Comments
02/05/2017
Market Update
US tsys lower, yields 1.5bps higher led by the 10Y at 2.332% (1.6bps), volumes in TY fuutres closer to avg (236k) as Europe/Asia back from vac. Equities lower( emini -1.25), crude higher (49.30 + 0.30), USD up vs Yen for 4th day. Latest JPM Client Survey showed all clients at highest ner short since Feb 21st while active clients are net long for 3rd week. EGBs lower, gilts lower steeper after beter than exp Markit PMI. GOCs slightly lower, curve unch after big steepening move yest driven by US on Mnuchin ultra long bond comments – GOC 2s10s +4bps with 10s30s unch. Provis unch after closing 1bp tighter yest led by longs. In corps Pepsico Inc issued C$ 750mln 7Y @ 87 which ended up being well oversubscribed , and the bonds broke 3-4bps tighter. We are still buyers of HCG 18s – 88bid for up to 500k.
News headlines
Global Stocks Climb Amid Earnings as Yen Weakens: Markets Wrap (Bloomberg) Global stocks headed for a fresh high as many markets reopened with investors focusing on stronger corporate earnings. The yen extended losses while Treasuries maintained declines. The MSCI All-Country World Index was poised for a record close, while European shares advanced. U.S. stock futures pointed to a lower opening. European government bonds fell across the board. Treasury yields climbed after Steven Mnuchin said it “could absolutely make sense” for the U.S. to sell ultra-long bonds.
Trump Weighs Breaking Up Wall Street Banks, Raising Gas Tax (Bloomberg) President Donald Trump said he’s actively considering a breakup of giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer and investment banking.
China’s factory output slows to 7-month low (Market Watch) China’s nationwide factory activity expanded at a slower pace in April, with a private gauge falling to a seven-month low. The Caixin China manufacturing purchasing managers’ index dropped to 50.3 in April from 51.2 in March, indicating a slower expansion of activity, Caixin Media Co. and research firm Markit said Tuesday.
China banks hike lending rates for Beijing home buyers: sources (Reuters) The Beijing branches of at least six major Chinese banks have raised interest rates on housing loans for first- and second-home buyers, effective from May 1, six sources with direct knowledge of the hikes told Reuters.
U.K. Manufacturing Growth Surges to Fastest in Three Years (Bloomberg) U.K. manufacturing unexpectedly grew at the fastest pace in three years in April as the domestic market strengthened and the pound’s depreciation boosted exports. A measure of factory conditions rose to 57.3 from 54.2 in March, according to IHS Markit’s Purchasing Managers’ Index. That’s far better than the 54 forecast by economists in a Bloomberg survey and above the 50 level dividing expansion from contraction. Growth in new orders and exports also gathered pace.
Greek Debt-Relief Talks Move Closer After Late-Night Deal (Bloomberg) Greece resolved the latest impasse over the terms of its bailout program with international creditors in the early hours of Tuesday, unlocking the way for debt-relief talks and the disbursement of the next tranche of emergency loans.
Will Home Capital Dent Canada’s ‘Boring-but-Stable’ Reputation? (Bloomberg) As Home Capital Group Inc. spiraled downward last week, a group of Canadian real estate brokers relaxing in Mexico brooded over whether the mortgage lender’s woes would seep into the housing market and trigger the kind of crisis the country averted in 2008.
Overnight markets
Overview: US 10yr note futures are down -0.075% at 125-12, S&P 500 futures are down -0.01% at 2386.75, Crude oil futures are up 0.37% at $49.02, Gold futures are down -0.14% at $1253.7, DXY is up 0.01% at 99.083, CAD/USD is up 0.15% at 0.7298.
US Economic Data
| 8:30 AM | Wards Total Vehicle Sales, Apr, est. 17.10m (prior 16.53m) |
| Wards Domestic Vehicle Sales, Apr, est. 13.10m (prior 12.97m) |
Canadian Economic Data
There is no major economic news release.
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
01/05/2017
Market Update
US tsys lower, yields 0.5bps higher thru the curve on very light volume in TY futures – 134k less than half avg as Europe is closed, much of Asia as well. Little reaction to weaker than exp March Personal Income/spending data – PCE deflator 1.8% vs 1.9% exp. The US Congress passed a $1.1trln spending bill that funds the govt thru Sept. Latest CFTC COT report for April 25th showed large specs continued to reduce shorts across the curve – in 10s specs went from -41k to 214k contracts long, the largest net long since before the 2008 fin’l crisis. GOCs slightly higher, curve flatter, provis unch.
