Commentaires

Market Update

US tsys opening weaker,US 10Y above 2.50% with prices accelerating downwards after 8:30 data : CPI came in double exp , the largest m/m increase since Feb 2013 at 0.6% vs 0.3% exp. Empire also much stronger 18.7 vs 7.0  – prices paid rose to 37.8 the highest since May 2012. Retail Sales 0.4% vs 0.1% – broad based advance as ex-auto sales were up 0.8% vs 0.4%. EGBs lower, gilts outperforming as UK labor data mixed with Jan weekly earnings dropping to 2.6% from 2.8% but employment coming in 37k vs 22k exp. UK infl linkers underperforming after weak 10Y IL gilt reopening drew lower bid-cover 1.88 vs 2.09 prev. GOCs lower , spds ~1bp tighter vs tsys  , Manufacturing Sales rose 2.3% in Dec vs 0.3% exp the largest gain since March 2015 – another strong month esp with Nov revised higher to 2.3% vs 1.5%. Provis trading up this morning after closing 1.5bps tighter yest. CMB 10Y & 5Y FRN this morning, 10Y WI 47.5 bid.

News headlines 

World stocks head towards record high on Yellen, U.S. outlook (Reuters) World stocks rose to a whisker off all-time highs on Wednesday and the dollar rose for the 11th straight day following Federal Reserve Chair Janet Yellen’s flagging of a possible interest rate rise next month.

Milestones on the oil market’s road to rebalancing (Reuters) Crude oil stockpiles are expected to empty significantly during the third quarter as continued production restraint from OPEC interacts with the seasonal increase in consumption. OPEC and non-OPEC countries are committed to reducing production by an average of nearly 1.8 million barrels per day in the first six months of 2017, with an option to extend cuts for a further six months.

EU-Canada Trade Agreement Wins European Parliament Green Light (Bloomberg) The European Parliament approved a landmark free-trade agreement with Canada, shoring up Europe’s market-opening clout in the face of a populist surge across the continent and U.S. President Donald Trump’s protectionist tilt.

UK wage growth slows in late 2016, employment picks up (Reuters) British workers saw their pay grow more slowly than expected at the end of last year, official data showed on Wednesday, ahead of a likely squeeze on their living standards from higher inflation in 2017.

China Mulls Resuming Coal Output Curbs for Six Months (Bloomberg) China, the world’s biggest producer and consumer of coal, is considering reinstating output restrictions to avoid the return of a glut after easing limits during winter. Shares in the country’s coal miners jumped along with futures prices.

Air Canada’s Plan of Attack Flies Over America (Bloomberg) When it comes to maintaining domestic air superiority, U.S. carriers have been shaking their fists at Persian Gulf airlines that have rapidly increased their American presence. Yet there’s another threat that may be growing in their own backyard—or more precisely, just north of it.

Overnight markets 

Overview: US 10yr note futures are down -0.3396% at 123-26, S&P 500 futures are down -0.21% at 2332, Crude oil futures are down -0.53% at $52.92, Gold futures are down -0.61% at $1217.9, DXY is up 0.48% at 101.74, CAD/USD is up 0.31% at 0.7626.

 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

US tsys slightly lower, 10Y 2.44% , little reaction to stronger than exp PPI. Mkt awaits 10am Fed Yellen semi annual testimony.  Narrow three tick range in Ty1 on low volume (250k). Last nite Dallas Fed Kaplan advocated removing accommodation sooner rather than later as well as reducing the size of the Fed’s balance sheet. Data out of China reinforced bearish bias – new credit rose to a record 2.74trln yuan in Jan vs 3trln exp.  Crude 1.0% higher at 53.40, the USD is lower for the first day in ten, marginally thou.  Gilts trading lower following mixed inflation data – CPI 1.8% in Jan from 1.6% but lower than 1.9% exp. Yellen expected to convey the view the US economy remains strong, inflation close to Fed’s 2.0% goals yet slack remains. The mkt will be closely watching for clues regarding a near term rate hike in March. GOCs lower in line with tsys, Shaw in the mkt with a #300mln 10Y deal ~198 bps. Quiet in provis, CMB 10Y deal expected.

News headlines 

Stocks, Dollar Falter as Investors Await Yellen: Markets Wrap (Bloomberg) A global rally that sent U.S. benchmarks surging to a fresh round of records stalled as markets turned their attention to Janet Yellen for clues on how quickly she’ll tighten monetary policy amid expected pro-growth measures by the White House. Treasuries steadied.

Oil rises as OPEC-led output cuts trim oversupply (Reuters) Oil strengthened slightly on Tuesday, supported by an OPEC-led effort to cut output while rising production elsewhere kept prices within the narrow ranges that have contained them so far this year. Brent crude LCOc1 was 55 cents higher at $56.14 a barrel by 1220 GMT. U.S. light crude oil CLc1 was up 45 cents at $53.38.

Fed has limited view on Trump economic policies as Yellen heads to Congress (Reuters) Federal Reserve Chair Janet Yellen goes to Congress on Tuesday for the first time since Republicans took control of the White House and both houses of the legislature with less clarity on the direction of U.S. economic policy than at any time of her three-year tenure.

China Factory Prices Surge Most Since 2011, Boosting Reflation (Bloomberg) China’s producer prices increased the most since 2011, with the world’s biggest exporter further lifting the outlook for global inflation.

