Commentaires

Market Update

US tsys trading higher, yields 1-2 bps lower with longs lagging on the curve & the US 10Y 2.474 (-2bps). Prices off the highs after Feb Phili Fed surged to 43 vs 18 exp., thou Housing Starts were weaker -2.6% vs unch exp. European govt bonds higher, big rally in peripherals led by Spain &Portugal after ECB said in its minutes that ‘limited deviations from capital key were possible and inevitable’. Fed Fischer said the central bank is close to achieving its dual goals repeating Yellen’s view. FRBNY Pres Dudley said removal of accommodation is warranted if the economy evolves as anticipated. GOCs higher in line with tsys, 10Y 1.761%. 5Y benchmark has switched to the March 22s trading 1.194% with the roll (M22/S21) continuing to come in now 4.9 bid from 5.2 at auction yest.  As we noted the 5Y auction was very well received despite a the roll being a full bp flatter on the week. We would highlight the attractiveness of the June 22/5Y roll  which has barely budged at ~5.4bps. Provis opening unch after closing 0.5bps tighter yest  with 10Y Ontario back to the tights of Dec @ 76.5. Expect supply today, Alberta in the mkt with a new 11/15/21 GBP benchmark. CMB 10Y & 5Y FRN yest unch from new issue levels, WI 27 47.5/46.5., CMB 3/15/22 FRN CDOR + 14.5 mid. Enercare (DBRS:BBB) priced $275mm in 5Ys @ 215 OTC (214.8 vs 0.5 3/22) & $225mm 7Ys @ 245 (253 vs 1.5 6/23) – both upsized and a the tighter end of guidance. Both tranches ~15 bps tighter on the break. Enercare’s recent acquisition of Service Experts in the US broadened its reach, and at the same time the firm has increased its focus on the more lucrative rental mkt which has a 2.5x long term EBITDA impact vs outright water heater sales.  Ford Cda (BBB/BBB) issued $750mm 5s @ 147.9 which came in 5bps on the break. This morning Brookfield Infrastructure Partners (S&P BBB+) in the mkt with a 7Y @ 185 +/-5 bps. We had the BIP curve at ~6bps/yr which would value new 7Y closer to 175. So this looks like a decent NIC.

News headlines 

World stocks ride to record high, dollar retreats (Reuters) World stocks hit an all time high on Thursday as the latest round of robust global data matched hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus. MSCI’s All Country World index, which spans 46 countries, notched the milestone as Wall Street hit its latest record and Asia and Europe consolidated the roughly 10 percent gains both have made since mid-December.

Oil rises after news OPEC could extend output cuts (Reuters) Oil prices rose on Thursday after OPEC sources said the group could extend its oil supply-reduction pact with non-members and might even apply deeper cuts if global crude inventories failed to drop to a targeted level.

BOJ’s Kuroda warns low rates may sow seeds of new financial crisis (Reuters) Bank of Japan Governor Haruhiko Kuroda said low profitability at financial institutions could sow the seeds of a new financial crisis, offering his strongest warning to date of the demerits of aggressive monetary easing pursued by major central banks.

Aussie Unemployment Rate Falls Despite Full-Time Jobs Plunge (Bloomberg) Australia’s labor market is sending mixed signals following lackluster hiring last year, when full-time jobs virtually stagnated as gains were primarily part-time. The unemployment rate held below 6 percent partly due to discouraged job-seekers giving up the hunt, underscoring spare capacity in the labor market.

Canada, United States will focus on bilateral NAFTA negotiations (TheGlobeandMail) Canada and the United States will focus on bilateral negotiations as part of President Donald Trump’s pledge to tweak the North American free-trade deal that governs Canadian commerce, leaving Mexico essentially to fend for itself.

Trudeau Says EU Must Spread Trade’s Benefits or Risk Its Decline (Bloomberg) The trade pact between Canada and the European Union approved this week could be one of the world’s last multilateral trade deals unless policy makers share the benefits more widely, Canadian Prime Minister Justin Trudeau told European lawmakers.

Bombardier revenue misses on weak demand for trains, business jets (Reuters) Canadian plane and train maker Bombardier Inc (BBDb.TO) reported lower-than-expected revenue, hurt by weak demand in its rail and business aircraft units. The company said revenue in the business aircraft division, which makes the Learjet, Global and Challenger business jets, fell 20.9 percent to $1.65 billion in the fourth quarter.

Overnight markets 

Overview: US 10yr note futures are up 0.1134% at 124-4, S&P 500 futures are down -0.16% at 2346.75, Crude oil futures are up 0.53% at $53.39, Gold futures are up 0.5% at $1239.3, DXY is down -0.45% at 100.72, CAD/USD is down -0.31% at 0.7667.

US Economic Data

Canadian Economic Data

There is no major economic news 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

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