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Market Update

US tsys trading weaker off the lows before non farms (exp 170k, unem rate 4.3%, 0.3% AHE), US 10Y 2.386% (+2bps), heavy selling in 10Y tsy futures tied to weaker Yen – 2 block trades for combined 780k/DV01.  Crude -2.5% @ 44.33 despite yesterday’s drop in DOE inventories. Core EGBs mixed, 10Y bund reached new 2017 high 0.581% . GOCs lower before Cdn employment, spreads ~1bp tighter vs tsys, CAD resilient 1.2977 despite steep drop in crude.  New CM 5Y deposit note 79/77, priced at 80.3.

News headlines 

Yields Stay Higher as Stocks Drop Before Jobs Data: Markets Wrap  (Bloomberg) Bond yields stayed elevated after a sell-off in debt this week stoked by a number of central banks stepping up talk of tighter policy conditions. The yen slumped to an eight-week low after the Bank of Japan stepped in to curb the rise in rates.

Dollar climbs as payrolls eyed, hits seven-week high vs yen (Reuters) The dollar climbed on Friday, hitting a seven-week high against the yen after the Bank of Japan expanded its monetary policy as other major central banks are moving in the opposite direction.

Inflation elusive, but central bankers getting twitchy (Reuters) A significant pickup in inflation still remains tantalizingly out of reach in most developed economies — aside from asset prices — yet several central banks are leaning toward launching or stepping up efforts that could slow it down.

Oil prices fall 3 percent on signs market still oversupplied (Reuters) Oil prices fell 3 percent on Friday after data showed U.S. production rose last week just as OPEC exports hit a 2017 high, casting doubt over efforts by producers to curb oversupply. Global benchmark Brent futures LCOc1 were down $1.43, or 3 percent, at $46.68 a barrel at 1116 GMT, after falling to as low as $46.63, its weakest level in more than a week.

U.S. job growth seen accelerating; unemployment rate steady (Reuters) U.S. employers likely stepped up hiring in June and boosted wages for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate increase this year.

BOE Policy Hawks Face New Signs of Weakening U.K. Economy (Bloomberg) The hawks circling over the Bank of England may have just got their wings clipped. Unexpectedly weak manufacturing, construction and trade data Friday all darkened the economic outlook, casting doubt over the U.K.’s performance in the second quarter and reining back expectations of tighter policy.

Overnight markets 

Overview: US 10yr note futures are down -0.1% at 124-28, S&P 500 futures are up 0.09% at 2410.75, Crude oil futures are down -2.17% at $44.53, Gold futures are down -0.12% at $1221.8, DXY is up 0.2% at 95.992, CAD/USD is down -0.03% at 0.7707.

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 trading sharply lower, US 10Y 2.382 (+6bps) – no reaction from weaker June ADP (158k vs 188k) . Tsy weakness spurred by steep selloff in core EGBs, particularly bunds & OATS.  German 10Y +9bps @ 0.562%  at 1 ½ yr high eclipsing 0.509% resistance from March, heavy selling in bund futures  (>750k).  Eurozone supply from Spain and France – the latter sold 10 & 30Y bonds , 30Y b/c  1.53x vs 1.93x at the previous auction on Jan 5th. GOCs well offered, 10Y new high @ 1.85% ( was 1.46% last Monday!). Yesterday’s 5Y auction @ 1.486% is now ~2bps underwater with Sep 22s above 1.50% and the sep 22/5Y roll unch 5.5/5.3. Provincials reacting as expected to higher GOC yields and no supply – narrowing 0.5bps yest  – Ont 27s 69.5, Ont 48s 79.5/78.5.  First Capital Realty (Baa2/BBBH) issued 200mln in 10s at 195.7 , now 193/190.

News headlines 

European Bonds and Stocks Slump; Oil Rises on Data: Markets Wrap (Bloomberg) Markets took a nervous turn in the European session, with government bonds slumping in the wake of a disappointing French debt sale and the selloff spilling over into stocks. Oil clawed back some of its biggest loss in four weeks, while gold and silver retreated.

ECB’s Praet calls for a steady hand with policy (Reuters) The European Central Bank needs to be patient and maintain a steady hand in policy as inflation is still far below its target, its chief economist, Peter Praet, said on Thursday. His comments may dampen expectations for imminent policy tweaks.

