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Market Update

US tsys higher, yields 2-4bps lower, curve flatter with the 10Y 2.33 (-4.4bps). Tsy prices off the highs after initial claims/import pricesGerman bunds weaker due to Italian govt supply. Tsys were higher in Asia on risk off buying after Trump press conf did not address infrastructure spending. Fed Evans & Lockhart will appear on a panel at 8:30am to discuss economic policy while the US auctions $12bln in 30Y bonds after a very well received 10Y yest (3bps thru). GOCs higher led by 10s which are ~3bps tighter on the curve, GOC 10Y 1.66%. Provis opening with a weaker bias after closing 1bp wider yest as GOCs rallied following trump & Mani 10Y y which seemed to compete with a slew of corp supply . Algonquin Power priced $300mln tens @ 243.7 which closed 232 bid, strong demand with 5% fills. Riocan issued $300mln Oct 22s at 160 (155 OTC) after being upgraded by S&P in Dec, also well received closign 5bps tighter on low fills.

News headlines 

Dollar Slumps, Bonds Rally as Trump Bets Unwind: Markets Wrap (Bloomberg) The dollar slid and Treasuries gained with commodities as Donald Trump’s press conference sent a wake-up call to the market about exalted expectations for fiscal stimulus in the U.S. Gold advanced. The U.S. currency slumped against all major peers and the 10-year Treasury yield touched the lowest since November as Trump’s first press conference since his election victory gave scant detail on policy.

Euro zone economy registering surprisingly strong growth spurt (Reuters) Industries across the euro zone cranked up output in November and Germany ended the year with its strongest growth in five year, data showed on Thursday, pointing to an economic spurt that may be arriving earlier than some ECB policymakers expect.

China banks extend record 12.65 trillion yuan in loans in 2016 as debt worries mount (Reuters) China’s banks extended a record 12.56 trillion yuan ($1.82 trillion) of loans in 2016 as the government encouraged more credit-fueled stimulus to meet its economic growth target, despite worries about the risks of an explosive jump in debt.

Mark Carney signals Bank of England may raise forecast for UK economy (TheGuardian) The Bank of England looks set to upgrade its forecasts for the UK economy after admitting that some of the risks posed by the Brexit vote last June have now receded. Giving evidence to the Treasury select committee, governor Mark Carney said the Bank’s actions to avoid a market meltdown after the referendum were a key reason why Threadneedle Street might be raising its forecasts for a second time.

Toronto housing boom to continue as Vancouver slumps (TheGlobeAndMail) Canada’s two largest housing markets are going in different directions, with the Greater Toronto Area poised for another rally in 2017 while the Vancouver region girds for a decline. Royal LePage forecasts the median residential price in the GTA will jump 10 per cent this year while Greater Vancouver will experience an 8.5-per-cent price decrease for various housing types.

Magna expects sales growth to outperform, eyes building vehicles for new industry players (Financial Post) Canadian auto-parts giant Magna International Inc. expects its sales growth to outperform the market over the next three years and sees particular opportunity in manufacturing complete vehicles for new industry players that have never built a car before.

 Overnight markets

Overview: US 10yr note futures are up 0.1753% at 125-1, S&P 500 futures are down -0.23% at 2265.25, Crude oil futures are up 1.61% at $53.09, Gold futures are up 0.38% at $1201.2, DXY is down -0.75% at 101.02, CAD/USD is down -0.69% at 0.7642.

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 trading higher, upper end of o/n range with the US 10Y 2.377, albeit in a very narrow range on low volume in TY futures (203k).  Asian hrs saw foreign CB selling in the short end, with interest in buying out the curve, flatteners from credit desks (MNI).  Quiet on economic data front with 11:00am Trump press conf key event, as well as  $20bln 10Y auction at 1:00 & Fed Dudley this aft.  Tuesday saw another strong day of primary issuance in the US – $13.75bln highlighted by $ IADB ($3bln), KFW ($5bln), 4 part Nissan deal. GOCs slightly higher, upward bias since early NA trading. The BOC auctions  $3.9bln in 2Y , reopened Feb 19s at noon with the F19/2Y roll 1.9/1.8. Provis opening unch, Ont & MP possible issuers.

News headlines 

Stocks edge down, dollar steady ahead of Trump news conference (Reuters) World stocks edged down from recent highs and the dollar steadied ahead of a news conference by U.S. President-elect Donald Trump in which he is expected to give more details about his plans for the U.S. economy.

Big Oil Hits Sweet Spot as Projects Reap Rewards of Recovery  (Bloomberg) Big Oil is poised to reap rewards this year as investments made before the crude-price slump pay off just as the recovery starts. Seven of the world’s largest energy companies will together boost oil and natural gas output by 398,000 barrels a day, the most since since 2010, according to data from Oslo-based consultant Rystad Energy AS. In 2018, output will rise even faster.

PRECIOUS-Gold holds near six-week peak on safe-haven demand (Reuters) Gold on Wednesday held near a six-week high hit in the previous session, with economic and  political uncertainty boosting its safe-haven appeal. Markets were waiting for indications on policy from U.S. President-elect Donald Trump’s first news conference since the U.S. elections, due later in the day.

China’s central bank launches spot checks on bitcoin exchanges (Reuters) China’s central bank said on Wednesday it launched spot checks on major bitcoin exchanges in Beijing and Shanghai, knocking the price of the cryptocurrency down by more than 6 percent. The probe of bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into a range of possible rule violations, including market manipulation, money laundering and unauthorized financing, the People’s Bank of China (PBOC) said. It did not say if any violations had been found.