Euro zone Q4 growth revised down to 0.4 pct, Dec industry output drops (Reuters) The euro zone economy grew less than initially estimated in the last quarter of last year as industrial output recorded the worst fall in more than 4 years in December, estimates from the European Union’s statistics office Eurostat showed on Tuesday.

Nafta ‘Tweak’ Aside, Trudeau Gets What He Wants From Trump Visit (Bloomberg) As Justin Trudeau praised U.S. ties in his debut remarks at Donald Trump’s White House, the Canadian prime minister’s top diplomat nodded along in the front row with barely a glance at her boss.

Overnight markets 

Overview: US 10yr note futures are down -0.0125% at 124-19, S&P 500 futures are down -0.02% at 2325.75, Crude oil futures are up 0.55% at $53.22, Gold futures are up 0.76% at $1235.1, DXY is down -0.14% at 100.82, CAD/USD is down -0.3% at 0.7673.

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

US tsys opening NY trading weaker, curve steeper with the 10Y note 2.44 (+3.4bps) . Nothing on the calendar today, mkt awaits Yellen semi-annual testimony tomorrow, PPI & CPI as well. JGBs lower, Japan Q4 GDP rose for the fourth straight quarter @ 1.0% ann., less than forecast (1.1%).  UK gilts, bunds weaker, peripheral spreads doing better. GOCs weaker, unch vs tsys for the most part . UK gilts, German bunds weaker, peripheral spreads doing better, also EGB supply from Austria & Italy weighing. Bloomberg highlighted Japan selling of treasuries in an article on Sunday, saying holdings declined by the most in four years in Dec.  The latest CFTC  COT report showed large specs covering shorts in 5s& 10s in the week ended last Tuesday , which covered Jan payrolls which showed the smallest increase in AHE since last August.

News headlines 

Global Stocks Keep Climbing as Treasuries Decline: Markets Wrap (Bloomberg) Rumors of the reflation trade’s demise seem to have been at least a little exaggerated, as investors shifted to equities from bonds. Global stocks continued a rally before data this week provides detail on the strength of U.S. consumer prices, and ahead of speeches from a range of Federal Reserve officials. Treasuries fell after data showed America’s biggest creditors ditching holdings. Iron ore surged and copper climbed, buoying commodity producers.

Oil falls on rise in U.S. drilling, selling ahead of OPEC report (Reuters) Oil prices fell nearly one percent on Monday in response to growing evidence that U.S. production is rising and as some investors unwound positions ahead of OPEC’s first report on compliance with its deal to cut production. Global benchmark Brent crude futures were down 45 cents at $56.25 a barrel at 0947 GMT and touched a session low of $56.04 a barrel. West Texas Intermediate (WTI) crude futures were down 41 cents at $53.45 a barrel and traded as low as $53.86 earlier in the day.

Saudi Arabia Tells OPEC It Cut Oil Output by Most in 8 Years (Bloomberg) Saudi Arabia told OPEC that it cut oil production by the most in more than eight years, going beyond its obligations under a deal to balance world markets. The kingdom reported that it reduced output by 717,600 barrels a day last month to 9.748 million a day, according to a monthly report from the Organization of Petroleum Exporting Countries. The group’s own analysts, who compile data from external sources, estimated that Saudi Arabia made a smaller 496,000 barrel-a-day cut — in line with last year’s supply agreement.

Dollar hits two-week high after U.S.-Japan meeting (Reuters) The dollar hit a two-week high against the yen on Monday as investors focused again on the U.S. reflation trade which dominated the aftermath of Donald Trump’s election in November but has stalled this year. All eyes are fixed on testimony by Federal Reserve chief Janet Yellen this week after signs that other policymakers at the U.S. central bank are leaning towards more hikes in interest rates this year than the two currently priced in by markets.

Trudeau visits U.S. with two aims: Push trade, avoid Trump’s ire (Reuters) When Canadian Prime Minister Justin Trudeau visits U.S. President Donald Trump on Monday, he will look to nurture economic ties while avoiding tensions over issues such as immigration on which the two are sharply at odds. Trudeau has taken a low-key approach toward Trump, a Republican who campaigned on a pledge to toughen U.S. immigration policies and renegotiate the North American Free Trade Agreement among Canada, the United States and Mexico.

Japan’s economy slows in Q4 on flat spending (Market Watch) Japan’s economy slowed again in the final quarter of 2016 as feeble spending by consumers took the shine off a pickup in exports and business investment, leaving growth lagging behind the pace targeted by Prime Minister Shinzo Abe’s administration. Japan’s real gross domestic product grew 1.0% on an annualized basis in the three months through December for the fourth consecutive quarter of expansion, the longest stretch of gains since 2013, according to Cabinet Office data released Monday. The expansion was slightly smaller than a forecast for 1.1% growth by economists surveyed by The Wall Street Journal.

Overnight markets 

Overview: US 10yr note futures are down -0.2129% at 124-17, S&P 500 futures are up 0.19% at 2317.25, Crude oil futures are down -0.74% at $53.46, Gold futures are down -0.7% at $1227.3, DXY is up 0.05% at 100.85, CAD/USD is up 0.16% at 0.7631.

US Economic Data

There is no major economic data release for today.

Canadian Economic Data

There is no major economic data release for today.

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