Commentaires

Market Update

Tsys mixed, slightly higher in the short end, 10s unch 2.56%, tsy futures in narrow 3 tick range overnite.  German bund curve steeper bias after ECB left rates & QE unch. Tsys/bunds reacting to Draghi’s hawkish press conf – revision upwards in HICP inflation, GDP.  Tsys also buoyed by continued weakness in crude , now off another 2.1% at 49.20 after yest 5.4% drop on crude inventory build.   GOCs moving lower with tsys on Draghi, provis unch.

News headlines

Oil Extends Slump as Euro Gains Before ECB Meet: Markets Wrap (Bloomberg) Crude’s selloff deepened, with prices slumping a fourth day amid a broad commodities retreat that dragged down European stocks. Bonds moved higher, while the euro strengthened with the dollar as investors prepare for key central bank meetings. Oil couldn’t sustain an early bounce after data showing U.S. inventories at a record battered prices Wednesday. West Texas Intermediate dropped below $50 per barrel as metals also fell. Commodity producers dragged European stocks lower, while the euro rose before Thursday’s European Central Bank meeting, where no change in monetary policy is expected.

ECB Keeps Bond-Buying, Rates Unchanged Amid Inflation Flare-Up (Bloomberg) The European Central Bank kept its quantitative-easing program unchanged as policy makers gauge whether a recent jump in inflation will endure. The Governing Council reaffirmed its decision that monthly asset purchases will be reduced to 60 billion euros ($63 billion) from April, compared with 80 billion euros currently. Policy makers also left the main refinancing rate at zero and the deposit rate at minus 0.4 percent, as predicted by all economists in a Bloomberg survey.

China February producer inflation fastest in nearly nine years as commodities surge (Reuters) China’s producer price inflation accelerated to its fastest pace in nearly nine years in February and by more than expected as prices of steel and other raw materials extended a torrid rally, boosting profits for industrial companies worldwide. Consumer inflation, however, cooled more than expected to its mildest pace since January 2015 as food prices fell, remaining well below the government’s 3 percent target.

As Gold Stalls, Canada’s Top Equity Fund Manager Likes Oil, Zinc (Bloomberg) Chris Beer has made the RBC Global Precious Metals Fund the best-performing Canada-focused mutual fund by scooping up smaller, growth-oriented gold companies. He thinks energy and metals are now the better play.

Shell Cuts Debt With $7.25 Billion Sale of Canada Oil Sands (Bloomberg) Royal Dutch Shell Plc will sell almost all of its production assets in Canada’s oil sands in a $7.25 billion deal that cuts debt and reduces involvement in one of the most environmentally damaging forms of fossil-fuel extraction.

Overnight markets 

Overview: US 10yr note futures are down -0.14% at 122-31, S&P 500 futures are down -0.02% at 2360.5, Crude oil futures are down -1.85% at $49.35, Gold futures are down -0.25% at $1206.4, DXY is up 0.04% at 102.11, CAD/USD is up 0.23% at 0.7395.

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 sharply lower after huge Feb ADp (298k vs 187k), yields 3-4 bps higher, 10Y at 2.56% above 2.55 resis. from Jan 26th,volume in TY futures heavy TYM7 taking out the lows for the year at 123-00.  Tsys weaker thru Asia session, selling picking up in Europe with bunds offered on better Jan. Ind Prod data & supply (uncovered bund auction). The bund curve ~3 bps steeper with the short end pinned by ECB buying, the 2Y -0.88%, 10s @0.352%. Gilts softer on UK spring budget statement as borrowing set to decline on stronger growth (2017 – 2.0% vs 1.4% in Nov). GOCs lower in line with tsys, 10Y 1.778% close to 1.80% high from Feb 15th.  Housing Starts rose for a third month in Feb by 0.6% to 210.2k vs 207.4k exp. Busy day for primary issuance in Cda yest – $2.75 bln /3 deals including $1.5bln RY 5Y dep note @ 81. Husky issued $750mln 10s @ 180 (188 vs 10Y) – the tighter end of guidance yet bonds broke 5-7 tighter. Nissan Cda issued $500mln 2Y FRN & 3Y fixed @ 80.6. The mkt had problem digesting supply – theres been a lack of bank issuance and CIBC & RY have $4.55bln in dep notes rolling out of the index this week and next.

