Comments

Market Update

Tsys break higher out of the range, as more buying coming in, 10-year note is at 2.255%, around session low yields. Tsys see 2/7Y, 2/30Y flattening. – TIPS also doing well, outperforming nominal Tsys in fact for another day, today’s 1pm ET $13B 10Y TIPS auction. Tsys holding near early session highs post data, volume rather light still, some rate paying by props and real$ in long end, fast$ buying 10s so far. Sep Bunds now trading close to level seen before ECB monetary policy decision as markets react to comments from ECB President Draghi. Sep Bund last 18 ticks lower at 161.74

News headlines 

Stocks Trade Near Record Before ECB; Dollar Rises: Markets Wrap (Bloomberg) Central banks were once again front and center in global markets on Thursday, with stocks trading near a record as investors await the ECB’s latest rate decision. The Bank of Japan maintained its mega monetary stimulus, sinking the yen and lending momentum to a dollar advance.

Major central banks to turn up policy heat despite low-burn inflation: Reuters poll (Reuters) Expectations are firming for major central banks to turn further away from ultra-easy monetary policy despite scant evidence of a pickup in inflation, Reuters polls of more than 500 economists showed on Thursday.

China unveils plan to become a world leader in AI by 2025 (Reuters) China unveiled a national artificial intelligence (AI) development plan on Thursday, laying out its ambitions to build world-leading technology amid heightened international friction over applications of AI in military technology.

BOJ pushes back inflation target for sixth time, keeps policy steady (Reuters) The Bank of Japan kept monetary policy steady on Thursday but once again pushed back the timing for achieving its ambitious inflation target, reinforcing views it will lag well behind other major central banks in scaling back its massive stimulus program.

May Urged to Reassure Businesses Over Her Brexit Strategy (Bloomberg) U.K. Prime Minister Theresa May will be urged to do more to reassure businesses about her Brexit plans, as she begins her first serious consultation with companies on the subject more than a year after taking office.

France Says ‘We Want Our Money Back’ as Brexit Talks Crawl On (Bloomberg) France insisted that the U.K. pay a Brexit bill of as much as 100 billion euros ($115 billion), underlining the hurdles to substantial progress in negotiations toward a new relationship with the European Union.

Overnight markets 

Overview: US 10yr note futures are down 0% at 126-02, S&P 500 futures are up 0.1% at 2474, Crude oil futures are up 0.62% at $47.41, Gold futures are down -0.32% at $1238, DXY is up 0.3% at 95.064, CAD/USD is up 0.04% at 0.793.

US Economic Data 

Canadian Economic Data

There is no major economic data release 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 Treasuries prices open NY mildly weaker, after overnight muted consolidation followed Tuesday march higher to higher prices. Some say their game plan will be to buy dips. However, 10Y could not close below 2.261% 55-day moving average. June housing starts +8.3% to 1.215m SAAR, well above the 1.150m rate expected. This followed upward revisions to total starts in May and downward revisions in Apr. Building permits +7.4% to 1.254m SAAR, highest % change since Nov 2015, with single-family (+4.1%) and multi-family (+14.6%) permits both up. Despite increases this month, the numbers are still low in 2Q, which could mean home building will be a drag on 2Q GDP. Canada May mfg sales +1.1%, above expected. But ex autos and parts -0.1%. Tot sls volume +1.1%%. New ordrs -3.6%. Unfilled ordrs -1.5%. Inv/sales 1.35. Overall not as strong as headline suggests, especially since Apr rev dn to +0.4% from +1.1%.

News headlines 

Euro Retreats as ECB Meets; Earnings Boost Stocks: Markets Wrap (Bloomberg) The euro retraced some recent gains as European policy makers gathered in Frankfurt before Thursday’s rate decision. The region’s equities got a lift from corporate results, while oil fluctuated and gold fell.

Accommodative monetary policy still needed: ECB’s Villeroy (Reuters) The European Central Bank has made progress steering inflation towards its two percent inflation target but loose monetary policy is still necessary, ECB policymaker Francois Villeroy de Galhau said on Wednesday.

