Commentaires

Market Update

US tsys moving lower after PCE, 10Y 2.263%, on heavier than avg volume in TY1 futures, 470k vs ~600k last two days. Treasuries rose with EGBs into month/qtr end, 10Y bund 1bp lower 0.44% , +20bps wk/wk, 10Y bund/tsy spd just off recent narrows @ 182bps. Tsy/bund curves steepened this week after several months of flattening, despite seemingly coordinated efforts from central banks to prepare mkts for tightening/unwinding of stimulus into a low inflation environment. GOCs lower, extending underperformance vs tsys after Apr GDP 0.2% as exp, 3.3% y/y vs 3.4% – highest since June 2014.   Crude oil higher for 7th day, longest streak in 6 months, on drop in crude production & gas inventories.

News headlines 

Stock futures slightly higher ahead of consumer spending data (Reuters) U.S. stock index futures were slightly higher on Friday, a day after Wall Street fell sharply, as investors awaited a slew of economic data, including on consumer spending, a key indicator for U.S. economy.

Oil Set for Longest Rally This Year as Oversupply Concerns Ease (Bloomberg) Oil headed for the longest run of gains in six months as a drop in U.S. crude production and gasoline stockpiles eased concern that OPEC-led supply curbs were proving ineffective. Futures added as much as 1 percent in New York, advancing for a seventh session. U.S crude output last week fell by the most in almost a year amid field maintenance in Alaska and tropical storm Cindy, while gasoline inventories fell for a second week.

Euro zone inflation eases less than expected, core measure up (Reuters) Euro zone inflation eased in June because of more moderate energy price rises, but the slowdown was less than expected by markets and the core measure of price growth the ECB keenly watches increased by more than anticipated.

Japan’s Inflation Edges Up But Remains Far From BOJ’s Target (Bloomberg) The BOJ is betting that a growing economy and the tightest labor market in decades will eventually fuel acceleration in wage gains and inflation. So far pay has risen only modestly, and the key inflation gauge has only turned positive since January.

CMHC to give Ottawa a special $4 billion dividend, has too much capital on its books (Financial Post) Canada Mortgage and Housing Corp., is paying the federal government a special $4 billion dividend, a move the Crown corporation says is driven by the fact it has more cash than it needs to back its obligations.

Canada public pension fund commits up to $1 billion to buy U.S. oil, gas assets (Reuters) Canada Pension Plan Investment Board (CPPIB), the country’s biggest public pension fund, plans to invest up to $1 billion to buy oil and gas assets in the United States in a partnership with Encino Energy Ltd.

Trudeau Versus Trump Is a Win for Toronto Tech and Innovation (Bloomberg) Silicon Valley startups are tapping into Toronto’s tech talent. Okta Inc., which JPMorgan Chase & Co. calls one of the fastest growing public software firms, opened a 60-seat office this month on trendy King Street West. Lured by a deepening pool of engineers in a city routinely ranked among the world’s most innovative, the company is following peers such as Uber Technologies Inc. and Amazon.com Inc. across the border.

Overnight markets 

Overview: US 10yr note futures are down -0.087% at 125-23, S&P 500 futures are up 0.12% at 2423, Crude oil futures are up 0.69% at $45.24, Gold futures are down -0.41% at $1240.7, DXY is up 0.14% at 95.762, CAD/USD is down -0.18% at 0.7703.

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 sharply lower, 10Y 2.274% (+4.5bps), off the lows after Q1 GDP revised higher 1.4% vs 1.2% & PCE 1.1% vs 0.6%, thou GDP price index 1.9% vs 2.2% prev. Heavy volume in TY1 futures (690k) overnite. Core EGBs lower as well, the German bund curve ~5bps steeper, Gilt yields 5-8bps higher. European peripheral spds vs Germany continue to compress led by Greece, 10Y vs bunds 493 bps or 15bps tighter. German CPI rose above forecasts in June, while BOE chief economist Haldane said the BOE had to seriously consider raising rates to stem cost of living increases. GOCs lower, underperforming tsys across the curve 2-3bps, longs tighter on the curve, 10s30s new lows 42bps. Can/US spreads 20-30 bps cheaper since Wilkins/Poloz warning on rates two weeks ago. Provincials tighter by 0.5bps to start after closing 1bp tighter yest on no issuance.

News headlines 

Euro, Pound Climb as Traders Adjust Rates Outlook: Markets Wrap (Bloomberg) The euro strengthened to the highest level in more than a year and the British pound gained a seventh day as expectations grew that financial conditions will be tightened on accelerating economic growth. Banking stocks outperformed and oil extended its winning streak.

