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Market Update

Tsys open NY weaker after Wed post-FOMC rally. FOMC lifted rates by 25bps. However, the Fed dot plot projections showed forecasts for 2017 and 2018 were unchanged from December. Tsys near low end of range, cued by lower Bunds and Gilts. Overnight rates move lower, partly due to hedge unwinds vs. Dutch election concerns; French and Spanish debt issuance also weighed. US swaps, running mildly wider; mild rate and spd paying from specs and fast$ in 2s and 5s, some deal-tied hedging in intermediates. Eurodollar futures mostly lower; LIBOR sets higher. US corporate bond issuance could see Scentre Grp 10Y, APA Grp long 10Y. Following yesterday’s Fed rate hike, the overnight hold from the Bank of Japan and rate increase from the People’s Bank of China, it is the turn of European central banks to announce their decisions today.

News headlines 

Dovish Fed, Dutch Vote Spur Stocks as Oil Advances: Markets Wrap (Bloomberg) Stocks advanced with commodities as the U.S. Federal Reserve’s dovish message continued to feed into markets, and as pro-Europe parties claimed victory in the Netherlands election. The euro and Treasuries gave up some of Wednesday’s advance.

Europe Gets Reprieve in Dutch Election, But the Center Fragments (Bloomberg) When Donald Trump was elected U.S. president in November his Dutch equivalent, Geert Wilders celebrated the arrival of a “Patriotic Spring” that would lift anti-immigrant nationalists to power across Europe. That uprising failed to materialize in the Netherlands.

BOJ sets high hurdles for tapering, rate hike in wake of Fed move (TheGlobeAndMail) Bank of Japan Governor Haruhiko Kuroda said an uptick in inflation towards 1 per cent won’t immediately trigger an interest rate hike, signalling that Japan will stick to its ultra-easy policy even as other major economies eye withdrawing stimulus.

Oil extends gains as dollar and U.S. inventories fall (Reuters) Oil prices rose for a second day on Thursday, supported by U.S. data showing crude inventories had dipped after rising for nine weeks and a weaker dollar after the U.S. Federal Reserve signaled it would not hike rates faster than expected. Brent crude oil was up 38 cents at $52.19 a barrel by 1050 GMT, recovering from Tuesday’s slide to $50.25, its lowest level since Nov. 30 when the Organization of the Petroleum Exporting Countries announced plans to cut supplies.

Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy (Bloomberg) Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation. Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshooting its 2 percent goal and that it intended to keep its policy accommodative for “some time.”

Household debt hits fresh record, with Canadians owing $2 trillion by the end of 2016 (Financial Post) Canadian household debt as a share of income rose to a fresh record in the fourth quarter, data from Statistics Canada showed on Wednesday in a report likely to underscore concerns consumers are becoming overly indebted. The ratio of debt to disposable income rose to 167.3 per cent from an adjusted 166.8 per cent in the third quarter. That meant Canadians owed $1.67 for every dollar of disposable income.

Overnight markets 

Overview: US 10yr note futures are down -0.152% at 123-18, S&P 500 futures are up 0.13% at 2383.5, Crude oil futures are up 0.55% at $49.13, Gold futures are up 2.57% at $1231.6, DXY is down -0.24% at 100.5, CAD/USD is down -0.03% at 0.7518.

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 drifting lower after firmer 8:30 US data , 10Y 2.584(-1.6bps) – Feb retail sales came in as exp but large upward revision to Jan, CPI 0.1% vs 0.0% exp., stronger Empire Man. Modest volume in TY futures overnite as mkt awaits FOMC decision this aft. Core European bonds higher, bund curve continues to flatten , gilts higher as UK avg weekly earnings came in much weaker than expected. GOCs higher, off the highs as tsys pullback post data, curve unch, 10Y 1.83%.  Of note, longs have performed well on the curve in the selloff, 10s30s flatter for a seventh day yest, opening at 64.5. The belly of the curve looks relatively cheap, 2s5s bearing the brunt of the selloff.

News headlines 

Europe Stocks, Oil Rise as Bonds Steady Before Fed: Markets Wrap (Bloomberg) Crude prices were once again a dominant story in markets, with oil’s rebound helping underpin European stocks as investors wait for Wednesday’s expected U.S. interest rate increase. The British pound pared a rebound and metals climbed.

U.S. Retail Sales in February Post Smallest Gain in Six Months (Bloomberg) U.S. retail sales in February posted the smallest gain in six months, indicating a tempering of the consumer spending that’s been carrying the economy. Purchases rose 0.1 percent, matching the Bloomberg survey median estimate, after a 0.6 percent increase in the prior month that was stronger than previously reported, Commerce Department figures showed Wednesday. Just four of the 13 major retail categories saw gains in February sales.

