Commentaires

Market Update

Tsys sharply lower yields 3-5 bps higher wit the 10Y 2.435% (+4.3bps). Tsys fell to the lows of the o/n range after strong German CPI data and have accelerated lower despite less than expected Jan core PCE (1.9% y/y vs 2.0%).  Selling started late yesterday aft on hawkish comments from Fed Dudley & Williams , March rate hike prob rising to 80% from 50%, volumes on the TU (2Y) future ~4x avg after fedspeak. Selling in TY futures accelerating overnight as equity futures rose on Trump risk on rally, outlines of $1trln infrastructure spending. Bunds weaker, the 10Y bund contract worst day since Jan 25th on heavy volume. GOCs lowers on par the decline in tsys. Yesterday aft saw index buyers come in and push spreads 5-7 bps tighter as the US sold off on hawkish fed, with 10s30s 1.5bps flatter @ 71.5 as solid bid emerged for longs post 4:00pm. This morning longs outperforming on the selloff, 10s30s 70/69 and off the run long rolls getting lifted (37/33s, 29/26). BOC at 10:00am, expected to retain cautious tone despite signs the economic rebound is gaining momentum, inflation pressures building thou mostly due to strength in energy prices. The BOC auctions $3.0bln in reopened June 27s tommorrow with the J27/10Y roll 11.7/11.6 fairly steady even as the 10Y roll (26/25) has widened considerably (3bps) over the past three months. 10Y absolute yields back to the middle of the range 1.60-1.80% after the move yest & this morn. Provis ended month end yest better bid  , 2 deals Alberta 10s & mani longs.

News headlines 

Focus Turns to Fed as Dollar Gains, Bonds Drop: Markets Wrap (Bloomberg) Investors moved on from President Donald Trump’s address to Congress, shifting their focus to the timing of a U.S. rate increase as the dollar strengthened, stocks advanced and bonds fell. Robust factory data from China spurred gains in metal prices. The Bloomberg Dollar Spot Index climbed the most in a month, the yield on 10-year Treasuries rose to a week-high and European banking stocks surged after odds jumped for a Federal Reserve rate increase this month. Shares of commodity producers found support from a report indicating improving health for Chinese manufacturing which also helped prices for raw material exports.

In speech, Trump tries to turn from divisive to deal-maker (Reuters) U.S. President Donald Trump showed a different side in his first address to Congress. This Trump was part deal-maker, part salesman, asking for unity and trying to repackage his populist message in more palatable terms

Oil inches up as OPEC sticks to output pledges (Reuters) Oil edged higher on Wednesday as investors took heart from strict OPEC compliance with its pledge to cut output, although evidence of increasing U.S. production capped gains. The Organization of the Petroleum Exporting Countries reduced its oil output for a second month in February, a Reuters survey found, showing the exporter group has boosted already strong compliance to around 94 percent.

China February official manufacturing PMI rises to 51.6, beats forecasts (Reuters) Activity in China’s manufacturing sector expanded faster than expected in February, an official survey showed on Wednesday. The official Purchasing Managers’ Index (PMI) rose to a three-month high of 51.6 in February, compared with the previous month’s 51.3, and above the 50-point mark that separates growth from contraction on a monthly basis.

German inflation hits 4-1/2 year high in February (Reuters) German inflation accelerated further in February, reaching its highest level in four-and-a-half years and surpassing the European Central Bank’s price stability target of just under 2 percent, preliminary data showed on Wednesday. German consumer prices, harmonized to compare with other European countries (HICP), rose by 2.2 percent on the year after an increase of 1.9 percent in January, the Federal Statistics Office said.

Fed officials jolt market with talk of pending interest rate hike (TheGlobeAndMail) A handful of Federal Reserve policy makers on Tuesday jolted markets into higher expectations for a March U.S. interest rate increase, with comments that suggested rate-setters are worried about waiting too long in the face of pending economic stimulus from Washington.

National Bank’s profit handily beats estimates (TheGlobeAndMail) National Bank of Canada reported a better-than-expected quarterly profit on Wednesday, largely boosted by its wealth management and personal and commercial businesses. Canada’s sixth-largest bank said net income in its personal banking and commercial business rose 18.3 per cent to $213-million, helped by higher personal mortgage lending.

Overnight markets 

Overview: US 10yr note futures are down -0.727% at 123-22, S&P 500 futures are up 0.74% at 2380.25, Crude oil futures are up 0.3% at $54.17, Gold futures are down -1.05% at $1240.7, DXY is up 0.77% at 101.9, CAD/USD is up 0.2% at 0.7503.

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 unch yet off the lows after weaker Q4 GDP (1.9% unrevised vs 2.1% exp), curve ~1bp flatter, US 10Y 2.358 (-0.7bps), equity futures slightly lower, crude -0.28% @ 53.90.  Mkts await Trump speech to Congress tonite. Dallas Fed Kaplan on CNBC  said its time for the Fed to remove accommodation ‘sooner rather than later’. Core Euro govt bonds lower, bund yields 1-3 bps higher, 10Y bund 0.211 vs Friday’s low 0.182%. Peripherals mixed – Italy yields lower for a third day, France 10Y +2.5bps @ 0.895% – France CPI weak yet little impact. GOCs higher, 10Y 1.62 (-2bps), spds 2bps narrower vs tsys. Provis ended yest better offered, Ont rumourd for today in longs as well as MP. Crombie Reit reopened their 21s for $75mln @ 245 , which looked ~7bps cheap.

News headlines 

Stocks Steady, Dollar Slips Before Trump Address: Markets Wrap (Bloomberg) Investors mostly hit the pause button on Tuesday, with European stocks trading little changed and the dollar paring this month’s gains before President Donald Trump addresses Congress. Oil declined. Shares of raw-material producers fell as the outlook for industrial metals worsened, while construction companies rose a second day after Trump said Monday he’ll spend “big” on infrastructure. Yields on Treasuries were little changed after rising at the start of the week as the odds of a Federal Reserve interest-rate increase in March jumped.

