Commentaires

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

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