Oil jumps off lows, IEA sees H1 deficit after OPEC cuts (Reuters) Oil prices climbed more than $1 on Wednesday, lifted by a surprise drawdown in U.S. inventories and data from the International Energy Agency (IEA) suggesting OPEC cuts should create a crude deficit in the first half of 2017.

Fed expected to raise rates as U.S. economy flexes muscle (Reuters) The Federal Reserve is expected to raise interest rates for the second time in three months on Wednesday, encouraged by strong monthly job gains and confidence that inflation is finally rising to its target.

UK wage growth weakens but jobless rate lowest since 2005 (Reuters) Inflation gnawed away at British pay growth in the three months to January, an unpromising sign for the economy ahead of its divorce from the European Union even as the unemployment rate fell to its lowest level since 2005.

Quebecor swings to $123.3-million profit in fourth quarter (TheGlobeAndMail) Quebecor Inc. is reporting a profitable fourth quarter, erasing a loss that the media and telecommunications company experienced in the final quarter of 2015. The Montreal-based company had $123.3-million of net income for shareholders in the three months ended Dec. 31.

Overnight markets 

Overview: US 10yr note futures are up 0.102% at 123-00, S&P 500 futures are up 0.22% at 2368.25, Crude oil futures are up 1.89% at $48.62, Gold futures are down -0.3% at $1199, DXY is down -0.11% at 101.59, CAD/USD is down -0.12% at 0.7428.

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 higher, yields 1-2bps lower, curve flatter, 10Y 2.606% (-2bps), S&P futures lower and crude below $48 on news OPEC raised output above 10mln bbls/day in Feb. Bund yields lower after the 10Y briefly went above 0.50% for the first time since January of last yr, now 0.477%. Gilt yields not reacting much to Brexit news or BOE Hogg resignation, thou the pound fell to an eight-week low vs the USD. GOCs higher, with the 10Y back below 1.85% on bid in tsys, lower crude …CMB 5Y pricing this morning – new June 2022 ~45 bps over 5s – the deal is well spoken for.  Provis better bid to start the week on higher GOC yields, 10Y BC still rumoured with the BC/Ont 26 roll unch -8/-8.5.

News headlines 

Stocks Drop Before Fed as Pound Slumps on Brexit: Markets Wrap (Bloomberg) Most European stocks retreated as signs of caution started to show in markets before this week’s packed schedule of events, which includes a U.S. interest rate decision. The pound tumbled as the British Prime Minister won permission to trigger the country’s departure from the EU.

Canada Missed Ultra-Long Opportunity Before Trump Yield Spike (Bloomberg) Officials discouraged Canada’s finance minister from selling further ultra-long maturity debt, and potentially locking in near-record low borrowing costs for a generation, just ahead of a surge in yields spurred by the election of U.S. President Donald Trump.

Oil edges off three-month lows, eyes on U.S. inventory (Reuters) Oil prices recovered modestly from three-month lows on Tuesday, with concerns persisting about rising U.S. inventories and few clear signs that OPEC will extend supply curbs beyond June. The immediate focus for investors is Tuesday’s data from the American Petroleum Institute (API) about U.S. crude and product stockpiles after a bigger-than-expected climb in last week’s report. Analysts see a further, albeit smaller, rise this time.

Ackman’s Pershing Square sells Valeant stake, takes $3 billion loss (Reuters) Billionaire investor William Ackman walked away from Valeant Pharmaceuticals International Inc (VRX.TO) on Monday with a loss of more than $3 billion as he sold his entire stake in the struggling drug company after trying to rescue it for some 18 months.

China’s industrial output picking up in 2017 (Market Watch) Industrial production in China expanded 6.3% in the first two months of 2017 from a year earlier, accelerating from 6.0% growth in December, data from the National Bureau of Statistics showed Tuesday.

UK PM May’s hand moves closer to Brexit trigger (Reuters) British Prime Minister Theresa May cleared the final hurdle standing between her and the start of Brexit negotiations on Monday after parliament passed legislation giving her the power to start the EU exit process. Members of the lower house of parliament voted to throw out changes to the bill made by the upper house earlier this month, after the government argued it needed freedom to operate without restriction to get a good deal.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 122-27, S&P 500 futures are down -0.34% at 2363.75, Crude oil futures are down -1.51% at $47.67, Gold futures are up 0.1% at $1204.3, DXY is up 0.32% at 101.63, CAD/USD is up 0.26% at 0.7418.

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