China’s central bank: We’ll boost ability to adjust interest rates (Reuters) China’s central bank said on Thursday that it will strengthen the ability to adjust interest rates and improve efficiency of its medium-term lending facility (MLF), standing lending facility (SLF) and reverse repos operations.

MEG Energy CEO says oilsands new chapter is exciting, but Canada has to want it, too (Financial Post) Canada’s oilsands appeared to be skidding toward big trouble in the dying days of 2014. Shale producers in the United States had found ways to produce oil faster and cheaper, and the Organization of the Petroleum Exporting Countries was pushing down prices to try to drive everyone else out of business.

Can U.S. defend against North Korea missiles? Not everyone agrees (Reuters) Not everybody asserts as confidently as the Pentagon that the U.S. military can defend the United States from the growing threat posed by North Korea’s intercontinental ballistic missile capability.

The Flashpoints for World Leaders at the Hamburg G-20 (Bloomberg) The Group of 20 summit that starts in Hamburg on Thursday is the most anticipated—and potentially turbulent—meeting of global leaders in years. An unpredictable U.S. president with a protectionist bent, a Russian leader subject to international sanctions and a Chinese president looking to assert a greater global role are just a few of the factors that might stoke tensions.

Overnight markets 

Overview: US 10yr note futures are down -0.262% at 124-29, S&P 500 futures are down -0.35% at 2419.5, Crude oil futures are up 1.51% at $45.81, Gold futures are up 0.22% at $1224.4, DXY is down -0.31% at 95.989, CAD/USD is down -0.14% at 0.7729.

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 higher, yields ~1bp lower with the 10Y outperforming. Tsy prices rose in Asia in safe haven bid on continued fallout from North Korea missile launch, but then faded on Europe on supply & stronger Euro data, heavy selling at the lows in TY futures 125-02. Core Euro bonds lower led by UK gilts , hawkish comments from BOE Saunders who said households should prepare for higher rates. GOCs higher, outperforming tsys by 1-2bps after yesterday’s 6bp widening on more comments from Poloz  in a German newspaper.  The BOC auctions $3.9bln in 5Y bonds at noon – reopening of the 1% Sep 2022s with the Sep 22/5Y roll 5.6/5.2, towards the low of recent range.

News headlines 

Global stocks recover as eyes shift to Fed minutes (Reuters) Stock markets rode out the latest rise in tensions around North Korea on Wednesday, main markets in both Europe and Asia inching higher as attention moved to minutes from the U.S. Federal Reserve’s last meeting. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, regaining half the losses it saw on Tuesday when North Korea fired a missile into Japanese waters.

Dollar rises as short bets unwound before data (Reuters) The dollar rose its highest levels in nearly two months against the Japanese yen on Wednesday as investors reduced bearish bets against the greenback before data this week sheds more light on the ongoing recovery in the U.S. economy.

Factbox: Trump talks tough on North Korea, but options limited (Reuters) U.S. President Donald Trump has employed tough rhetoric in response to North Korea’s missile tests, but his options appear limited in dealing with a challenge that has vexed his Oval Office predecessors.

North Korea says its ICBM can carry nuclear warhead; U.S. calls for global action (Reuters) North Korea said on Wednesday its newly developed intercontinental ballistic missile (ICBM) can carry a large nuclear warhead, triggering a call by Washington for global action to hold it accountable for pursuing nuclear weapons.

Monte Paschi to Reduce 5,500 Jobs, Assets in Rescue Plan (Bloomberg) Italian lender Banca Monte dei Paschi di Siena SpA laid out a five-year restructuring plan that includes cutting thousands of jobs and selling assets as part of an agreement with the European Union that lets the bank receive 5.4 billion euros ($6.1 billion) in state aid.

Ontario economy too dependent on housing ‘bubble,’ new study warns (Financial Post) Ontario, once the industrial powerhouse of Canada, has become precariously reliant on its booming housing market to fuel economic growth, warns a new report.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 125-03, S&P 500 futures are up 0.18% at 2429.25, Crude oil futures are down -1.25% at $46.48, Gold futures are down -0.08% at $1218.2, DXY is up 0.23% at 96.438, CAD/USD is up 0.19% at 0.7715.

US Economic Data 

 Canadian Economic Data

There is no major economic news 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