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Market Update

US tsys lower with the tsy curve steeper, prices off overnight price low which saw the 10Y hit 2.485%, now 2.48% (+1.5bps). Tsys weaker in Asia as risk on carried over from Tuesday & Nikkei rose 1.43% the largest rise since Jan4th. The MSCI – All Country World Index rose to the highest level since 2015 while the Euro Stoxx index is up 1.2%. German bunds lower, yields 5-6bps higher in the long end on technical selling on stop losses and as Germany prepares to sell E1bln in long bonds. GOCs lower, spds unch vs tsys, 10Y 1.788% (+3bps) 62% retrace of the Dec-Jan rally. Provis  better bid awaiting supply – Ontario is looking to reopen its global 5Y Green bond (1.95 jan 2023) after Quebec issued $2bnln USD 5Y Monday. Peripherals tighter by 1bp led by Alberta, Man. Mani 48s 104.5/ from 106 at issue yest. Quebec plans to issue a new 10Y bond – Sep 27s , we see the curve in that area as 2.5-3bps which  would put Sep 27s at 85/86 OTC.

News headlines

Earnings Feed Global Stock Rally as Bonds Retreat: Markets Wrap (Bloomberg) Stocks around the world extended a rally as corporate earnings reignited investors’ optimism in economic growth. Bonds sold off with oil. The MSCI All-Country World Index and a gauge of German stocks headed for the highest closing level since 2015 as European equities were swept up in trades favoring banks and cyclical companies as the agents of economic growth.

Oil slips on rising U.S. inventories, awaits EIA data (Reuters) Oil prices fell on Wednesday after builds in U.S. inventories reinforced expectations that increasing shale output this year would reduce the impact of production cuts by OPEC and other major exporters. Benchmark Brent crude LCOc1 was down 1 percent or 54 cents a barrel at $54.90 by 1024 GMT. U.S. light crude CLc1 was down 52 cents at $52.66.

As Ottawa and Alberta dither, Trump embraces the oilsands with Keystone XL nod (Financial Post) U.S. President Donald Trump delivered on his promise to approve the Keystone XL pipeline, signing an executive order Tuesday to advance its construction and giving Canada’s battered oilsands industry his support. “We are going to renegotiate some of the terms” of the Keystone XL project, Trump said to reporters. “And if they like (them) we will see if we can get that pipeline built – a lot of jobs, 28,000 jobs, great construction jobs.”

ECB can soon start talk of exit from stimulus: Lautenschlaeger (Financial Post) The European Central Bank could soon start planning an exit from its unprecedented stimulus program, Executive Board member Sabine Lautenschlaeger said on Tuesday, a rare public discussion of ending its asset buying scheme. A longtime critic of the ECB’s ultra-easy monetary policy, Lautenschlaeger has opposed many of the bank’s past easing measures and now becomes the only board member to publicly advocate an exit, a taboo for ECB President Mario Draghi, who has said that tapering, or winding down the 2.3 trillion euro ($2.5 trillion) program has not been discussed.

CN posts fourth-quarter gain as agriculture shipments lift freight volumes (GlobeAndMail) Canadian National Railway Co. says its fourth-quarter profit rose by 8 per cent, buoyed by rising grain and fertilizer shipments. Montreal-based CN, Canada’s largest railway, said revenue for the three months ending Dec. 31 rose by 2 per cent, driven by a 14-per-cent increase in agriculture freight and a 4-per-cent rise in automotive shipments.

Kuwait Expects Oil Output Cuts to Balance Market in Early 2017 (Bloomberg) OPEC and other oil producers are likely to comply fully with a deal to reduce supply, bringing global crude markets into balance early this year, Kuwaiti Oil Minister Essam Al-Marzouk said. Some countries have not yet made the full output reduction agreed to last month, but they will increase cuts over the coming months and all producers are “highly committed” to the deal, Al-Marzouk said Wednesday at a conference in Kuwait City.

Overnight markets 

Overview: US 10yr note futures are down -0.1635% at 124-1, S&P 500 futures are up 0.42% at 2284, Crude oil futures are down -0.6% at $52.86, Gold futures are down -0.64% at $1205.8, DXY is down -0.31% at 100.04, CAD/USD is down -0.43% at 0.7633.

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 lower, yields 2-4 bps higher led by 10s @ 2.434 (+3.4bps), curve 1.5bps steeper. Tsys pressured since Asia after Monday’s short covering rally. USD higher after hitting a seven-week low on Treasury Secretary Mnuchin warning of excessive strength, S&P futures unch, European equities higher, crude slightly higher @ 52.90. Big news overnite UK Govt lost its Brexit appeal at the Supreme court, gilts touched the lows after the news with the UK 10Y back above 1.40% vs 1.45% high from last Friday. Europe also facing supply from France (20Y) , Spain (10Y) and the UK (40Y).  GOCs lower, spds ~1bp narrower vs tsys , 10Y 1.71% (+3.4bps), provis 0.5bps wider, Ont 48 92/91.5, Ont 26 81/80, PQ/Ont 26 2.5/2.3. BC & MP rumoured as possible today, MP/Ont 46 roll @15 at the tights as is the long Alta/Ont 46 @9/8.  In corps IGM FInancial (Ah) issued 2 tranche $600mln in 10s and longs both met with strong demand closing 2-3bps tighter. H&R issued $200mln in 7Ys @ 201.8, closing 1bp tighter. Royal has a $1.75bln deposit note maturing tommorrow ( 3.66% 17).

News headlines

Dollar Rises With Stocks as Pound Drops on Brexit: Markets Wrap (Bloomberg) The dollar rose from the lowest this year, poised to end three days of declines that have book-ended the inauguration of the new U.S. president. The pound and gold slipped.