News headlines 

Gundlach Predicts `Old School’ Fed Will Do Sequential Hikes (Bloomberg) The Federal Reserve is likely to begin raising rates sequentially as inflation and growth speed up, according to Jeffrey Gundlach, manager of the DoubleLine Total Return Bond Fund. “There’s starting to become a sequential type of Fed pattern,” Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital, said during a webcast Tuesday. “It’s almost old school.”

Hammond Presents Upbeat Picture as Britain Braces for Brexit (Bloomberg) Chancellor of the Exchequer Philip Hammond will say Britain is well placed to weather the challenges of Brexit as he pledges to take the decisions needed to prosper outside the European Union. In his Spring Budget on Wednesday, Hammond will deliver an upbeat assessment of the future as Prime Minister Theresa May prepares to trigger formal talks with the EU this month. While the need to continue reducing the deficit means difficult decisions on tax and spending, investment remains a priority and the government will help ordinary working families still suffering from the effects of the 2008 financial crisis, the Treasury said in a briefing note.

Hammond Seen Cutting Gilt Sales to Decade-Low in First Budget (Bloomberg) U.K. Chancellor of the Exchequer Philip Hammond may deliver a boost for bondholders in his first budget, with analysts forecasting gilt issuance in the next fiscal year at its lowest since the financial crisis a decade ago. The Debt Management Office will sell 109.7 billion pounds ($134 billion) of gilts in the year starting April, compared to 146.5 billion pounds in the current fiscal year, according to the median prediction of 14 primary dealers surveyed by Bloomberg. With Britain’s economic data beating expectations since the decision to leave the European Union, analysts see improved growth projections, reducing the need to borrow in Wednesday’s budget.

China posts first monthly trade deficit in three years as imports soar (Reuters) China unexpectedly posted its first trade gap in three years in February as a construction boom pushed imports much higher than expected and as increasing U.S. protectionist rhetoric casts a spotlight on the export giant’s trade position. The upbeat import reading reinforced the growing view that economic activity in China picked up in the first two months of the year, adding to a global manufacturing revival. That could give China’s policymakers more confidence to press ahead this year with oft-delayed and painful structural reforms such as tackling a rapid build-up in debt.

Japan Is Poised for Its Longest Run of GDP Growth in a Decade (Bloomberg) Global tailwinds look set to sustain Japan’s modest recovery in 2017, as exports prop up an economy that’s still struggling to stoke domestic demand. Wednesday’s upward revision of gross domestic product in the final three months of last year sets the scene for a fifth-straight period of growth — the longest streak since the six quarters of gains to mid-2006.

Mnuchin’s Treasury Staff Picks Stall as White House Scrutinizes Tweets (Bloomberg) Steven Mnuchin’s picks for the top ranks of the U.S. Treasury are stalled due to resistance from White House aides, including one recruit whose Twitter account was scrutinized for potential criticism of Donald Trump, according to people familiar with the matter.

OPEC Said to Break Bread With Shale in Rare Show of Détente (Bloomberg) For the last two years, they’ve been locked in a battle for supremacy of the oil market. But for a couple of hours in Houston over dinner on Sunday, the head of OPEC and leaders of some of America’s top shale producers shared a table for a rare off-the-record chat about the future of oil.

Ivey purchasing index slows in February as material prices cool (TheGlobeandMail) The pace of purchasing activity in Canada slowed in February, driven by a decline in prices paid by companies for materials, according to Ivey Purchasing Managers Index data released on Tuesday. The seasonally adjusted index fell to 55.0 from 57.2 in January, though the unadjusted index rose to 55.1 from 52.3. A reading above 50 indicates an increase in the pace of activity.

Overnight markets 

Overview: US 10yr note futures are down -0.38% at 122-32, S&P 500 futures are up 0.08% at 2368.5, Crude oil futures are down -1.22% at $52.49, Gold futures are down -0.48% at $1210.3, DXY is up 0.21% at 102.02, CAD/USD is up 0.34% at 0.7431.

