by Earnings, Commodities; Bonds Gain: Markets Wrap (Bloomberg) Gains in commodities from oil to copper lent momentum to European stocks as positive corporate results continued to feed into markets. Bonds bounced as investors waited for clues on the fate of the Federal Reserve balance sheet.

Fed expected to leave rates unchanged; balance sheet in focus (Reuters) The Federal Reserve is expected to hold interest rates unchanged on Wednesday and possibly hint that it will start winding down its massive holdings of bonds as soon as September in what would be a vote of confidence in the U.S. economy.

Oil bounce, results keep stocks on high (Reuters) Oil’s rise back above $50 a barrel helped prod stock markets higher on Wednesday and company results and economic data continued to soothe worries that the world economy may be ripe for a another slowdown. European stock markets were mainly higher, led by energy and commodity-linked companies after Brent crude topped the $50 mark for the first time since early June.

Petronas Deals Fresh Blow as World Exits Canada’s Energy Patch (Bloomberg) Petroliam Nasional Bhd.’s decision to back out of a giant gas-export project on Canada’s Pacific Coast is the latest hit to the country’s energy sector — and to Prime Minister Justin Trudeau’s plan of balancing energy exports and climate action.

Home Capital Repays C$2 Billion Credit Line From Berkshire (Bloomberg) Home Capital Group Inc. said it repaid the balance on a C$2 billion ($1.6 billion) credit line from Warren Buffett’s Berkshire Hathaway Inc. after the Canadian mortgage lender sold assets.

U.K. Joins France in Bidding Goodbye to Fossil-Fuel Cars by 2040 (Bloomberg) The U.K. became the latest European country to mark the end of the line for diesel and gasoline fueled cars as automakers such as Volvo race to build electric vehicles or face the consequences of getting left behind.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 125-18, S&P 500 futures are up 0.19% at 2478.75, Crude oil futures are up 0.9% at $48.32, Gold futures are down -0.44% at $1252.9, DXY is up 0.08% at 94.128, CAD/USD is up 0.09% at 0.7988.

US Economic Data 

Canadian Economic Data

There is no major economic new 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