Japan January flash manufacturing PMI shows fastest expansion in almost three years (Reuters) Japanese manufacturing activity expanded in January at the fastest pace in almost three years as export orders surged, suggesting that overseas demand is not as weak as some economists and business leaders had feared.

China’s Efforts to Stem Capital Outflows Are Starting to Pay Off (Bloomberg) China’s campaign to stop cash flooding out of the country is showing some success. For the first time since the yuan’s devaluation in August 2015, Chinese banks last month registered net inflows under the capital account, according to cross-border payments figures released last Thursday by the currency regulator. The yuan, which plunged last year by the most in two decades, is now heading for its biggest monthly advance against the dollar since March.

Supreme Court Rules Brexit Trigger Needs Parliamentary Vote (Bloomberg) The highest U.K. court ruled Prime Minister Theresa May must seek an act of Parliament to trigger the two-year countdown to Brexit, handing lawmakers a chance to soften the government’s plan.

Trump calls for more U.S. auto jobs, factories ahead of CEO meeting (Reuters) U.S. President Donald Trump on Tuesday will push the chief executives of General Motors Co, Ford Motor Co and Fiat Chrysler Automobiles NV to increase production in the United States and boost American employment.

Canadian Drillers Brave Deep Freeze as Oil Patch Revives Growth (Bloomberg) In the snowy prairies of Western Canada, not even temperatures below -40 degrees have stopped Stampede Drilling Ltd.’s 60 recently rehired workers from manning the oil-service provider’s rigs after a nine-month dry spell for the business. 

Overnight markets 

Overview: US 10yr note futures are down -0.1878% at 124-19, S&P 500 futures are up 0.09% at 2264, Crude oil futures are up 0.74% at $53.14, Gold futures are down -0.16% at $1213.7, DXY is up 0.07% at 100.23, CAD/USD is down -0.13% at 0.7564.

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 higher, US 10Y 2.44% (-2bps), curve ~0.5bps steeper. Tsys bid in Asia after Trump inauguration & ensuing protest, thou the  rally faded in Europe along with core EGBs.  S&P futures off 0.17%, crude down 1.2% at 52.58, reversing some of Friday’s 2.0% gain. Core Euro bonds higher led by UK gilts prior to tomorrow’s Supreme Court ruling on article 50 (Brexit). The latest CFTC COT report for Jan17th showed specs scaling back shorts across the curve, paring record shorts in 5s & 10s. GOCs higher, outperforming tsys in 10s & longs. Nov wholesale sales came in below exp @ 0.2% vs 0.5%. Supply in the US & Cda this week- the US auctions 2,5 & 7 yr notes starting Tues for $88bln. The Bank of Cda auctions $3bln of 3Y notes Wed – 1.5% Mar 2020 reopening. Provis closed weaker on Friday led by Quebecs. The latter is expected to issue  a 5Y USD global to be priced Tuesday, talk MS +46bps.

News headlines

Stocks, Dollar Dip as Metals Rise on Trump Jitters: Markets Wrap (Bloomberg) Shares in developed markets fell with the dollar, lifting metals and Treasuries after President Donald Trump offered little more on plans to boost growth and stirred concerns over protectionism in his first days in office. The Stoxx Europe 600 Index touched its lowest level this year, while U.S. futures slid and the dollar fell against all major peers. The weaker currency pushed aluminum to the highest in more than a year, while 10-year Treasury yields fell a second day.

Pound eyes $1.25 as traders bet British government to lose Brexit case (Reuters) Investors have largely priced in the British government losing its Supreme Court appeal on whether it can trigger Brexit talks without parliamentary approval, but traders – both human and computer models – will scour the ruling for clues on whether regional assemblies will get a say.

Bond Buyers Grab Disappearing Bank Debt Ahead of Canada Bail-In (Bloomberg) Bond investors are snapping up Canadian bank debt that’s likely to start disappearing under new government rules expected early this year to protect taxpayers from having to bail out a failing financial firm.

Canada Signals Possible U.S. Trade Deal That Excludes Mexico (Bloomberg) Canada’s government will consider bilateral trade measures during renegotiation of the North American Free Trade Agreement, a sign it could potentially move ahead at least in part without Mexico. The comments from David MacNaughton, Canada’s ambassador to the U.S., suggest Donald Trump’s protectionist pledges are splintering the continental pact as the U.S. leader prepares to meet Mexican President Enrique Pena Nieto late this month.

Equatorial Guinea has applied to join OPEC: OPEC source (Reuters) Equatorial Guinea has now applied to join the Organization of the Petroleum Exporting Countries, an OPEC source familiar with the matter said on Monday, which would bring the oil producer group’s membership to 14 countries.

Donald Trump Embarks on His First Week With a Heavy Slate (WSJ) President Donald Trump starts his first week with a packed schedule—from pushing through his slate of cabinet nominees to a raft of executive orders and setting the direction on foreign trade. Mr. Trump is planning executive actions early in the week on immigration and trade, two White House officials said, and will have a chance to lay the groundwork for a trade deal during a meeting Friday with British Prime Minister Theresa May , the first foreign leader to visit the new president in the White House. He also will meet with congressional leaders on Monday and attend a lawmakers’ retreat later in the week, where he could discuss his legislative agenda.

Overnight markets 

Overview: US 10yr note futures are up 0.1887% at 124-15, S&P 500 futures are down -0.15% at 2262.5, Crude oil futures are down -1.54% at $52.4, Gold futures are up 0.78% at $1214.3, DXY is down -0.36% at 100.38, CAD/USD is down -0.08% at 0.7514.

US Economic Data

There is no major economic news for today

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