Market Update

Rates trading weaker, lower half of modest overnight range. Relative quiet with ongoing risk-on mood after US President Trump promised new tax measures Thursday. US Treasuries prices open NY weaker after overnight two-way flows. Trump/Japanese PM Abe joint news conference at 1pm ET. The Organization of Petroleum Exporting Countries (OPEC) has received an early and key endorsement of its effort to reduce the global oversupply of oil.International Energy Agency said OPEC had achieved 90% compliance with its agreement last year to lower production, best compliance in its history with respect to an agreement to curb production. Saudi Arabia appeared to cut more than was agreed on at the meeting with some key non-OPEC members in November.

News headlines 

Stock futures edge up after Wall St. hits record high (Reuters) U.S. stock index futures were slightly higher on Friday, a day after Wall Street hit record high on President Donald Trump’s promise to unveil a tax reform plan in the coming weeks. Trump called the tax plan as « phenomenal », but offered no specifics other than citing the need to lower tax burden on businesses.

Oil rises on signs of record compliance with OPEC output deal (Reuters) An OPEC-led production cut may well be accelerating a drawdown in global oil stocks that began last year, but implementing the reduction for just six months means the producer group will fall short of achieving its objective of rebalancing the market.

Euro zone, IMF agree on a common stance on Greece: official (Reuters) Euro zone lenders and the International Monetary Fund have reached agreed between themselves to present a common stance to Greece later on Friday in talks on reforms and the fiscal path Athens must take, euro zone officials said. Such a united stance would be a breakthrough because the two groups have differed for months on the size of the primary surplus Greece should reach in 2018 and maintain for years later as well as the issue of debt relief.

UK manufacturing jump shows economy ended 2016 strongly despite Brexit vote (Reuters) British manufacturing grew more strongly than expected in December, showing the economy remained resilient to the end of the year despite June’s Brexit vote shock, although 2017 looks likely to be more difficult. Official data released on Friday also showed the country’s smaller construction sector grew more quickly in December than many economists had forecast, while the trade deficit narrowed.

OpenText has been on a US$3 billion buying spree, and its CEO says it’s not done yet (Financial Post) Canada’s largest software company expects to get even bigger. Waterloo, Ont.-based Open Text Corp. has spent almost US$3 billion on acquisitions over the past three years, including its recently-closed purchase of Dell EMC’s enterprise content division. It was the company’s largest purchase, at US$1.62 billion, and it made OpenText the world’s largest vendor of software that helps businesses organize and store their documents.

Suncor says building delays behind cost hikes at Fort Hills oil sands (TheGlobeAndMAil) Suncor Energy Inc. is blaming construction delays and design changes for cost increases at its Fort Hills oil sands mine as the project nears completion amid uncertain oil markets. Suncor said the price tag for the sprawling Northern Alberta project now stands between $16.5-billion and $17-billion, up from $15.1-billion previously, after work on the project was halted for about a month during last year’s wildfires.

Overnight markets 

Overview: US 10yr note futures are down -0.1876% at 124-22, S&P 500 futures are up 0.13% at 2307.25, Crude oil futures are up 1.49% at $53.79, Gold futures are down -0.65% at $1228.8, DXY is up 0.24% at 100.89, CAD/USD is down -0.51% at 0.7645.

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 lower, curve steeper 10Y 2.352% (+3.2bps) reversing most of Wed rally on light volume  in TY futures.  A large bearish bet in Eurodollar options betting on a more aggressive Fed next year , four rate hikes by June 18. European yields higher, 10y gilt yield higher for the first day in six, risk on as peripheral yields decline except for Greece where 2Y yields are 67 bps higher @9.91%. US auctions $15bln in 30Y bonds at 1pm with the WI @ 2.975. GOCs lower in line with tsys, little reaction to lower New Housing data for Dec. Provis starting unch, Quebec 27 still rumoured,also NB after budget yest.

News headlines 

Europe Stocks Rise on Earnings, French Bonds Gain: Markets Wrap (Bloomberg) Positive momentum from earnings filtered through stocks after Societe Generale SA beat estimates, while Treasuries fell with German bunds and the debt of France and Italy gained amid ebbing political risk. Banks paced gains as the Stoxx Europe 600 Index rose for a third day. Societe Generale benefited from consumer banking, offering relief to lenders that have been dragged lower by anxiety over looming elections. Treasuries halted the longest stretch of gains since the weeks before June’s Brexit vote while bonds of peripheral countries and France rebounded. Gold backed off its highest level since November.

Oil up on U.S. gasoline stocks, but market bloated (Reuters) Oil prices rose on Thursday, supported by an unexpected draw in U.S. gasoline inventories, although bloated crude supplies meant that fuel markets remain under pressure. Benchmark Brent crude LCOc1 was up 50 cents a barrel at $55.62 per barrel by 1130 GMT. U.S. light crude CLc1 was 50 cents higher at $52.84 a barrel.

Germany’s 2016 trade surplus sets record, may fuel U.S. tensions (Reuters) Germany’s trade surplus climbed to a record high in 2016, official data showed on Thursday, days after U.S. President Donald Trump’s top trade adviser accused Berlin of exploiting a « grossly undervalued » euro to its advantage. The surplus is likely to worsen tension between Washington and Berlin, which is trying to safeguard global free trade this year during its presidency of the Group of 20 leading economies, adopting the motto « Shaping an Interconnected World ».

U.S. to sell 10 mln barrels of SPR oil in Feb -Energy Dept (Reuters) The U.S. Energy Department said on Wednesday it will sell 10 million barrels of oil from the government’s emergency crude reserve in late February. The sale from the Strategic Petroleum Reserve (SPR) was required by a law passed last year as a way to help increase funding for medical research. The law mandated sales of 25 million barrels from the SPR over three years, starting with the sale of 10 million barrels this year.

Freeland talks tough on trade with Trump team (TheGlobeAndMail) Foreign Affairs Minister Chrystia Freeland has warned the Trump administration that Ottawa is ready to retaliate if the new President imposes tariffs at the border, potentially sparking a trade war between Canada and its largest trading partner.

Telus profit misses as it pays more to win wireless customers (Reuters) Telus Corp, one of Canada’s three big telecom providers, reported a smaller-than-expected quarterly profit on Thursday as operating expenses rose and it spent more to attract wireless customers. The company said it expects 2017 revenue to grow by 2.5-3.5 percent.

Overnight markets 

Overview: US 10yr note futures are down -0.0997% at 125-8, S&P 500 futures are up 0.12% at 2293, Crude oil futures are up 0.99% at $52.86, Gold futures are up 0.21% at $1242.1, DXY is down -0.07% at 100.21, CAD/USD is down -0.26% at 0.7628.

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