Commentaires

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

Market Update

US tsys futures and GoC moving higher supported by risk-off tone following news of a successful North Korean missile launch. Initially, bonds had benefited from a flight to quality trade as a result of another North Korean missile launch. However, equity markets have recovered from a poor start but bond prices continued moving higher. Current levels: GoC 10yr 1.817 (+0.055) US10yr 2.35 (Closed).

News headlines 

Asian shares stumble as North Korea fires missile into Japanese waters (Reuters) Asian shares turned lower on Tuesday as earlier gains were quashed by tensions on the Korean peninsula after North Korea fired a missile that landed in Japanese waters, deepening concerns over the isolated nation’s nuclear capabilities.

Oil eases on U.S. holiday after eight days of gains (Reuters) Oil prices fell on Tuesday, as investors booked profits on an eight-day rally that was triggered by tentative signs that a persistent rise in U.S. crude production may be slowing. Brent crude futures LCOc1 fell by 15 cents to $49.53 per barrel by 1138 GMT.

China Warns Against ‘Negative’ U.S. Turn as Trump Raises Heat (Bloomberg) President Xi Jinping’s complaint about a “negative” turn in China’s relationship with the U.S. showed the challenge facing Donald Trump when the two leaders meet in Germany this week.

German new car sales down 3 percent in June on fewer selling days – VDA (Reuters) German new car sales declined 3 percent last month to 327,800 vehicles, auto industry association VDA said on Tuesday, citing two fewer selling days. Year-to-date registrations in Europe’s largest auto market were still up 3 percent on year-earlier levels at 1.79 million vehicles, VDA said, confirming a Reuters story.

China central bank will maintain prudent and neutral monetary policy (Reuters) China’s central bank said on Tuesday that it would continue to implement a prudent and neutral monetary policy, and keep liquidity in the country’s financial system basically stable. The People’s Bank of China switched to a modest tightening stance at the start of this year to help cool explosive growth in debt, but it injected substantial liquidity last month to avoid a quarter-end cash crunch, market participants said.

Who wins and who loses when the Bank of Canada raises rates (Financial Post) Another month of solid growth for the Canadian economy in April and upbeat survey results from the Bank of Canada have strengthened expectations that the central bank will soon begin increasing interest rates for the first time in seven years.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 125-06, S&P 500 futures are up 0.19% at 2429.5, Crude oil futures are down -0.28% at $46.94, Gold futures are up 0.39% at $1223.9, DXY is up 0.04% at 96.252, CAD/USD is down -0.29% at 0.771.

US Economic Data

There is no major economic news release for today.

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