ECB Is Studying Stimulus Options for Possible Fall Decision (Bloomberg) While European Central Bank policy makers look forward to a summer break, the institution is quietly working on stimulus plans for them to consider on their return. The ECB’s Frankfurt-based staff are examining scenarios for the future path of quantitative easing ahead of a Governing Council decision that is expected to take place in September or later, according to euro-area officials familiar with the matter. The people asked not to be named as the work is confidential. An ECB spokesman declined to comment.

Greek Bond Sale Is Said to Be Delayed by IMF Debt Cap Rule (Bloomberg) Greece’s much anticipated return to bond markets this week has been held off partly due to a ceiling set by the International Monetary Fund on the amount of debt the country can hold, according to three officials familiar with the matter who asked not to be identified as the talks are confidential.

Poloz’s Rate Hike Spells Trouble for Trudeau’s ‘David and Neera’ (Bloomberg) For one view of Canada’s rate hike, consider the case of David and Neera. He can’t get a raise, is worried about retirement and they borrowed money a couple years ago to fix the roof. Interest costs will jump now, with vacations and kids’ clothes already out of reach.

China’s Guangzhou offers incentives to boost home rental market (Reuters) The southern Chinese boomtown of Guangzhou has announced a flurry of incentives to boost its home rental market as a year-long property boom makes new housing less affordable.

Overnight markets 

Overview: US 10yr note futures are down -0.062% at 126-01, S&P 500 futures are up 0.12% at 2460.75, Crude oil futures are up 0.04% at $46.42, Gold futures are down -0.08% at $1240.9, DXY is up 0.13% at 94.729, CAD/USD is down -0.19% at 0.7934.

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 Treasuries open NY higher, flatter after overnight buying as US Senate GOP halts effort to push Obamacare healthcare repeal-&-replace bill; may be a later repeal-only bill. Tsys drew credit tied hedging buying in 5s and 10s, foreign real money accts bought 10s. US dollar/yen weakness aids Tsys bid.Tsys trailed core EGBs higher on weaker than expected German ZEW survey and soft UK CPI, PPI and RPI inflation.

News headlines 

Dollar Falls as U.S. Reform Hopes Dim; Gold Climbs: Markets Wrap (Bloomberg) The dollar slid back to a 10-month low as President Donald Trump’s economic revitalization agenda once again faltered. European stocks dropped as some earnings disappointed, and gold climbed to the highest in two weeks.

China’s property market slows, Beijing prices down for first time since 2015 (Reuters) Home prices in Beijing fell for the first time in more than two years in June, while Shanghai declined further and Shenzhen stalled, pointing to significant cooling in China’s biggest real estate markets, official data showed on Tuesday.

Pound Slides From 10-Month High as U.K. CPI Unexpectedly Falls (Bloomberg) The pound dropped from a 10-month high versus the dollar as U.K. inflation unexpectedly slowed in June, reducing the chances of an imminent interest-rate increase by the Bank of England. The yield on benchmark 10-year government bonds dropped to the lowest level since June.

German growth outlook positive despite sentiment dip: ZEW (Reuters) The growth outlook for the German economy remains positive, the ZEW institute said on Tuesday despite a fall in investor morale for the second consecutive month in July which economists attributed to a stronger euro.

Clean Energy Is Trouncing Oil, Gas and Coal in Trump Era (Bloomberg) President Donald Trump took office vowing to revive the coal industry’s fortunes. So far, the smart money has been on clean energy. An index of 40 publicly-traded solar companies, wind-turbine component makers and others that benefit from reduced fossil fuel consumption is up 20 percent this year.

Canada’s home sales fall most in 7 years, as Toronto market plunges (Financial Post) Home sales in June posted their largest monthly drop in seven years, driven by a plunge in the Greater Toronto market, the Canadian Real Estate Association said Monday. Transactions last month were down 6.7 per cent compared with May on a national basis, the third consecutive monthly decline, with the Greater Toronto Area registering a 15.1 per cent drop.

Overnight markets 

Overview: US 10yr note futures are up 0.087% at 125-28, S&P 500 futures are down -0.12% at 2455.5, Crude oil futures are up 1.65% at $46.78, Gold futures are up 0.42% at $1238.9, DXY is down -0.47% at 94.683, CAD/USD is down -0.77% at .7938.

US Economic Data 

Canadian Economic Data

There is no major economic data release 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