Oil prices rise to two-week high on dip in U.S. output (Reuters) Oil prices rose to a two-week high on Thursday, extending a rally into a sixth straight session after a decline in weekly U.S. production eased concerns about deepening oversupply. Crude prices slipped to the lowest in 10 months last week but have since rebounded more than 7 percent, stretching their bull-run to the longest since April.

Global borrowing hits record $217T, as central banks prepare to tighten credit (Financial  Post) Global debt levels have climbed $500 billion in the past year to a record $217 trillion, a new study shows, just as major central banks prepare to end years of super-cheap credit policies.

Buffett’s Berkshire on verge of becoming BofA’s top shareholder (Reuters) Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) may be on the verge of becoming Bank of America Corp’s (BAC.N) largest shareholder, after the bank raised its dividend in the wake of a positive assessment of its ability to handle market stresses.

Banks Unleash Surprisingly Big Payouts After Fed’s Stress Tests (Bloomberg) The Federal Reserve told big banks they have more than enough capital, and they promptly announced a windfall for their shareholders. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected, after every lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis. Shares across the industry rallied in early trading Thursday.

Canada’s long ride with rock-bottom interest rates appears to be ending (Financial Post) Canada’s long ride with rock bottom interest rates appears to be coming to an end. Stephen Poloz, governor of the Bank of Canada, has dropped a big hint that for the first time in seven years, the bank will be pushing Canadian interest rates higher.

Overnight markets 

Overview: US 10yr note futures are down -0.384% at 125-23, S&P 500 futures are down 0% at 2438.5, Crude oil futures are up 1.14% at $45.25, Gold futures are down -0.53% at $1242.5, DXY is down -0.03% at 95.982, CAD/USD is down -0.04% at 0.7672.

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 paring earlier  losses following comments from ECB that Draghi’s comments yesterday were misinterpreted, tys yields now ~1.5bps lower in the short end, slightly higher out the curve, 10Y 2.21 (+0.7bps), heavy volume in TY1 futures (600k). Overnite tsy prices once again relatively flat in Asia then pressured lower in EGBs in continuation of yest post Draghi selloff. 10Y bund yield hit 0.40% before reversing lower, now 0.35% (-2.2bps).  Gilts lower, extending the bear steepening move from yest was close to 1.15% -highest since May 16th  before ECB clarification. GOCs are lower, underperforming tsys as the curve bear flattens as BOC Poloz reiterated that rate cuts ‘have done their job’ in interview on CNBC, the CAD above 0.76 for first time since Feb. Provis tightened 1bp yest , Ontario issued 10Y @ 73 yest ,now 72/71, Ontario credit curve flatter out to 10Y on higher all in yields. In corps, financials under pressure on issuance, BNS 7Y dep note @90.4 – 4-5bps conc., now 89/87.

News headlines 

Euro Extends Gain, Bonds Drop; Europe Stocks Slump: Markets Wrap (Bloomberg) The euro touched a one-year high and government bond yields climbed as investors digested a series of hawkish messages from central banks. European stocks sank as the global selloff in technology companies spread.

Japan, EU press ahead on free trade pact to counter U.S. protectionism (Reuters) Japanese and European Union negotiators meeting in Tokyo aim to reach a free trade deal that would stand against a protectionist tide threatening the global economy, and make the United States think twice over pursuing inward-looking policies.

Oil Snaps Longest Gain in a Month on Signs U.S. Supplies Rose (Bloomberg) Oil fell, snapping the longest run of gains in a month, as U.S. industry data showed crude stockpiles rose. Futures lost as much as 1.3 percent in New York after climbing 4 percent the previous four sessions. U.S. stockpiles expanded by 851,000 barrels last week, the American Petroleum Institute was said to report on Tuesday. That runs counter to expectations for government inventory data due to be published Wednesday, which is forecast to show inventories extended declines.

Cyber attack hits property arm of French bank BNP Paribas (Reuters) A global cyber attack has hit the property arm of France’s biggest bank BNP Paribas (BNPP.PA), one of the largest financial institutions known to be affected by an extortion campaign that started in Russia and Ukraine before spreading.

Fed’s Yellen expects no new financial crisis in ‘our lifetimes’ (Reuters) U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash.

Five questions still facing Home Capital ahead of its annual general meeting (Financial Post) Executives at Home Capital Group Inc. will face the company’s shareholders Thursday for the first time since a crisis of confidence pushed the alternative mortgage lender to the brink of collapse last month.

Overnight markets 

Overview: US 10yr note futures are down -0.062% at 126-07, S&P 500 futures are up 0.28% at 2427.25, Crude oil futures are down -0.36% at $44.08, Gold futures are up 0.36% at $1251.4, DXY is up 0.06% at 96.452, CAD/USD is down -0.69% at 0.763.

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