Commentaires

Market Update

Post non farm :US tsys sharply lower after Dec payrolls fell short (156k vs 175k) but AHE rose 2.9% vs 2.8% exp. while Nov payrolls where revised sharply higher to 204k from 178k.  Yields 2-4 bps higher led by the 5Y, with the 10Y 2.386% from 2.33% low pre eco data. Cdn data also very strong:  employment rose 53.7k last month vs -2.5k exp – even accounting for monthly vol this is a strong beat!, full time rising 81.3k vs -8.7k .  Can/US ~5-7bps wider even in the downtrade. Considering how much the mkt has rallied just since mid Dec ~20bps in US 10s , the mkt is ripe for a correction even thou specs (CFTC 10Y specs) are the are record short 341k contracts.  Keep in mind there is $56bln in Tsy supply next week while US IG supply which came in above $20bln thi week is likely to be heavy next week as well with associated rate locks limiting any potential rebound.

News headlines 

Second Wind for Dollar Before Jobs Undercuts Bonds: Markets Wrap (Bloomberg) The dollar rebounded as Treasuries fell before U.S. data expected to show sustained growth in hiring. Global stocks headed for the best start to the year since 2013. As the greenback stabilized Friday after a two-day tumble, the yen, euro and British pound all weakened and the Turkish lira extended losses. China’s offshore yuan pared a record weekly rally triggered by government curbs while a second intervention by Mexico’s central bank sent the peso to the top of the stack among major currencies. Oil declined and Treasuries snapped their biggest post-Brexit rally.

Oil prices post gains on OPEC hopes, but doubts linger (Reuters) Oil prices edged higher on Friday as output cuts by OPEC members met with lingering concern that other producers could try to shirk their share of planned decreases aimed at curbing global oversupply.

Yuan Pares Record Rally as Goldman Says Now’s the Time to Sell (Bloomberg) The offshore yuan pared its record weekly rally as China’s central bank raised its fixing less than projected and some analysts reiterated their bearish views on the currency. The exchange rate fell as much as 1.1 percent to 6.8623 a dollar in Hong Kong, the most since this day last year, after a 2.5 percent surge over the past two sessions. Goldman Sachs Group Inc. advised clients that the best times to bet against the yuan have tended to be after interventions that flushed out bearish positions, or when China concerns were off traders’ radar screens.

Euro-Area Economic Confidence Jumps to Highest Since 2011 (Bloomberg) Euro-area economic confidence jumped to the highest since 2011 at the end of last year after the European Central Bank extended its stimulus and the recovery in the 19-nation region showed further signs of strengthening. An index of executive and consumer sentiment increased to 107.8 in December from a revised 106.6 in November, the European Commission in Brussels said on Friday. That’s the strongest reading since March 2011 and compares with a forecast of 106.8 in a Bloomberg survey.

China central bank urges rational investment in bitcoin (Reuters) China’s institutional and individual investors should take a rational approach to investing in virtual currencies such as bitcoin, the central bank said on Friday. Bitcoin prices had showed abnormal fluctuations, the Shanghai head office of the People’s Bank of China (PBOC) said in a notice.

Canadian pensions see boost from rising bond yields after Trump victory (TheGlobeAndMail) Canadian pension plans ended 2016 with an average 95-per-cent solvency funding level, a dramatic improvement from the start of the year due to major gains from equity investments and climbing bond yields following Donald Trump’s election victory. An analysis by pension-consulting firm Aon Hewitt shows more than 35 per cent of the firm’s Canadian pension-plan clients were fully funded or had a surplus by the end of 2016, up from just 10.7 per cent at the start of the year, giving many more plans a cushion to weather future volatility.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.2378% at 124-17, S&P 500 futures are up 0.06% at 2265.5, Crude oil futures are up 0.33% at $53.94, Gold futures are down -0.66% at $1173.5, DXY is up 0.5% at 102.03, CAD/USD is down -0.08% at 0.7568.

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

Tsys prices open NY higher, but well off 2am ET highs, after FX-tied buying in Asia was followed by UK drift. High-grade corporate bond issuance busy. US ADP sees 153’000 for December private Payrolls. Treasuries gain mildly on softer than expected ADP, 10Y note now is at 2.432%.

News headlines 

Dollar Rally Stymied by China, Fed as Gold Climbs: Markets Wrap (Bloomberg) The dollar faced further headwinds as Chinese efforts to stem capital outflows and the Federal Reserve conspired to halt the strongest rally in the currency in more than a decade. Gold rose.