Canada’s banks won’t see big mortgage losses when interest rates rise, says RBC CEO Dave McKay (Financial Post) An eventual increase in Canadian interest rates is not expected to lead to a spike in mortgage book losses for Canada’s banks, Royal Bank of Canada chief executive Dave McKay told investors Tuesday. Canada’s largest bank has built higher rates into the adjudication process for mortgages, McKay said, adding that employment is the real driver of whether  homeowners struggle with mortgage payments.

Alstom/Bombardier consortium seal $1.2 billion French train deal (Reuters) An Alstom (ALSO.PA) and Bombardier (BBDb.TO) consortium has won a French train contract estimated to be worth 1.16 billion euros ($1.22 billion) for the consortium, the companies and French authorities said on Wednesday.

Overnight markets

Overview: US 10yr note futures are up 0.0501% at 124-27, S&P 500 futures are down -0.09% at 2261.75, Crude oil futures are up 0.61% at $51.13, Gold futures are up 0.19% at $1187.7, DXY is up 0.44% at 102.46, CAD/USD is up 0.04% at 0.7554.

US Economic Data 

There is no major economic data release for today

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 lower, yields 1.6 – 2.3 higher across the curve, US 10Y 2.388 (+2.4bps), curve 0.5bps steeper after US small business optimism, as measured by the NFIB index, rose to a 12-year high in Dec to 105.8. Tsys pressured in Europe after unch Asia session despite China factory prices rising to a five year high in Dec. France IP surged 2.2% vs 0.6% exp , the UK FTSE  for 9th straight day to record high. The CITI Eurozone eco surprise index has surged to a three year high, and coupled with renewed inflation concerns (the EUR 5Y5Y infl swap pushing above 1.75%) and EGB supply (Netherlands & Austria longs) raises odds of a retracement in 10Y bund yields back above 0.40% from ~0.28% currently.  GOCs lower, CGBs moving lower in lockstep with tsys in recent trade. Provis opening unch with supply expected to materialize as generic spreads are at one year tights,  new Ont 10Y 2027 rumoured. Algonquin Power (BBB/BBBL) in road show – no deal imminent , next maturity is 2018 thou the company has been in acquisition mode. Honda Finance (A1/AH) in the mkt with a 3.25Y FRN & $400 mln 5.5Y fixed (July 2022) @ ~ 105bps, which looks 2-3bps cheap based on Dec 21s at 95 OTC.

News headlines 

Stocks and dollar fall; sterling reels from Brexit pain (Reuters) Risky assets hit the skids on Tuesday, with stocks and sterling tumbling over political uncertainty over Britain’s future ties with the European Union and the policies of the incoming U.S. president, Donald Trump. European stock markets opened broadly lower , with the exception of Britain’s blue-chip FTSE stock index .FTSE, which hit a fresh record high on the back of sterling’s fall to multi-week lows — seen as beneficial to exporters.

Oil prices steady after recent falls on weaker dollar (Reuters) Oil prices stabilized on Tuesday after a sharp sell-off as a fall in the dollar triggered a bout of short-covering, but analysts said the market remained vulnerable to further falls. Rising oil prices through December encouraged investors to buy large volumes of crude oil futures contracts and many of these “long” positions are likely to be unwound unless the market stays strong, analysts and brokers say.

China consumer inflation slows down in December (Market Watch) China’s consumer inflation slowed in December, losing speed for the first time in four months, but producer inflation quickened at a pace much faster than economists expected, official data showed Tuesday. China’s consumer price index increased 2.1% in December from a year earlier, rising at slower pace than a 2.3% year-over-year gain in November, the National Bureau of Statistics said, adding that a higher base for comparison from the year-earlier period was the main factor weighing on the headline figure.

Carney Faces Lawmakers as Brexit Battles Sweep Into New Year (Bloomberg) Mark Carney is starting 2017 exactly where he left off: in front of his fiercest critics. In parliament’s first week back from recess, lawmakers have the chance to haul the Bank of England governor over the coals again. He faces the Treasury Committee on Wednesday after multiple fiery exchanges last year in which he was grilled on the Brexit vote, record-low interest rates, central bank independence and even his own tenure.

Valeant to sell assets for $2.12 billion to ease debt load (Reuters) Valeant Pharmaceuticals International (VRX.TO) is selling its Dendreon cancer business and three skincare brands for about $2.12 billion as the troubled Canadian drugmaker looks to pay down its more than $30 billion debt. Valeant’s U.S.-listed shares rose 15 percent to $17.65 in premarket trading on Tuesday.

Refiners shun new Canadian crude blend offer from Enbridge line (Reuters) Enbridge Inc has approved a new stream of heavy Canadian crude for export on one of its major oil pipelines to the United States, according to four trading sources. The only problem? No one wants it. Canada produces more heavy than light crude because of its vast oil sands projects in northern Alberta. Space on the Enbridge system for heavy barrels is in short supply, with congestion set to worsen as oil sands production grows.

Overnight markets 

Overview: US 10yr note futures are down -0.0501% at 124-23, S&P 500 futures are down -0.03% at 2264.25, Crude oil futures are down -0.08% at $51.92, Gold futures are down -0.18% at $1182.8, DXY is up 0.1% at 102.03, CAD/USD is up 0.04% at 0.7564.

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