Commentaires

Market Update

Treasuries prices open NY higher, fractionally flatter, follow core EGBs upward within range on light summer volume, France’s July 14th Bastille Day holiday. US equities futures mixed. Rally post data, holding gains on the double miss, orderly trade on moderate volume. Treasuries jump on soft core 0.1% June CPI and weak -0.2% June retail sales; 10Y yield is at 2.309%, vs. 2.332% at 8:26am. Tsys see 5/30Y steepeners, but 2/5Y, 2/7Y, 2/10Y flatteners. TIPS meanwhile also saw some buying. Those who bought 30Y auction Thurs at 2.936% rate, would have a profit, as WI 30Y is now at 2.891%.

News headlines 

Bonds Gain, Stocks Steady as CPI Tests Fed Resolve: Markets Wrap (Bloomberg) Bonds rebounded while U.S. stock futures were steady as U.S. inflation data and bank earnings roll in, serving as a test for the strength of the economy. Treasuries headed for their first weekly gain in three, bolstered by Fed Chair Janet Yellen’s gradualist tone to policy tightening as inflation languishes below the central bank’s 2 percent target. Bunds rose for the first day in four. A gauge of the dollar fell for the fifth day, its longest streak of losses in two months. S&P 500 index futures were little changed after financial shares led gains yesterday. JPMorgan Chase & Co. reported quarterly earnings that were largely in line with expectations, although fixed-income revenue was hurt by low volatility.

Oil Sands Help Shale Stymie OPEC’s Effort to Rebalance Market (Bloomberg) OPEC producers are finding that shale oil drillers aren’t their only adversaries in their battle to drain a three-year crude glut. As oil rigs in the U.S. jumped 45 percent this year, north of the border, oil-sands companies including Devon Energy Corp., Suncor Energy Inc. and Cenovus Energy Inc. have ramped up operations as well. Their thermal production sites are running as much as 30 percent above capacity this year, squeezing barrels from existing production sites to maximize revenue.

Sterling inches higher, investors split on BoE rate hike (Reuters) Sterling rose against the dollar on Friday, investors still weighing the likelihood of an interest rate rise from the Bank of England after labour market data this week offset some worries over Britain’s exit from the European Union. The pound has recovered from its losses after Britain’s election in June as a number of BoE policymakers have spoken out in favour of reversing a rate cut delivered in the wake of the Brexit vote last year.

Canada-U.S. softwood deal possible by next month: forestry analyst (TheGlobeAndMail) The framework for a 10-year softwood lumber agreement between Canada and the United States could be reached in the coming weeks, an industry analyst says, citing discussions with unnamed trade contacts. In a report released on Thursday, Hamir Patel of CIBC World Markets Inc. said a deal setting quotas on Canadian softwood exports could be acceptable to the U.S. lumber industry if Canada drops several demands. That would include withdrawing a request that New Brunswick be excluded from any softwood agreement restrictions, Mr. Patel said.

IMF cautions Bank of Canada against tightening a day after it raised the rate (Financial Post) The International Monetary Fund said on Thursday that while Canada’s economy has regained momentum, housing imbalances have increased and uncertainty surrounding trade negotiations with the United States could hurt the recovery.

Sears Canada extends benefits to former employees while seeking approval for sales process (Financial Post) Sears Canada can begin soliciting potential buyers, an Ontario judge ruled Thursday, three weeks after the struggling retailer filed for creditor protection. Ontario Superior Court Justice Glenn Hainey approved the motion for the sale and investor solicitation process after several hours of negotiations between lawyers representing the company, its lenders and retirees and laid-off employees, according to the Canadian Press.

Overnight markets 

Overview: US 10yr note futures are up 0.349% at 125-27, S&P 500 futures are up 0.05% at 2446.75, Crude oil futures are up 1.19% at $46.63, Gold futures are up 0.34% at $1221.4, DXY is down -0.11% at 95.621, CAD/USD is down -0.22% at 0.7877.

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

Tsys trading lower after PPI/Initial Claims , after being under pressure for most of the early NA session, US 10Y 2.33 (+2bps). Yellen speaks before Senate in part II of testimony, followed by $12bln 30Y bond auction at 1:00PM.  EGBs lower , gilts slightly lower  outperforming bunds, 10Y bund at new high 0.595%, spread to 10Y tsys below 175bps for the first time since the US election. GOCs sharply lower, underperforming tsys  by 2-4bps led by the belly of the curve, with the 10Y above key 1.90% resistance, now 1.92% (+4bps). Follow thru from yesterday’s hawkish BOC has pushed Can/US spds ~14bps wider since Tuesday’s close.  Provi spds trading up this morning, yet are unch on the week not benefitting from higher all in Cda yields. The BOC auctions $3.2bln in reopened Sep 1 20s at noon with the Sep20/Mar 20 roll 7.5bps, slightly cheaper (0.3bps) over the week.

