Commentaires

Market Update

Tsys bid in NA trading, yields 1-2bps lower with the 10Y 2.465 (-1.5bps) as S&P futures move lower, crude -0.56%, gold futures +6. Core Euro bonds mixed – 10Y bund yields ~3bps lower @ 0.32% despite better Construction & retail PMIs, while gilt 10Y yield 1bp higher @ 1.192%. FTQ bid in tsys as congress will investigate Trump’s wiretap claims. Weakness in gilts on more uncertainty over French election – Alain Juppe will not run for pres, raising likelihood of Le Pen win, thou l.t. French yields are barely 1-2bps higher mostly in the long end.  The latest CFTC COT report showed the largest divergence on the outlook for 10Y rates since 2012 with large specs extending record net short positions (327k) while asset manager net long rose to the highest in a year based on data for Feb 28th.  GOCs higher, outperforming tsys across the curve. Monetary policy divergence a big factor in last week’s 12 bp narrowing in 5s (84bps thru tsys) with Yellen signalling a March hike is in the cards while the BOC statement was decidedly dovish looking past the uptick in inflation. The BOC auctions $3.3bln in 3Y bonds (March 20s) with the Mar20/2Y roll trading up @ 14.4 this morning.  Provis  0.5bps wider ,  domestic bank supply rumoured, Molson Coors in the US mkt with $1bln in 2Y & 3Y notes IPT t+ 75/80, 85/90 which translates into GOC +60, GOC + 83. The CAD TAP 2.75 20 are G-103 or 20 back of US issue.

News headlines 

Yellen Says March Hike ‘Likely Appropriate’ If Progress Persists (Bloomberg) Federal Reserve Chair Janet Yellen capped a week of rising expectations about an imminent interest-rate increase by explicitly supporting a hike in mid-March if U.S. economic progress persists. “At our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said in the text of a speech Friday at the Executives’ Club of Chicago.

Dollar Bulls Despair as March Fed Hike Looks Like It’s Baked In (Bloomberg) The heightened confidence about March may actually spell trouble for dollar bulls in coming days — there’s little in the way of fresh incentives to buy more of the U.S. currency right away, after it surged to an almost six-week high last week. Fed speakers are now in a blackout period until their March 14-15 meeting, and for major economic data, traders have to wait for February jobs figures to be released March 10.

China Eases Fiscal Stance to Meet Slower 2016 Growth Target (Bloomberg) China unveiled a record fiscal deficit and pledged to accelerate the restructuring of its bloated state-owned industries while still setting a weaker growth target for this year. Premier Li Keqiang announced a 6.5 percent to 7 percent expansion goal Saturday, down from an objective of about 7 percent last year and the first range the government has offered since 1995. The government also abandoned its trade target, underscoring the degree of uncertainty about prospects for global growth. The details were given in Li’s work report at the annual meeting of the ceremonial legislature in Beijing. The plan reflected the government’s determination to maintain growth and put off confronting its debt — now nearly 250 percent of gross domestic product. The report also cited downward pressure on the economy against a backdrop of weaker global growth.

Deutsche Bank shares drop on capital hike plan (GlobeandMail) Shares in Deutsche Bank fell almost 7 per cent in early trading on Monday after the lender announced an €8-billion ($8.48-billion) capital increase that Chief Executive John Cryan had previously declared a last resort. The capital hike is its fourth since 2010. Together with a partial listing of the asset-management unit and a sale of other assets, the move should take its core capital ratio – a key measure for regulators – above 13 per cent from 11.9 per cent at end-2016. Germany’s biggest lender, weighed down by litigation costs and writedowns, has fallen behind Wall Street rivals. It has spent the last 18 months trimming its portfolio, throwing out bad clients and trying to get its technology into shape.

PSA targets Opel turnaround as GM exits Europe (Reuters) France’s PSA Group has agreed to buy Opel from General Motors in a deal valuing the business at 2.2 billion euros ($2.3 billion), creating a new European car giant to challenge market leader Volkswagen. The maker of Peugeot and Citroen cars vowed to return Opel and its British Vauxhall brand to profit, targeting an operating margin of 2 percent within three years and 6 percent by 2026 underpinned by 1.7 billion euros in joint cost savings.