News headlines
Yen Falls as Stocks Climb on Budget Deal: Markets Wrap (Bloomberg) The yen weakened with bonds, while stocks and U.S. futures climbed, as a tentative deal by the U.S. Congress to avert a government shutdown offset weaker economic data from China and America.
U.S. Congress negotiators set spending plan to avert shutdown, bolster defense (Reuters) Negotiators in the U.S. Congress reached a deal late on Sunday on around $1 trillion in federal funding that would avert a government shutdown later this week, while handing President Donald Trump a down payment on his promised military build-up.
Oil slips below $52 as U.S. drilling, China worries weigh (Reuters) Oil edged below $52 a barrel on Monday as rising crude output and drilling in the United States countered OPEC-led production cuts aimed at clearing a supply glut. U.S. drillers added nine oil rigs in the week to April 28, bringing the count to the most since April 2015, energy services company Baker Hughes said on Friday. Crude output C-OUT-T-EIA in the United States has hit its highest since August 2015, government data shows.
French voters skeptical Macron, Le Pen have answers on key issues (Reuters) A week before the decisive second round in France’s presidential election, many voters are skeptical that either of the two candidates can solve chronic unemployment or tackle security concerns, a poll published on Sunday found.
China April manufacturing growth slows faster than expected (Reuters) Growth in China’s manufacturing sector slowed faster than expected in April, an official survey showed on Sunday, as producer price inflation cooled and policymakers’ efforts to reduce financial risks in the economy weighed on demand.
A house of woes: How Home Capital went from market darling to the brink (Reuters) As Home Capital Group Inc. was having its worst week ever, at least one person in the investment world was smiling. Marc Cohodes, a short seller who has been described as a “scourge of Wall Street” has for more than three years bet on the implosion of the Toronto-based alternative mortgage lender.
Pembina Pipeline Corp to buy Veresen in $9.7 billion deal (Financial Post) Pembina Pipeline Corp said it would buy Veresen Inc in a deal valued at $9.7 billion, including debt, adding natural gas pipelines and processing infrastructure to its oil and natural gas liquids-heavy portfolio.
Overnight markets
Overview: US 10yr note futures are down 0% at 125-23, S&P 500 futures are up 0.23% at 2386, Crude oil futures are down -0.79% at $48.94, Gold futures are down -0.26% at $1265, DXY is down -0.08% at 98.972, CAD/USD is down 0% at 0.7324.
US Economic Data
| 8:30 AM | Personal Income, Mar, 0.2%, est. 0.3% (prior 0.4%, revised 0.3%) |
| Personal Spending, Mar, 0.0%, est. 0.2% (prior 0.1%) | |
| PCE Core, m/m, Mar, -0.1%, est. -0.1% (prior 0.2%) | |
| PCE Core, y/y, Mar, 1.6%, est. 1.6% (prior 1.8%) | |
| 9:45 AM | Markit US Manufacturing PMI, Apr F, est. 52.8 (prior 52.8) |
| 10:00 AM | ISM Manufacturing, Apr, est. 56.5 (prior 57.2) |
| ISM Prices Paid, Apr, est. 67.5 (prior 70.5) | |
| 10:00 AM | Construction Spending, m/m, Mar, est. 0.5% (prior 0.8%) |
Canadian Economic Data
| 7:00 AM | MLI Leading Indicator, m/m, Mar, 0.5% (prior 0.4%, revised 0.4%) |
| 9:30 AM | Markit Canada Manufacturing PMI, Apr, (prior 55.5) |
| 10:00 AM | Bloomberg Nanos Confidence Index, Apr 28, (prior 59.1) |
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
28/04/2017
Market Update
US tsys moving lower despite a big miss on Q1 GDP (0.7% vs 1% exp) thou GDP prices came in stronger 2.3% vs 2.0 exp) 10Y 2.327%% (+3bps). Core Euro bonds sharply lower with the 10Y bund 5bps higher @ 0.343% and the 10Y bund/tsy spd close to three month lows @ 195bps. Eurozone CPI rose 1.9% in Apr vs 1.8% exp. The German 5s30s curve wider for seventh day, another 2bps steeper after the inflation data. Today is the month-end extension , the Euro Aggregate Tsy index extends 0.12yrs vs 0.03 avg. monthly. GOCs lower, spds 2bps tighter vs tsys after Feb GDP missed est , unch vs 0.1% exp, 2.5% y/y vs 2.6% – but keep in mind this comes after three solid mnthly increases.
