Commentaires

Market Update

US tsys shooting higher after stronger headline employment (227k vs 180k) yet weaker AHE with downward revision, , 10Y 2.45% (-3bps).  Quiet overnight session with mkts awaiting payrolls, Reaction in tsys was muted in Asia despite the PBOC tightening monetary policy in a surprise move. The JPY and JGBs were volatile as the BOJ stepped in to buy to control rising yields, having to step in twice as the first operation failed to stem the decline in JGB prices forcing the BOJ to pay thru the offered side for bonds. Euro govt bonds lower, peripheral yields higher, the bund curve continuing to bear steepen on concerns of rising inflation – Eurozone inflation rose to the highest in four years in Jan to 1.8% as measured by the MUICP flash estimate. GOCs higher post US payrolls. Two year Cda auction yest, new May 19s went well, the WI/2Y roll 0.2bps narrower @ 5.6bps – still looks cheap to us. Provis grinding tighter basically all week, Ont 26s trading up at 78 – no domestic supply and a well received 5Y global adding to positive momentum in Ont spds.

News headlines 

Dollar Advances With Stocks Before Payrolls Data: Market Wrap (Bloomberg) The dollar climbed and European stocks gained before a report economists forecast will show employment growth in the U.S. expanded at a faster pace in January. Bonds in Europe slid, while oil advanced. Bloomberg’s Dollar Spot Index rose, paring a sixth weekly decline, its longest losing streak since 2010. Europe’s Stoxx 600 index advanced and the region’s bonds dropped. Britain’s pound dropped against most of its major peers after growth slowed in the service industry amid surging costs.

China raises short-term interest rates in fresh tightening signal (Reuters) China’s central bank surprised financial markets on Friday by raising short-term interest rates on the first day back from a long holiday, in a further sign that it is slowly moving to a tighter policy bias as the economy shows signs of steadying. The People’s Bank of China (PBOC) said it raised the interest rate on open market operation reverse repurchase agreements (repos) by 10 basis points, effective on Feb. 3.

Oil pushes higher on worries over new U.S. sanctions on Iran (Reuters) Oil prices edged higher on Friday in response to the possibility of new sanctions on Iran after U.S. President Donald Trump said « nothing is off the table » in dealing with the country after its test launch of a missile.

Euro may be too weak for Germany but too strong for others (Reuters) In an attack on Germany, U.S. President Donald Trump’s top trade adviser said the euro was « grossly undervalued », a charge which may ring true for the German economy but not for the 19-member currency zone as a whole.

Gold Demand Rises to Three-Year High on Political Upheaval (Bloomberg) Gold demand rebounded to a three-year high in 2016 as investor concerns over political issues including Brexit spurred demand for a haven. Purchases through exchange-traded funds helped global demand climb about 2 percent to 4,309 metric tons last year, the World Gold Council said in a report Friday. The recovery in ETFs offset a decline in coin and jewelry demand and reduced buying by central banks.

Pound Falls as Services PMI Shows Loss of Momentum in Economy (Bloomberg) The pound extended its first weekly loss since early January after data showed that the services sector, one of the main engines of the British economy, is growing at a slower pace than expected.

Trump’s call to speed up NAFTA talks puts Canada on guard (GlobeandMail) U.S. President Donald Trump announced he wants to “speed up” renegotiation of NAFTA, an accelerated approach that could ramp up the bargaining pressure on Canada as the country tries to find a way to emerge unscathed from a rewriting of the rules of commerce with its largest trading partner.

Overnight markets 

Overview: US 10yr note futures are up 0.2764% at 124-23, S&P 500 futures are up 0.4% at 2284.5, Crude oil futures are up 0.45% at $53.78, Gold futures are down -0.28% at $1216, DXY is up 0.17% at 99.962, CAD/USD is down -0.05% at 0.7681.

US Economic Data 

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

Market Update

US tsys trading higher, yields ~3bps lower, 10Y 2.44%.  Euro govt bonds sharply higher led by 10Y gilts 8bps lower @ 1.36% after the BOE voted to leave rates unch, upgraded its forecast for growth for the second time since Brexit and now sees inflation above the 2.0% target sooner than in its Nov forecast. EGBS, tsys benefitting from dovish FOMC yest & FTQ bid after latest Trump tweets on Iran.  Yesterday saw tsy prices rally after the FOMC statement with few substantive changes thou the Fed did mention that inflation ‘will rise to 2% instead of is ‘expected to rise…” The Fed decided to ignore the upward trend in survey based expectations of inflation as measured by 10Y TIPs as market based indicators such as core PCE & CPI are well below the Fed’s 2.0% target. Importantly there was no mention of reduction in the balance sheet, the statement reiterating existing policy to reinvest principal from its agency & tsy holdings. GOCs higher, curve 1.5bps flatter led by 10Y @1.73%, with the BOC scheduled to auction $3.9bln in new 2Y May 19s at noon. The WI roll is quoted at 5.9/5.8 (vs Feb 19s) which implies a yield of ~0.818% and represents 18.5% of the 2s/5s curve and is consistent with  the ~2.3bp steepening in the benchmark 2Y roll (Feb19/Nov18) since the last auction on Jan 11th. Yet viewed against a 2s/5s curve which has narrowed 2 bps since the last 2Y auction the WI & benchmark 2Y rolls would appear attractive. Provis well bid, Ont 26s trading up at 76.5 – the province’s borrowing program for the current FY is complete after yest $2.5bln USD 5Y deal. Quebec/Ont 10Y spd steady at 2bps.