Standard Life, Aberdeen agree to $13.5-billion merger (GlobeandMail) Standard Life is to buy Aberdeen Asset Management in an £11-billion ($13.5-billion) all-share deal that should save £200-million a year in costs, pushing rivals to follow suit as fund managers’ margins sag. The merger, creating Britain’s biggest money manager with £660-billion in assets, values Aberdeen around £3.8-billion based on its closing share price on Friday. The tie-up follows an industry shift towards rivals providing low-cost index-tracking products and away from so-called active investment management, which charges customers higher fees.

Greece desperate for growth strategy as public mood darkens (TheGuardian) In the long and winding road of Greek debt drama, disappointment and hope have been the alternating emotions that every government has faced. With the nation’s crisis no nearer to being resolved than when it erupted seven years ago, negotiations with creditors at another critical juncture and Europe engulfed in uncertainty, the need for hope has never been greater.

Funds expect Saudi Aramco to be valued around $1-1.5 trillion (Reuters) Fund managers and institutional investors expect oil giant Saudi Aramco to have a market capitalization of $1 trillion to $1.5 trillion when it sells shares to the public next year, a survey by regional investment bank EFG Hermes showed on Monday. The valuation of Aramco IPO-ARMO.SE, the world’s biggest oil firm, has been the focus of intense speculation since the Saudi government last year announced plans to sell up to 5 percent of it and list the shares in Riyadh and at least one foreign stock exchange.

Overnight markets 

Overview: US 10yr note futures are up 0.089% at 123-22, S&P 500 futures are down -0.31% at 2373.75, Crude oil futures are down -0.23% at $53.21, Gold futures are up 0.57% at $1233.5, DXY is down -0.06% at 101.48, CAD/USD is up 0.08% at 0.747.

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 trading lower, near bottom of overnight range on moderate vol in TY futures, US 10Y 2.50%. Equities higher in Europe, S&P futures slightly neg (-0.2%), crude unch. Fed chair Yellen speaking at 1:00pm, Lacker & Evans before that.  Core Euro bonds mixed, bund yields 1-4bps higher, 10Y 0.35% (+4bps). Gilts outperforming bunds & tsys on surprise decline in Feb UK service PMI to a six month low, 53.8 from 55.5. GOCs lower, spds unch vs tsys despite the pullback in the US – which may just be a pause after 12-15bps of outperformance just this week driven by the belly of the GOC curve with 5s @85bps thru the most expensive since Dec. Long end also doing well this week with 10s30s 2bps flatter. Provis better bid this morning, Ont 48s 84/83 after closing 1bp tighter yest. PQ issued longs yest @87 now 86/85 or 2/1 vs Onts.

News headlines 

Futures dip ahead of Yellen’s speech (Reuters) U.S. stock index futures were down for the second straight day since January on Friday, ahead of Federal Reserve Chair Janet Yellen’s speech, which is expected to give further clarity on the possibility of an interest rate hike later this month. Yellen is set to speak at 1:00 p.m. ET (1800 GMT) at the Executives Club of Chicago. Her speech comes after several other Fed officials this week stoked market expectations for a March rate hike.

A Fit U.S. Shale Industry Challenges OPEC Once Again (Bloomberg) When the who’s who of the oil industry met a year ago in Houston, Saudi Arabia’s energy minister had harsh words for U.S. shale drillers struggling with the worst price crash in a generation. « Lower costs, borrow cash or liquidate, » said Ali Naimi, who managed the world’s largest oil-exporting business for more than two decades.

Euro zone private sector business growth near six-year high (Reuters) Euro zone private sector business activity rose at its quickest pace in nearly six years in February, accelerating across all major economies with job creation reaching its fastest in almost a decade, surveys showed on Friday. The data, which came alongside news on Thursday that euro zone inflation had just surpassed the European Central Bank’s target, could pose a challenge to policymakers in how to explain leaving monetary policy unchanged even as the economy picks up sharply.

U.K. Economy May Be Heading for a Slowdown as Services Weaken (Bloomberg) The U.K. may be heading for its weakest growth in a year, possibly heralding the start of a Brexit-induced slowdown. IHS Markit’s gauges for manufacturing and the dominant services sector fell in February, with both readings coming in below economists’ median forecasts. While the construction index rose, that wasn’t enough to stop the composite Purchasing Managers Index falling to a six-month low of 53.8 from 55.5.