News headlines
U.S. first-quarter growth weakest in three years as consumer spending falters (Reuters) The U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending barely increased and businesses invested less on inventories, in a potential setback to President Donald Trump’s promise to boost growth. Gross domestic product increased at a 0.7 percent annual rate also as the government cut back on defense spending, the Commerce Department said on Friday. That was the weakest performance since the first quarter of 2014.
UK GDP growth slower than expected as inflation bites (TheGuardian) The UK economy suffered a sharp slowdown in the opening months of this year, as the post-referendum rise in living costs took its toll on British households and hit consumer spending. GDP growth fell more than expected to 0.3% in the first quarter from 0.7% in the previous quarter, the Office for National Statistics said.
ECB nods to euro zone recovery but keeps money taps wide open (Reuters) The European Central Bank stuck to its ultra-easy policy stance on Thursday as inflation continues to undershoot its target but explicitly acknowledged the vigor of the euro zone economy, now on its best run since the global financial crisis.Despite calls from Germany, the euro zone’s economic powerhouse, for a gradual reduction of stimulus, the ECB even left the door open to further rates cuts or an increase in asset buys. But ECB President Mario Draghi noted that the euro zone’s economy had further improved and the risk of a new downturn had receded, a signal seen by many as foreshadowing a bolder change at the next meeting in June.
All for One: Emboldened EU United Against U.K. Over Brexit (Bloomberg) European Union leaders are set to declare that when it comes to Brexit, 27 of them will stand as one against the U.K. A Saturday summit in Brussels called solely to discuss Britain’s departure from the bloc will serve as a stage for the governments the U.K. is leaving behind to talk up unity and warn British officials against sowing division in the hope of securing a better exit deal.
Barclays Shares Fall After Surprise Drop in Trading Revenue (Bloomberg) Barclays Plc dropped the most in almost six months after posting a surprise drop in trading across debt and equity.The firm reported an unexpected decline in fixed-income trading revenue, contrasting with a 24 percent jump achieved by its five largest American counterparts and a smaller increase at Deutsche Bank AG, its biggest competitor in Europe. Income from equities trading also fell more than expected, while investment banking fees surged.
Cloud Produces Sunny Earnings at Amazon, Microsoft and Alphabet (NYTimes) The moneymaking machines at the core of Amazon, Microsoft and Alphabet, the parent company of Google, are notably different. But the respective kings of online retailing, software and internet search should all credit a relatively new line of business for lifting their financial results. In their quarterly earnings reports on Thursday, the three said cloud computing — through which they rent computing services and online access to software hosted in their data centers — was growing faster than their larger, older businesses.
Overnight markets
Overview: US 10yr note futures are down -0.162% at 125-14, S&P 500 futures are up 0.03% at 2386.75, Crude oil futures are up 1.47% at $49.69, Gold futures are up 0.1% at $1267.2, DXY is down -0.13% at 98.946, CAD/USD is up 0.16% at 0.7323.
US Economic Data
| 8:30 AM | Employment Cost Index, 1Q, 0.8% ,est. 0.6% (prior 0.5%) |
| GDP Annualized q/q, 1Q A, 0.7%, est. 1.0% (prior 2.1%) | |
| GDP Price Index, q/q, 1Q A, 2.3%, est. 2.0% (prior 2.1%) | |
| Personal Consumption, 1Q A, 0.3%, est. 0.9% (prior 3.5%) | |
| Core PCE, q/q, 1Q A, 2.0%, est. 2.0% (prior 1.3%) | |
| 9:45 AM | Chicago Purchasing Manager Index, Apr, est. 56.2 (prior 57.7) |
| 10:00 AM | University of Michigan Sentiment, Apr F, est. 98.0 (prior 98.0) |
Canadian Economic Data
| 8:30 AM | GDP, m/m, Feb, 0.0%, est. 0.1% (prior 0.6%) |
| GDP, y/y, Feb, 2.5%, est. 2.6% (prior 2.3%) | |
| Industrial Product Price m/m, Mar, 0.8%, est. 0.3% (prior 0.1%, revised 0.3%) | |
| Raw Materials Price Index, m/m, Mar,-1.6%, est. -0.5% (prior 1.2%) |
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