News headlines 

Relief Rally Spurs Stocks to Record; Dollar Falls: Markets Wrap (Bloomberg) European shares were swept up in a rally that took global stocks to a record after Janet Yellen spurred expectations the Fed won’t rush to end the era of cheap money. European bonds gained while the dollar fell against most major peers.

Oil prices dip as IEA sees waning compliance with OPEC cuts (Reuters) Oil prices fell on Thursday on worries about oversupply as the world’s energy watchdog warned that a long-awaited market rebalancing could be delayed due to weak compliance with production cuts among OPEC members.

Consumers quickly feel the pinch as big banks follow BoC rate hike (Financial Post) Tarek Mnaimne has been considering dipping his toes into the Canadian real estate market, particularly in Toronto or Montreal, but the rate hike from the central bank is giving him pause.

China June trade beats expectations on robust demand, but headwinds eyed (Reuters) China posted stronger-than-expected June trade figures on Thursday, bolstered by firm global demand for Chinese goods and robust appetite for construction materials at home, but local curbs on lending could weigh on imports later this year.

UK budget watchdog warns of long-term Brexit risk for public finances (Reuters) Britain will need to curb public spending further or raise taxes if leaving the European Union does long-term damage to economic growth, underscoring the importance of the country striking new trade deals, the government’s budget watchdog said on Thursday.

China trade with sanctions-struck North Korea up 10.5 percent in first half (Reuters) China’s trade with isolated North Korea rose more than 10 percent in the January-June period from a year earlier, a Chinese official said on Thursday, amid pressure from the United States for Beijing to pressurize its troublesome neighbor.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-15, S&P 500 futures are up 0.1% at 2442.5, Crude oil futures are down -0.09% at $45.45, Gold futures are down 0% at $1219.1, DXY is down -0.07% at 95.698, CAD/USD is up 0.09% at 0.7836.

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 tsys  rallying on Yellen’s prepared text release – the mkt focusing on comments that US rates don’t need to rise much to reach neutral, US 10Y 2.31% vs 2.36 pre Yellen. Tsys were already higher overnite with core EGBs after solid 10Y bund auction pushed up prices, thou prices has faded , weighed by strong UK labor mkt data  – employment rose 175k in 3 months to May pushing the unemployment rate down to 4.55 from 4.6%. Portugal sold E1bln in 10& 30Y bonds , at the high end of  the target. GOCs lagging the rise in tsys by 1.5-3 bps before key BOC decision at 10:00am. At this point, with mkt pricing in ~90% odds of a rate hike, BOC credibility would be severly tested should they decide to pass. For us the more relevant questions are whether we see another 25bp hike before y/e  and if so is the BOC done as the 50 bps of ‘insurance’ would have been removed.

News headlines 

Stocks Rebound as Dollar Dips on Trump Revelations: Markets Wrap (Bloomberg) European equities rebounded with oil while the dollar slipped as a fresh bout of political uncertainty in Washington damped optimism about rebounding global growth. A gauge of the U.S. dollar was lower for a third day while Treasuries rose before a testimony by Janet Yellen that may provide clues about her plans to scale back the Federal Reserve’s balance sheet. Oil bounced on reports of a decline in stockpiles, though it remains in a bear market. The pound erased losses after U.K. payrolls data beat estimates and unemployment fell to a 42-year low.

Your Guide to the Bank of Canada’s Bellwether Rate Decision (Bloomberg) Canada will likely become the first Group of Seven country to join the U.S. in raising interest rates on Wednesday, potentially fueling speculation the world’s central bankers are heading into a tightening cycle.

China June new yuan loans rise, but credit growth seen slowing (Reuters) Chinese lenders extended more credit than expected in June, as home lending stayed buoyant while a clampdown on shadow financing activities forced banks to shift more loans onto their books.

Germany tightens rules to shield businesses from foreign takeovers (Reuters) Germany has approved rules to make it easier to block the sale of strategically important companies to investors from outside the European Union, prompted by concerns about China acquiring German expertise by that route.

OPEC sees lower demand for its oil in 2018, points to surplus (Reuters) World demand for OPEC’s crude will decline next year as U.S. shale producers and other rivals pump more, OPEC said on Wednesday, suggesting the oil market will see a surplus in 2018 despite an OPEC-led output cut.

Mexico Oil Privatization Pays Off With Billion-Barrel Find (Bloomberg) Mexico’s decision to allow private companies to explore for oil and gas started to pay off after the discovery of at least a billion barrels in a new offshore field.

Overnight markets 

Overview: US 10yr note futures are up 0.424% at 125-23, S&P 500 futures are up 0.47% at 2436, Crude oil futures are up 1.78% at $45.84, Gold futures are up 0.69% at $1223.1, DXY is down -0.17% at 95.511, CAD/USD is down -0.01% at 0.7744.                                             

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