Quebec Eyes More Foreign Bond Sales as Local Market Gets Crowded (Bloomberg) Quebec may issue more bonds in foreign currencies as the federal government and other provinces crowd the Canadian debt market. “It’s probably a share of our activity that’s bound to increase in coming years,’’ Finance Minister Carlos Leitao said in an interview in Montreal Thursday. “There’s going to be a lot of Canadian products in the market, so to see what’s going on abroad is never a bad idea.’’

Climate change will have ‘pervasive effects’ on economy, Bank of Canada deputy governor says (TheGlobeAndMail)  Canada’s economy is already taking a hit from global warming, including more frequent droughts and forest fires plus a burst of carbon-tax-induced inflation, a top Bank of Canada official says. “Climate change and actions to address it will have material and pervasive effects on Canada’s economy and financial system,” deputy governor Timothy Lane said in a speech in Montreal Thursday.

Overnight markets 

Overview: US 10yr note futures are down -0.038% at 123-15, S&P 500 futures are down -0.16% at 2378.25, Crude oil futures are up 0.44% at $52.84, Gold futures are down -0.32% at $1229, DXY is down -0.39% at 101.8, CAD/USD is up 0.01% at 0.7467.

US Economic Data

Canadian Economic Data

There is no major economic news.

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 lower again this morning, follow thru from Wednesday’s ‘risk on’ related selloff, the 10Y 2.48 (+2.5bps), prices at the lows of the session after a surprise drop in claims (-19k) to 225k the lowest since .  Core Euro bonds seeing some steepening pressure, German bund curve ~5bps steeper, Eurozone inflation reached 2.0% (as exp) for the first time in four years in Feb. Fed gov Brainard in a speech last night advocated removal of accommodation soon, veering away from her usual dovish outlook , saying the US economy ‘appears to be in transition’. Current mkt expectations are ~80% for a rate hike at the March meeting from 30% two weeks ago.  GOCs slightly lower, lagging the decline in tsys by ~1bp, 10s outperforming on the curve after Dec GDP camein as exp 0.3% (2.0% y/y vs 1.7% exp) The BOC auctions $3.0bln in June 27s at noon with roll unch 11.6/11.5., relatively stable in contrast to the steady widening in the 10Y roll of late which for us makes it difficult to get to excited about the June 27s with 10Y yields close to the middle of the 20bp rnage 1.60-1.80%. Provis closed beter bid yest Alberta in blackout now, Ont/QC pre funded to great extent.

News headlines

Dollar rises, global stocks hold highs on March Fed rate hike bets (Reuters) European stocks held near 15-month highs and the dollar strengthened against other top global currencies on Thursday on growing expectations that the U.S. central bank will raise interest rates later this month.

Euro-Area Inflation Hits 2 Percent as ECB Debates Policy (Bloomberg) Euro-area inflation accelerated to the fastest pace since January 2013, providing fresh arguments to those calling for an exit from the European Central Bank’s monetary stimulus program.

Oil down on record U.S. crude stocks, flat Russian output (Reuters) Oil prices fell on Thursday after U.S. crude stocks hit an all-time high and official data showed Russian oil production unchanged in February, with no further cuts to tighten the market and drain global oversupply.

Data-Dependent Yellen Running Out of Reasons to Hold Rates Still (Bloomberg) By most real indicators, the U.S. economy is not too hot or cold, yet financial markets are betting that a core group of Federal Reserve officials who set interest rates are suddenly raring to go.

Valeant’s new bonus math puts debt holders in driver’s seat (TheGlobeAndMail)  Valeant Pharmaceuticals International Inc. shareholders, slide over: Debt holders are driving the bus. The drug maker has changed how it calculates executive cash bonuses. Their incentives are no longer tied to adjusted earnings per share, which were used as an executive incentive when the company was a market darling. The bonuses will now be pegged to Ebitda – earnings before interest, taxes, depreciation and amortization – which, as it happens, is also a metric watched by its creditors.

TD wraps up Canda’s bank earnings parade with another beat and dividend hike (Financial Post) Toronto-Dominion Bank reported quarterly earnings ahead of market expectations, helped by a strong performance by its retail banking businesses in the United States and Canada.

Overnight markets 

Overview: US 10yr note futures are down -0.063% at 123-21, S&P 500 futures are down 0% at 2393.5, Crude oil futures are down -1.58% at $52.98, Gold futures are down -0.81% at $1239.9, DXY is up 0.27% at 102.05, CAD/USD is up 0.24% at 0.7486.

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