Commentaires

Market Update

US tsys higher, yields 1-3 bps lower, curve flatter led by the 7Y, 10Y 2.234 (-2.1bps), little reaction to upward revision to Q1 GDP, weaker durable goods. TY volume high on continued Jun-Sep rolls, prices rising in Europe as equities weakened thru the session led by energy & fin’l with crude off another 1.0% after yest 4.8% drop on skepticism over the latest OPEC extension of prod cuts. EGBs well bid, the 10Y bund 3.5bps lower @ 0.323%, gilts lagging 10Y 1.016% (-2bps) – no econ news, risk off tone in mkts  Trump warning on North Korea at G7, lower crude… GOCs higher in line with tsys, curve 2bps flatter led by 10s on strong bid in CGBs, provis ended wider yest, PQ 48 deal @ 84 well received, 86/84 this morning.

News headlines 

European Stocks Falter on Oil Slump; Pound Slides: Markets Wrap (Bloomberg) A slump in crude weighed on energy shares as global equity markets headed for a lower finish to the week. The British pound slid. Stocks from Tokyo to Europe fell, dragged down by oil producers. Crude headed for a weekly loss after falling the most in three weeks on Thursday as OPEC’s move to prolong supply cuts for nine months disappointed investors hoping for more.

Oil edges up after dip on disappointing OPEC meeting outcome (Reuters) Oil prices edged back up on Friday after a 5 percent fall in the previous session on disappointment that an OPEC-led decision to extend current production curbs did not go deeper. At Thursday’s meeting in Vienna the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) of output until the end of the first quarter of 2018. The initial agreement would have expired next month.

Corbyn Ties Terror to Foreign Wars as Labour Gets U.K. Poll Lift (Bloomberg) Jeremy Corbyn linked U.K. military action abroad to terrorism at home and criticized Prime Minister Theresa May’s government for squeezing police and prison budgets as election campaigning resumed four days after a suicide bomber killed 22 people in Manchester.

Higher Energy Costs Nudge Japanese Inflation Up to 0.3% in April (Bloomberg) Japan’s core consumer inflation gauge rose for a fourth month in April, the longest run of gains since mid-2015, but it’s far below target and weak underlying price pressures point to limited gains ahead.

Toronto area home sales sink after cooling measures (TheGlobeAndMail) House sales fell 26 per cent in the Toronto region in the month following the Ontario government’s introduction of a foreign-buyer’s tax as many potential purchasers stepped back and waited to assess the market impact. In the 30 days after the province announced the immediate introduction of a 15-per-cent foreign-buyer’s tax on April 20, the number of houses sold in the Greater Toronto Area fell 26 per cent compared with the same period last year, according to data compiled by Toronto realtor John Pasalis, president of Realosophy Realty Inc.

RBC says there’s no systemic risk from Home Capital as the bank, CIBC and TD all beat market forecasts (FinancialPost) Concerns about the state of the mortgage market can’t seem to stop Canada’s big banks. On Thursday, Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank all posted stronger-than-expected quarterly results, with earnings per share growth in the 10 to 12 per cent range.

Overnight markets 

Overview: US 10yr note futures are up 0.124% at 126-11, S&P 500 futures are down -0.13% at 2410.25, Crude oil futures are down -0.31% at $48.75, Gold futures are up 0.82% at $1270.1, DXY is up 0.14% at 97.387, CAD/USD is down -0.24% at 0.7433.

US Economic Data

Canadian Economic Data

There is no major economic news 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 slightly higher on heavy volume in tsy futures, 628k TY1 contracts by 8:00 more than double the avg. Equities firmer, crude down 1.6% @ 50.53 after reaching a five week high 52.00 earlier in the session. EGBs outperforming, gilt/bund yields 3-4bps lower as DAX futures fell sharply at the outset of trading, and surprise downward revision to UK Q1 GDP. GOCs higher in line with tsys, curve slightly flatter after a big flattening move post FOMC minutes yest led bythe long end 2s30s ~5bps flatter vs unch in the US. Provis widened slightly yest despite a solid Ont 48 reopening, of which 400mln was carve out. BMO 10NC5 NVCC new issue yest, @ 156 clsoed 1bp wider, likely more bank supply coming as has been light so far.

News headlines 

World stocks hit record after Fed minutes, oil up as OPEC meets (Reuters) World stocks hit record highs on Thursday and the dollar dipped after the U.S. Federal Reserve signaled caution in raising interest rates, while oil prices rose in anticipation of top producers agreeing to extend output cuts for up to a year.

OPEC to Extend Oil Cuts for Nine Months to End Global Glut (Bloomberg) OPEC extended oil production cuts for nine more months after last year’s landmark agreement failed to eliminate the global oversupply or achieve a sustained price recovery. Members of the organization agreed to prolong their accord through March, said two delegates familiar with the decision, asking not to be identified before an official announcement is made. Ministers are scheduled to discuss the extension with non-member producers later on Thursday.

