Commentaires

Market Update

US tsys lower, near lower end of range, yields 2-3.5 bps higher led by longs, with the 10Y 2.36%, prices steady after in line CPI. Stock futures slightly higher (S&P +0.177%), while European equities are mixed. TY futures sliding since Asian session on above avg volume (>300k), risk on tone following Citi 7 GS earnings both beat, with GS seeing a fourfold increase in net income on a 78% surge in bond trading revenues. UK gilt yields higher after bette than expected employment data and a disappointing 5Y gilt auction. Bunds lower, large block trade in bund futures (700mln equiv) while earlier widening in peripheral debt has reversed on strong order book for Italy 15Y syndication. GOCs lower before BOC decision, provis steady after finally improving 1-1.5bps yest on the back of a well received Sask long issue (2048 reopen @ Onts + 11.5),. We don not expect any change from BOC today -economic data have been mixed: trade & employment data have improved yet the output gap remains stubbornly high

News headlines 

Futures flat ahead of Goldman results, Yellen speech (Reuters) U.S. stock index futures were little changed on Wednesday ahead of another set of big bank earnings and Federal Reserve Chair Janet Yellen’s speech. Goldman Sachs (GS.N) and Citigroup (C.N) are scheduled to report results before market opens. Goldman, like most of the big U.S. banks that have reported results so far, is expected to post a jump in quarterly profit as the U.S. presidential election in November boosted trading activity.

Rising U.S. shale-oil output threatens OPEC’s production pact (Market Watch) The oil market got a stark reminder Tuesday that rising oil production in the U.S. could upend efforts by major producers to bring global supply and demand for crude back in to balance. Just ahead of the settlement for oil futures prices CLG7, -1.77%  on the New York Mercantile Exchange on Tuesday, the Energy Information Administration released a report on drilling productivity—forecasting a monthly rise of 41,000 barrels a day in February oil production to 4.748 million barrels a day.

China urges U.S. to bar Taiwan delegation from Trump inauguration (Reuters) The United States should not allow a delegation from Taiwan to attend U.S. President-elect Donald Trump’s inauguration, China’s Foreign Ministry said on Wednesday, raising a new bone of contention in Beijing’s relations with the incoming government. Trump broke with decades of precedent last month by taking a congratulatory telephone call from Taiwan President Tsai Ing-wen, and he has also said the « One China » policy was up for negotiation, a position Beijing strongly rejected.

No Brexit hit yet for UK workers as pay growth accelerates (Reuters) British workers saw their pay grow at the fastest pace in more than a year in the three months to November, official data showed on Wednesday, adding to signs that the country’s economy ended 2016 strongly despite the shock of the Brexit vote.

IEA Sees Significant Gains in U.S. Shale Oil as Prices Rise (Bloomberg) Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply, according to the head of the International Energy Agency. “U.S. shale-oil production will definitely react strongly,” Executive Director Fatih Birol said Wednesday in a Bloomberg Television interview in Davos, Switzerland. At $56 to $57 a barrel, “a lot of shale plays in the United States would make perfect sense to produce.”

Canada given advance notice of Trump’s NAFTA demands (TheGlobeAndMail) Billionaire investor Wilbur Ross, chosen by U.S. president-elect Donald Trump to reshape U.S. trade policy, has informed Canada that rules of origin and independent dispute tribunals will be central to talks aimed at resetting the North American free-trade agreement.

Overnight markets

Overview: US 10yr note futures are down -0.3244% at 124-27, S&P 500 futures are up 0.19% at 2267, Crude oil futures are down -1.45% at $51.72, Gold futures are down -0.01% at $1212.8, DXY is up 0.51% at 100.84, CAD/USD is up 0.59% at 0.762

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 sharply higher, yields 4-6 bps lower,10Y 2.34%, S&P futures down 0.39%, GBP surging 2.5% – the largest gain since 2008 after UK PM May confirmed the UK will quit the European single market in a ‘hard brexit’. Tsys off the highs after weaker Empire Manuuf Index, the 10Y reached 2.30% prior to May’s speech ~7:00am EST.. Yet May’s tone was seen as more conciliatory as she said she wanted the UK to remain a global trading partner. Core European bonds higher, gilts lagging the rally in bunds as gilts have almost completely reversed o/n gains. Fed Dudley , in speech in NYC said the Fed is unlkely to ‘snuff out’ the expnasion anytime soon. GOCs higher, spds 2-3bps wider vs tsys, 10Y 1.65%. Pembina (BBB) in the mkt with 2 tranche 7Y and longs. for $500mln. Provis heavy for a 4th day, as rates rally, Sask 30Y at 12 + Onts rumoured but already well spoken for already.

News headlines 

May Pledges Vote on Brexit Taking U.K. Out Of EU’s Single Market (Bloomberg) Prime Minister Theresa May pledged to pull Britain out of the European Union’s single market while staying inside parts of its customs union, saying the U.K. parliament will get a vote on the final Brexit deal.

Dollar Drops on Trump Comments as May Boosts Pound: Markets Wrap (Bloomberg) The dollar weakened and gold advanced with bonds after the President-elect said the U.S. currency is already “too strong.” The pound rallied as British Prime Minister Theresa May laid out plans to leave the European Union.