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 lower in NA trading with the 10Y 2.505%, curve ~0.5bps flatter in a narrow range .  EGBs higher outperforming on weaker data bund curve steeper on long end supply. Tsys still pressured by huge IG supply – $22bln yest with 11 issues. Meanwhile expectations for March rate hike weighing on the front end of the curve.  GOCs lower in line with tsys, 10Y 1.72%, 10s30s flatter for second day @ 69.2. Husky (Alow/BBB+) in the mkt with a 10Y @~183 which looks fair with Husky 25s trading in the ~150 area.

News headlines

Trump signs revised travel ban in bid to overcome legal challenges (Reuters) President Donald Trump signed a revised executive order on Monday banning citizens from six Muslim-majority nations from traveling to the United States but removing Iraq from the list, after his controversial first attempt was blocked in the courts. The new order, which takes effect on March 16, keeps a 90-day ban on travel to the United States by citizens of Iran, Libya, Syria, Somalia, Sudan and Yemen. It applies only to new visa applicants, meaning some 60,000 people whose visas were revoked under the previous order will now be permitted to enter.

Euro-Area Growth Boosted by Domestic Demand as Trade Dragged (Bloomberg) Domestic spending drove euro-area growth in the fourth quarter of 2016, with trade damping output. Gross domestic product rose 0.4 percent, matching earlier estimates and the rate of expansion in the previous quarter. Household consumption added 0.2 percent point to growth, while government spending and investment contributed 0.1 point each, the European Union’s statistics office said on Tuesday.

China FX reserves rebound above $3 trillion in February, first rise in eight months (Reuters) China’s foreign exchange reserves unexpectedly rose for the first time in eight months in February, rebounding above $3 trillion as a regulatory crackdown and a steadying yuan helped staunch capital outflows. The rebound in reserves could ease fears in global markets that China will engineer another sharp one-off devaluation of the yuan, which would run the risk of inflaming trade tensions with the new U.S. administration under President Donald Trump. Reserves rose $6.92 billion during February to total $3.005 trillion, their first increase since June 2016, central bank data showed. That compared with a drop of $12.3 billion in January, when reserves fell to $2.998 trillion.

House Republicans reveal bill to repeal and replace Obama’s healthcare law (The Guardian) After weeks of promises, Republicans unveiled a bill to repeal the Affordable Care Act (ACA) with a plan that shrinks the government’s role in healthcare, and could leave more Americans without health insurance. Called the American Health Care Act, the bill would eliminate the individual mandate, which required Americans to have health insurance or pay a fine; cut the number of people insured under Medicaid; and allow insurance companies to charge the elderly up to five times more than the young. The bill would require insurers to cover so-called pre-existing conditions, but would allow them to add a 30% surcharge to premiums if people go without insurance for too long.

Iraq, Angola Signal Willingness to Extend OPEC Oil Output Cuts (Bloomberg) The Middle East producer cut the pricing for some of its April oil sales to Asia, surprising customers who were expecting an increase that was signaled by the structure of the market. That shows it’s trying to lure buyers toward its lighter and less sulfurous crude varieties at a time when similar-quality grades are rushing to the region from the Americas, Europe and Africa.

Australia Holds Rates as Sydney Housing Poses Stability Risk (Bloomberg) Australia kept interest rates unchanged Tuesday as risks from Sydney’s soaring property prices outweighed subdued inflation. Reserve Bank of Australia Governor Philip Lowe and his board left the cash rate at 1.5 percent following strong growth and trade performances in the final three months of last year. The decision was expected by all 29 economists surveyed by Bloomberg.

Overnight markets 

Overview: US 10yr note futures are down -0.088% at 123-16, S&P 500 futures are down -0.16% at 2371.75, Crude oil futures are up 0.79% at $53.62, Gold futures are down -0.41% at $1220.5, DXY is up 0.17% at 101.81, CAD/USD is down -0.03%at.7458.

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