Toronto Homeowners Are Suddenly in a Rush to Sell (Bloomberg) Toronto’s hot housing market has entered a new phase: jittery. After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren’t attracting the bidding wars their neighbors saw just a few weeks ago in Canada’s largest city.

CIBC profit climbs to $1.05-billion, revenue rises (TheGlobeAndMail) CIBC had $1.05-billion of net income in its second quarter, up 11 per cent from a year ago when it reported $941-million of net income. The earnings amounted to $2.59 per share, compared with $2.35 during the second quarter of 2016.

TD profit grows 22 per cent to $2.5-billion (TheGlobeAndMail) TD Bank had $2.5-billion of net income during the second quarter, up 22 per cent from a year ago. The earnings amounted to $1.31 per share. That compared with $1.07 per share or $2.05-billion of net income during the same period last year.

Royal Bank of Canada boosts profit by 9 per cent to $2.8 billion (FinancialPost) Royal Bank of Canada reported an 11 per cent increase in second quarter earnings, beating market forecasts, helped by a strong performance in its capital markets and wealth management businesses.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 126-05, S&P 500 futures are up 0.25% at 2408, Crude oil futures are down -1.17% at $50.76, Gold futures are up 0.14% at $1258.2, DXY is down -0.02% at 97.221, CAD/USD is up 0.27% at 0.7439.

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

Tsys slightly higher, US 10Y 2.276%, curve flatter, prices bid in Asia on Moody’s China downgrade. In Europe EGBs rose after good German auction. FOMC minutes the main focus for tsys this aft. GOCs higher, outperforming tsys by ~1bp before the BOC this  at 10:00am not expecting any changes, mkts still expect next move to be a rate hike – yet odds have faded appreciably over the past month. Busy day for corp issuance yest – CNQ issued USD$3bln across 5,10 & 30Y tranches – US$1bn 5yr at T+115bp, US$1.25bn 10yr at T+160bp , US$750m 30yr at T+200bp – 25-30 bps tighter than IPT! (140,185bp ,230bp). CNQ also priced CAD $1.8bln in  June 20s, Dec 26s & May 37s @ 125, 200.5 & 270.  GM Finance issued $400mln 5Y @ 162, Manulife Bank priced $500mln 5Y dep note @ 106.8 or ~25 over bank dep notes.  Provis tighter again yest despite the heavy corp supply & lower cda yields, Ont 27s 73.5/73 back to the lows of April, Ont 48s 83.5 vs 88.5 last week and the Ont 48/27 curve 0.5bps flatter as well indicating strong demand for long term provis.

News headlines 

Stocks, Currencies Hit Pause on Wait for Fed Clues: Markets Wrap (Bloomberg) European stocks struggled to maintain gains and U.S. equity futures and the dollar both traded sideways as investors awaited fresh insight from the Fed on the path for borrowing costs in the world’s biggest economy. China’s credit-rating downgrade sank industrial metals.

Moody’s downgrades China, warns of fading financial strength as debt mounts (Reuters) Moody’s Investors Service downgraded China’s credit ratings on Wednesday for the first time in nearly 30 years, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.

OPEC Wants to Carry on Pumping Less and Earning More (Bloomberg) At first glance, OPEC’s cuts haven’t worked — global oil inventories remain well above normal levels. But the policy’s made a difference where it really counts: juicing the coffers of finance ministries from Baghdad to Caracas.

U.S. rate hike in June ‘a distinct possibility’ -Fed’s Harker (Reuters) A U.S. interest rate hike next month is a « distinct possibility, » the head of the Federal Reserve Bank of Philadelphia said on Tuesday, adding that another disappointing reading on monthly inflation could cause the U.S. central bank to hold back.

Shell to sell $4.1-billion stake in Canadian Natural (TheGlobeAndMail) Royal Dutch Shell Plc has decided to offload a roughly $4.1-billion stake in Canadian Natural Resources Ltd (CNRL) that it acquired as part of a deal to retreat from Canada’s oil sands earlier this year, people familiar with the situation told Reuters.

BMO hikes dividend as earnings rise to $1.25 billion (FinancialPost) The Bank of Montreal had $1.25 billion of net income in its second quarter. That’s up 28 per cent from $973 million during the same period last year. Revenue was $5.74 billion, up from $5.10 billion a year ago.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 125-29, S&P 500 futures are up 0.04% at 2399, Crude oil futures are down -0.37% at $51.28, Gold futures are down -0.22% at $1252.7, DXY is down -0.04% at 97.312, CAD/USD is down -0.04% at 0.7404.

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