Oil up on Saudi commitment to cut; U.S. output seen rising (Reuters) Oil prices settled up on Monday, as Saudi Arabia’s commitments to reducing production offset a report forecasting U.S. output would again rise this year. The Organization of the Petroleum Exporting Countries (OPEC) has agreed to cut production by 1.2 million barrels per day (bpd) to 32.5 million bpd from Jan. 1 in an attempt to clear a global oversupply that has depressed prices for more than two years.

Chinese leader pushes back against Trump on free trade (Reuters) Chinese President Xi Jinping offered a vigorous defense of globalization and free trade in a speech at the World Economic Forum in Davos on Tuesday, which underscored Beijing’s desire to play a greater global role as the United States turns inward.

Hyundai Motor to boost U.S. investment as automakers respond to Trump (Reuters) The Hyundai Motor Group said it plans to lift U.S. investment by 50 percent to $3.1 billion over five years and may build a new plant there – the latest auto firm to announce fresh spending after President-elect Donald Trump threatened to tax imports.

Germany says NATO concerned about Trump ‘obsolete’ remark (Reuters) Germany’s Foreign Minister said on Monday that U.S. President-elect Donald Trump’s comments that NATO was obsolete had aroused concern across the 28-member alliance. Frank-Walter Steinmeier, speaking after a meeting with alliance Secretary-General Jens Stoltenberg in Brussels, said Trump’s remarks contradicted views expressed by designated Defense Secretary James Mattis. He spoke also of « amazement ».

Overnight markets

Overview: US 10yr note futures are up 0.313% at 125-6, S&P 500 futures are down -0.4% at 2263.5, Crude oil futures are up 1.58% at $53.2, Gold futures are up 1.38% at $1212.7, DXY is down -0.55% at 100.62, CAD/USD is down -0.82% at 0.7652.

US Economic Data 

Canadian Economic Data 

There is no major economic data release for today
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.Disclosure and Disclaimer

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

With the Martin Luther King holiday in the US, the Treasury market is really a by-stander in European trading. The volumes on the 10-year contract are running at around 60% of the averageof the past 10 days.
There is no cash activity and while swap market is trading, it is thin. UK Gilt yields have fallen in London Monday morning trading, supported by fresh overnight fall in the value of UK Sterling in wake of weekend
press reports of speculation of PM Theresa May’s Brexit speech scheduled for Tuesday.

News headlines 

Brexit Plans Rattle Pound and Stocks as Gold Rises: Markets Wrap (Bloomberg) The pound fell, equities slid and gold climbed on concern U.K. Prime Minister Theresa May is prepared to lead Britain out of the European Union’s single market and as the U.S. President-elect suggested other countries could break from the bloc. Sterling fell below $1.20 for the first time since October after the Sunday Times said May is ready to withdraw from tariff-free trade with the region in return for the ability to curb immigration and strike commercial deals with other countries.

Oil prices slip on doubts over output cuts (Reuters) Oil prices slipped on Monday, pressured by doubts that large oil producers will reduce production as promised and on expectations that U.S. production would increase again this year. Benchmark Brent crude oil LCOc1 was down 23 cents a barrel at $55.22 by 1142 GMT (6:42 a.m. ET) and U.S. light crude CLc1 fell 21 cents to $52.16.

Iron Ore Opens 2017 With a Bang After Flaying Skeptics Last Year (Bloomberg) Iron ore has carried last year’s bullish momentum into the start of 2017, with prices rallying to a two-year high amid speculation that China’s demand for overseas ore will hold up even as the world’s largest miners bring on new capacity. Ore with 62 percent content in Qingdao in China climbed 3.9 percent to $83.65 a dry metric ton, according to Metal Bulletin Ltd. The commodity has risen 6.1 percent in 2017 after surging more than 80 percent last year.

Toronto’s hot housing market spills over to condo rentals (TheGlobeAndMail) Toronto’s sizzling housing market is spilling over into the region’s rental market, pushing up rents to new records as tenants fought over a shortage of rental listings. Average rents for condos rose 11.7 per cent in the fourth quarter of 2016, compared to the same period a year earlier, hitting nearly $1,990 a month for a typical 719-square-foot condo, according to new data from Urbanation Inc., a consulting and market research firm that focuses on the Greater Toronto Area’s condo market.

China will ‘take off the gloves’ if Trump continues on Taiwan, state media warns (Reuters) China will « take off the gloves » and take strong action if U.S. President-elect Donald Trump continues to provoke Beijing over Taiwan once he assumes office, two leading state-run newspapers said on Monday. In an interview with the Wall Street Journal published on Friday, Trump said the « One China » policy was up for negotiation. China’s foreign ministry, in response, said « One China » was the foundation of China-U.S. ties and was non-negotiable.

Germany says in interests of EU and U.S. to pursue TTIP talks (Reuters) Germany still regards the TTIP EU-U.S. free-trade deal as an important project and believes it is in both European and U.S. interests to continue negotiations, government spokesman Steffen Seibert said on Monday. U.S. President-elect Donald Trump has opposed the Transatlantic Trade and Investment Partnership (TTIP).

Overnight markets

Overview: US 10yr note futures are up 0.0626% at 124-28, S&P 500 futures are down -0.19% at 2268.25, Crude oil futures are down -0.11% at $52.31, Gold futures are up 0.57% at $1203, DXY is up 0.37% at 101.55, CAD/USD is up 0.28% at 0.7604.

US Economic Data 

There is no major economic data release 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