Oil prices dip, rising U.S. output offsets OPEC cuts (Reuters) Global oil prices dipped on Tuesday but continued to trade in a tight range with the OPEC-led output cuts offset by increasing crude production from the United States. The Organization of the Petroleum Exporting Countries has so far surprised the market by showing record compliance with oil-output curbs, and could improve in coming months as the biggest laggards – the United Arab Emirates and Iraq – pledge to catch up quickly with their targets.

Exclusive: Saudi Arabia wants oil prices to rise to around $60 in 2017 – sources (Reuters) Saudi Arabia wants crude oil prices to rise to around $60 a barrel this year, five sources from OPEC countries and the oil industry said. This is the level the OPEC heavyweight and its Gulf allies – the United Arab Emirates, Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said.

Competitive Gains Drive Poloz’s Steadfast Caution on the Loonie (Bloomberg) Bank of Canada Governor Stephen Poloz has been keen to point out how much weaker his country’s economy is relative to the U.S., ostensibly in a bid to ensure investors don’t get too far ahead of themselves pricing in interest rate hikes.

BMO tops forecasts; announces share buyback (TheGlobeAndMail) Bank of Montreal, Canada’s fourth-biggest lender, on Tuesday reported much higher-than-expected quarterly earnings and announced plans to buy back 15 million of its shares. Net income for the first quarter ended on Jan. 31 rose to $1.49-billion, or $2.22 per share, from $1.07-billion, or $1.58 per share, a year earlier.

Valeant’s revenue falls for third straight quarter (TheGlobeAndMail) Valeant Pharmaceuticals International Inc. reported a 12.9 per cent fall in quarterly revenue on Tuesday, its third straight quarter of a double-digit percentage decrease, as sales declined across its businesses and realized prices fell.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 124-20, S&P 500 futures are down -0.08% at 2366.25, Crude oil futures are down -0.85% at $53.59, Gold futures are down -0.23% at $1255.9, DXY is down -0.08% at 101.05, CAD/USD is up 0.26% at 0.7567.

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 midly weaker , narrow o/n range , decent volume in TY futures (335k), US 10Y 2.33 (+2bps). No reaction  to stronger than Core Euro bonds weaker as well, yields 1-2 bps higher, 10Y bund 0.198%. French yields lower for a fourth day, poll suggest Le Pen is lagging.  The latest CFTC COT report for Feb 21stshowed large specs adding to net shorts in FF and Edlrs, while paring net shorts in the 10Y note by 39k to -302k (from record short -395k week of Jan 13th). GOCs weaker, outperforming tsys out to ten yrs, longs lagging on the GOC curve for a third day, 10s30s 72.2. Provis unch from Friday – spds closing 1-2bps tighter on the week. Corps on the back foot as well for change, weighed by fin’ls despite stonger earnings from RY (stock -1.7%) and CM (stock -0.69%). BCE new issue (7s & longs) closed 2 wider as well after tightening 3-4bps on the break.

News headlines

Politics Reigns as French Bonds Gain, Pound Slips: Markets Wrap (Bloomberg) Politics deepened its hold on markets, after French electoral polls boosted the country’s bonds and reports of a potential Scottish independence referendum sank the British pound. The dollar was little changed before a key speech from U.S. President Donald Trump.

Oil gains as bullish bets on rising prices hit record high (Reuters) Oil prices rose on Monday as investors showed record confidence in prices rising further, though gains were capped by the prospect of faster growth in U.S. oil production. Brent crude oil LCOc1 rose 52 cents to $56.51 a barrel by 1224 GMT, while U.S. West Texas Intermediate CLc1 added 42 cents to $54.41.

China FX regulator says strengthening supervision of forex market (Reuters) China’s foreign exchange regulator said on Monday that it will strengthen supervision of the forex market in 2017, while improving policy transparency and promoting the further opening of financial markets. Chinese authorities have taken a raft of steps in recent months to curb capital flight from the country to support the weakening yuan currency, while trying to attract more foreign investment.

LSE scuppers Deutsche Boerse merger hopes by rejecting EU demand (Reuters) The London Stock Exchange (LSE.L) has all but ended a planned merger with Deutsche Boerse (DB1Gn.DE) to create Europe’s biggest stock exchange by ruling out a European antitrust demand, saying it has strong prospects alone. In a bid to create a European trading powerhouse that would better compete against U.S. rivals making inroads on their home turf, the two exchanges struck a 29 billion euro ($30.1 billion) deal just over a year ago.

Trillions of Dollars on the Line When Trump Speaks to Congress This Week (Bloomberg) Donald Trump’s address to Congress on Tuesday is taking on the importance of a State of the Union speech when it comes to U.S. financial markets. For investors relying on more than a year of campaign promises of a pro-growth agenda to push U.S. stocks to record highs, the dollar surging and bond yields climbing, the prime-time speech to House and Senate lawmakers couldn’t come any sooner.

Foreigners’ Bets on Canada’s Housing Market Start With Its Banks (Bloomberg) One puzzle around the run-up in Canadian home prices is the extent to which foreign money is the driver. The idea is that rich people from places like China are buying up homes as an investment with no intention of ever living in Canada, pushing up the cost of housing for every one else.

Overnight markets 

Overview: US 10yr note futures are down -0.124% at 125-15, S&P 500 futures are down -0.02% at 2364.5, Crude oil futures are up 0.89% at $54.47, Gold futures are down -0.13% at $1256.7, DXY is down -0.09% at 101, CAD/USD is up 0.12% at 0.7629.

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