Commentaires

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

Market Update

Us tsys higher, yields 2-3bps lower led by the 7Y , picking up on strength in EGBs. Core Europeanbonds aharply higher, flatter , German 10Y 0.30% at one month low. Stop loss buying in binds, dovish comments from ECB Weidmann who said ECB was in no rush to end its accomodative policy.. Demand for shorter term bunds driven by FTQ bid all week ahead of French election, Greece . France/German 10Y spread continues to widen on uncertainy, with supply also weighing as Finland expected to launch 5 & 30Y dual tranche issue.  GOCs higher in line with tsys led by 10Y below 1.65%, 2s10s 3bps flatter. Provis well bid despite lower all in yields , Quebec, MP rumoured as potential issuers after Ontario 10Y on Monday @ 68.5 (69/68). BOC auctions $400mln in RRB 1.25 Dec 47s at noon. Long term breakevens have rallied since the US election ~30bos yet are 10bps off the highs of early Jan. Carry is negaive due to weak Dec CPI yet should improve markedly next month.

News headlines 

Earnings Buoy Stocks as Peripheral Bonds Recover: Markets Wrap (Bloomberg) European stocks got a boost from earnings pointing to improving corporate and economic health, while bonds from Italy to France recovered as attention was diverted away from political risk.

Oil prices fall on bloated U.S. fuel inventories, stalling China demand (Reuters) Oil prices slid on Wednesday to extend falls from the previous session, as a big increase in U.S. crude inventories and a slump in Chinese demand implied that global oil markets remain oversupplied despite OPEC-led efforts to cut output.

OECD flags growth pick-up in U.S., Japan, Germany, France (Reuters) Economic growth appears to be picking up in the United States, Japan, Germany and France, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday.

Greece Hits Back Against IMF as Bond Market Remains Spooked (Bloomberg) Greece pushed back against the International Monetary Fund’s view that the government’s economic reforms are heading off track. In official responses, published with an IMF report on Greece late Tuesday, Finance Minister Euclid Tsakalotos said the fund’s assessment was not based on recent evidence, while Bank of Greece governor Yannis Stournaras said it downplayed progress on the financial sector and was unduly pessimistic.

Political risks weigh on euro, yen gains (Reuters) The euro fell another third of a percent against the dollar on Wednesday, as concerns around a resurgence in political risk to the single currency project drove its worst run of daily losses in almost two months.

Canada Pledges $282 Million in Aid for Bombardier’s Marquee Jets (Bloomberg) Canada’s government will provide C$372.5 million ($282 million) in support for Bombardier Inc. to help fund two jet programs including the C Series, the single-aisle plane that competes with Boeing Co. and Airbus Group SE products.

Japan’s Abe hopes promises on jobs, defense will temper Trump’s tone on trade (Reuters) Prime Minister Shinzo Abe heads to Washington on Thursday hoping promises to help create U.S. jobs and bolster Japan’s military will persuade U.S. President Donald Trump to turn down the heat on trade and currency and stand by the decades-old alliance.

Overnight markets 

Overview: US 10yr note futures are up 0.1249% at 125-9, S&P 500 futures are down -0.12% at 2285.75, Crude oil futures are down -0.88% at $51.71, Gold futures are up 0.36% at $1240.5, DXY is up 0.11% at 100.37, CAD/USD is down -0.28% at 0.7605.

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 reversing earlier gains, trading near the lows, US 10Y 2.43 (+2.4bps), pre auction shorts going into 1PM $24bln 3Y auction.  European govt bonds mixed,  bunds lower despite very weak Dec Ind Prod (-3.0% vs 0.3% exp). Gilts lower, disappointing BRC retail sales, short end underperforming in weak 2019 Gilt reopening. Greece wider, 2Y approaching 10%  on ongoing tensions with EU over bailout targets. In Canada, GOCs lower, slightly underperforming as the curve steepens , 10Y 1.72%. Trade surplus showed surprising strength for the second month in a row, $923mln in Dec after $1.01bln (revised higher) in Nov. Energy exports surged 16% on rising WTI yet non energy exports were down 5.2% which is sure to attract attention from the BOC. Provis openign unch, Ontario issued a new 10Y bond yest  – $1bln June 27s @ 78.5 over the current 10Y which looked expensive @ 7.7 vs Ont 26s, the roll widening to 8.3/8.0 this morn.

News headlines 

Dollar Jumps, Gold Falls as Demand for Havens Ebbs: Markets Wrap (Bloomberg) The dollar strengthened against all of its major peers on the prospect of a U.S. interest rate increase as soon as March. Weakness in the euro helped European stocks shrug off some disappointing corporate results. The Bloomberg Dollar Spot Index rose the most in almost two weeks after a member of the Federal Reserve indicated the first rate increase of Donald Trump’s presidency remains “on the table” this quarter. Europe’s main equities gauge rose even as bellwethers BP Plc and BNP Paribas SA reported earnings that missed estimates. Gold slipped from the highest since November.

China Jan FX reserves fall below $3 trillion for first time in nearly 6 years (Reuters) China’s foreign exchange reserves unexpectedly fell below the closely watched $3 trillion level in January for the first time in nearly six years, though tighter regulatory curbs appeared to making some progress in slowing capital outflows. China has taken a raft of steps in recent months to make it harder to move money out of the country and reassert a firmer grip on its faltering currency, even as U.S. President Donald Trump steps up accusations that Beijing is keeping the yuan too cheap.

IMF says Greece should meet lower fiscal surplus target (Reuters) The International Monetary Fund said on Monday that Greece’s economy would only grow by just under 1.0 percent in the long run given the constraints of its bailout program, but should meet the fiscal surplus target preferred by most IMF directors. In its annual review of Greece’s economic policies, the IMF said most of its board directors favor a Greek fiscal surplus target of 1.5 percent of gross domestic product by 2018, while some directors favor the higher 3.5 percent target sought by Greece’s European lender group.

OPEC Output Cuts End Big Oil’s Trading Bonanza (Bloomberg) The oil-trading boom that cushioned the profits of Royal Dutch Shell Plc and BP Plc through the price slump of 2015 and early 2016 is over. BP said on Tuesday it made a « small » loss trading oil in the fourth quarter, while Shell last week said trading profits « flattened » in late 2016. The fall off in trading contributed to worse-than-expected fourth-quarter profits at Europe’s largest oil and gas producers.

Goldman Sachs Economists Are Starting to Worry About President Trump (Bloomberg) Just a few weeks ago, Wall Street analysts were busy boosting their economic forecasts on the expectation that President Trump would implement sweeping corporate-tax reform, a rollback of regulations, and new fiscal stimulus. Two weeks into his term and the president has been focused primarily on immigration and trade, causing a reevaluation among analysts at some banks that harks back to pre-election concerns about Trump’s uncertain effect on markets and U.S. economic growth.

Trump’s Dodd-Frank Do-Over Diverted to Slow Lane With Obamacare (Bloomberg) President Donald Trump’s pledge to dismantle the Dodd-Frank financial overhaul is colliding with the same reality as his pledge to gut Obamacare: The Republican majority in Congress can’t decide how to make it happen and Democrats are vowing to fight.

Overnight markets 

Overview: US 10yr note futures are down -0.075% at 124-27, S&P 500 futures are up 0.24% at 2292, Crude oil futures are down -0.66% at $52.66, Gold futures are down -0.19% at $1229.8, DXY is up 0.72% at 100.63, CAD/USD is up 0.63% at 0.7595.

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