Commentaires

Market Update

US tsys slightly lower, steeper, US 10Y 2.53 after reaching 2.55% in European trading. US data mix on the weak side with claims, inventories higher thou Chicago Fed for Dec stronger – 0.144 highest since Jan 16. Core European bonds lower, 10Y bund 0.464%, 10Y gilt 1.49% (+2.5bps). Large block sale of TY1 at 7:44am 22,898 TYH vs bunds  – UK Q4 GDP came in stronger led by services once again. GOCs unch after US data, curve steeper with longs lagging, 10s30s 63.8 bps (+1) as 10s lead the way higher, recovering earlier losses as tsys bounce on weaker data. This morning the BOC conducts its switch operation whereby the Bank issues $400mln in benchmark 2048s and buys back off the run longs 2029s-2041s duration neutral. Nothing on the calendar until Nov GDP next Tuesday. Ontarios trading down this morning, 26s @79, 48s @90.5. Peripherals bid this morning after trading up yest aft, rolls 0.5bps tighter i.e. Alta/Ont46 7.7/6.5, Man/Ont 26 7/6, Sask/Ont 48 10/9. We are buyers of  small CNQCN 22s, SAPCN 21s, & TD 4.859.

News headlines 

Global Stocks Rally Gathers Pace as Bonds Slide: Markets Wrap (Bloomberg) A global equities rally gathered speed as investors embraced riskier assets after the Dow Jones Industrial Average topped 20,000 for the first time. Gold retreated with bonds. European stocks climbed, pushing a benchmark all-country index to within 1.5 percent of its record high. The dollar rebounded, strengthening against most major peers. Copper touched the highest price since November after reports of lower production. Global government bonds extended declines as France’s 10-year yield breached 1 percent for the first time in more than a year.

Oil rises on weaker dollar, but U.S. supply caps gains (Reuters) Oil prices rose on Thursday, driven up by a weakening dollar, though gains were capped by plentiful supplies and bulging inventories despite efforts by OPEC and other producers to cut output to prop up the market. Benchmark Brent crude was up 35 cents a barrel at $55.43 by 1125 GMT. U.S. light crude futures were up 20 cents at $52.95.

UK GDP figures show solid end to 2016 despite Brexit vote (TheGuardian) The UK economy grew by 0.6% in the final quarter of 2016 thanks to buoyant consumer spending, marking a strong finish to the year despite the Brexit vote. It is the initial estimate for fourth-quarter GDP from the Office for National Statistics, and matches the 0.6% growth seen in the third and second quarters. It was a touch better than the 0.5% rise expected by City economists. The pound hit a fresh six-week high of $1.2673 just before the data was released.

Caterpillar reports bigger quarterly loss (Reuters) Caterpillar Inc (CAT.N), the world’s largest construction and equipment maker, reported a bigger fourth-quarter loss on Thursday, hurt by higher-than-expected restructuring costs.

China Said to Order Banks to Curb New Loans in First Quarter (Bloomberg) China’s central bank has ordered the nation’s lenders to strictly control new loans in the first quarter of the year, people familiar with the matter said, in another move to curb excess leverage in the financial system.

U.K. Commons to Complete Article 50 Bill Debate in Two Weeks (Bloomberg) Prime Minister Theresa May’s government will push its draft law to trigger Article 50 of the European Union’s Lisbon Treaty through the House of Commons within two weeks as it seeks to keep the Brexit process on track by her self-imposed March 31 deadline.

Overnight markets 

Overview: US 10yr note futures are down -0.0379% at 123-25, S&P 500 futures are up 0.02% at 2294.5, Crude oil futures are up 0.49% at $53.01, Gold futures are down -0.73% at $1191.7, DXY is up 0.38% at 100.41, CAD/USD is up 0.29% at 0.7629.

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 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