News headlines 

Dollar Falls as Fed Path Assessed; Stocks Retreat: Markets Wrap (Bloomberg) The dollar slumped against most of its major peers after the Federal Reserve gave dollar bulls little to be optimistic about after the worst January in 30 years. Global equities slid as investors scrutinized mixed earnings from corporate heavyweights.

BOE Sees Stronger Growth as Some Officials Flag Inflation Unease (Bloomberg) The Bank of England upgraded its forecasts for the economy for the second time since the Brexit vote and revealed that some policy makers have become more concerned about accelerating inflation.

Oil up as OPEC cuts outweigh rise in U.S. stocks (Reuters) Oil prices rose on Thursday as evidence that OPEC and other big exporters were cutting production outweighed a sharp rise in U.S. crude and gasoline stockpiles. Brent crude was up 50 cents at $57.30 a barrel by 1145 GMT after settling up $1.22 in the previous session. U.S. light crude gained 30 cents to $54.18 after climbing by $1.07 on Wednesday.

Yellen Eyes Commercial Real-Estate Froth as Fed Weighs ’17 Risks (Bloomberg) A decade after the U.S. housing market collapsed, Federal Reserve officials are watching rising apartment towers as the next potential asset-price bubble, which could add to the debate about the pace of interest-rate hikes this year.

Quebec regulator floats binary-option ban, citing rampant scams (TheGlobeandMail) Quebec’s securities regulator is proposing to ban the sale of short-term binary options to the general public, saying the securities are being used in scams. The Autorité des marchés financiers said Wednesday that it is proposing an outright ban after issuing several warnings to the public about the risks of investing in binary options and seeing fraud continue to emerge.

BCE Inc hikes dividend after earnings climb 30 per cent (Financial Post) BCE Inc. says its common share dividend will be increased by 5.1 per cent this year, starting with the first quarterly payment on April 15, following an improved profit in the fourth quarter and 2016 as a whole. The Montreal-based company, which owns Bell Canada, Bell Aliant and media companies including CTV, says its net income attributable to common shareholders was $657 million in the fourth quarter or 75 cents per share.

Overnight markets 

Overview: US 10yr note futures are up 0.2262% at 124-20, S&P 500 futures are down -0.24% at 2269, Crude oil futures are up 0.45% at $54.12, Gold futures are up 1.58% at $1227.4, DXY is down -0.36% at 99.286, CAD/USD is down -0.44% at 0.7697.

US Economic Data

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

Market Update

Tsys  lower trading at the low end of o/n range , yields 2-3 bps higher 10Y 2.484%  after ADP came in +246K vs 168K exp. FOMC decision at 2pm, no change expected and there is no news conf yet statement will be closely watched for clues as to timing of future rate hikes. Core European bonds lower, pressured by rise in peripheral yields led by Spain & Italy.  GOCs lower , spds -12 bps wider vs tsys as prices react more to pressure in EU bonds. Provis  unch to start focus on Ontario 5Y global.

News headlines        

Futures rise on Apple rally; Fed meeting in focus (Reuters) U.S. stock index futures rose on Wednesday, in an upbeat start to February, buoyed by strong earnings from Apple, while investors awaited the Federal Reserve’s decision on interest rates.

Oil edges further above $55 on Russia, OPEC cuts (Reuters) Oil edged further above $55 a barrel on Wednesday supported by signs that Russia and OPEC producers are delivering on promised supply reductions, although a report showing a large rise in U.S. crude inventories limited gains.

China January factory activity expands for sixth month at modest pace but risks loom (Reuters) China’s manufacturing sector expanded for the sixth month in a row in January as the world’s second-largest economy continued to benefit from record bank lending and a construction boom.

Fed’s message on portfolio trimming: prepare, don’t fret (Reuters) Federal Reserve policymakers are putting markets on notice that the central bank’s $4.5 trillion balance sheet is back on the agenda in an apparent effort to give investors time to prepare for changes rather than to signal any action is imminent.

BoC looks to overhaul ‘off track’ forecasting tools, Poloz says (TheGlobeAndMail)  The Bank of Canada has launched a multiyear effort to overhaul the sophisticated computer models it uses to forecast the economy after they failed to foreshadow the deep and persistent aftershocks of the global financial crisis. Governor Stephen Poloz acknowledged Tuesday that its forecasting tools have been pushed “persistently off track” in the decade since the 2007-09 crisis, leading to missed targets on inflation and other indicators.

Apple defies Wall Street with strong revival in iPhone sales. (Reuters) Apple Inc reclaimed the throne as the world’s top smartphone seller for the first time in five years on Tuesday, beating out rival Samsung in units shipped for the holiday quarter and boosting revenues with a strong showing for its new, top-of-the-line iPhone 7 Plus. The iPhone sales numbers, and a profit of almost $18 billion, both handily beat Wall Street expectations, sending its shares up 3 percent in after-hours trading.

Overnight markets 

Overview: US 10yr note futures are down -0.2511% at 124-5, S&P 500 futures are up 0.26% at 2280.5, Crude oil futures are up 0.89% at $53.28, Gold futures are down -0.26% at $1208.2, DXY is up 0.24% at 99.746, CAD/USD is up 0.34% at 0.7648.

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