Oil prices rise as Saudi Arabia discusses supply cuts (Reuters) Oil prices rose on Thursday after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to reduce global supply. The Organization of the Petroleum Exporting Countries promised in November to cut output to help prop up prices.

China’s yuan soars against dollar as liquidity tightens offshore (Reuters) China’s yuan soared against the U.S. dollar on Thursday following a sharp rise in the offshore spot rate as China worked to stem capital flows and stabilise the currency ahead of Donald Trump’s inauguration as U.S. president and the Lunar New Year.

Canadian, U.S. car sales hit record levels in 2016 (TheGlobeAndMail) Canadians and Americans wore out the showroom floors of car dealerships in 2016, driving auto makers to record sales years in both markets. Auto makers sold 1.95 million vehicles in Canada, the fourth consecutive year that sales have hit a record. The 2016 level was achieved despite a plunge in oil prices that sent sales tumbling in Alberta, the third largest market in the country

UK services sector grows at fastest pace for more than a year (TheGuardian) Britain’s services sector grew at the fastest pace for 17 months in December, according to a survey that has raised hopes for a strong end to 2016 for the economy. There was also a pick-up in new business and job creation, according to the poll of firms from the UK’s biggest sector, which includes banks, hotels and transport. But news that companies increased their prices at the fastest pace for more than five years will intensify worries over the weak pound stoking inflation in the months ahead and raises the prospect of interest rates going up this year.

Toronto Housing Has a Record Year Amid Supply Shortages (Bloomberg) Toronto’s housing market posted a record year in 2016 that saw double-digit price gains, tightening supply and the cost of an average home surpass C$700,000 ($526,355) for the first time. Sales figures released Thursday by the Toronto Real Estate Board show the city’s realtors sold C$82.6 billion worth of homes last year, an increase of almost C$20 billion from 2015. Unit sales rose 12 percent and prices increased by more than C$100,000 to an average C$729,922. That’s up 17 percent from last year — the largest annual gain since 1989.

Top Forecaster Sees Loonie Extending G-10’s Best Advance in 2017 (Bloomberg) The Canadian dollar will strengthen in 2017 as the country’s economy accelerates in the second half of the year and worries over U.S. President-elect Donald Trump’s trade policies fade, according to the most accurate forecaster of the currency.

Overnight markets  

Overview: US 10yr note futures are up 0.1637% at 124-10, S&P 500 futures are down -0.15% at 2260.75, Crude oil futures are up 0.73% at $53.65, Gold futures are up 0.88% at $1175.5, DXY is down -0.42% at 102.27, CAD/USD is down 0% at 0.7519.

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 Treasuries open NY mainly lower, 30Y exception, curvesflatter, 10Y 2.454%. TOKYO saw Japan’s Nikkei stock index +2.5% in catchup with US rise, pressuring Tsys mildly. Early Asia saw Asian real$ and bank portfolios selling 2Y Tsys, foreign central bank sold 2s. Foreign central bank buying in 3s and 5s, 2way in 10s and Asian buying of 10Y, Asian real money buyng in 30Ys. Asian selling arose in 5Y, 7Ys.

News headlines

U.S. stock futures rise ahead of Fed minutes (Reuters) U.S. stock index futures were slightly higher on Wednesday as investors awaited the release of the minutes of the Federal Reserve’s December meeting in which the central bank raised interest rates. The Fed raised rates for the first time last year, citing strength in the labor market and a slight uptick in inflation. Investors will be keen to assess policymakers’ view on inflation, especially after a spate of strong economic data.

Oil prices rise on expected drop in U.S. inventories (Reuters) Oil prices ticked higher on Wednesday on expectations that U.S. crude inventories are falling and signs that oil producers will stick to agreed output cuts that took effect this week. Global benchmark Brent crude futures LCOc1 were up 10 cents at $55.57 a barrel by 1110 GMT (6:10 a.m. ET). The contract reached an 18-month high in the previous session, but a strong dollar has shaved off most of those gains.

Euro-Area Inflation Outpaces Expectations as Oil Surges (Bloomberg) Euro-area inflation accelerated in December at the fastest pace since 2013, suggesting that a debate about the appropriate degree of European Central Bank stimulus is about to gather momentum.

China Said to Consider Options to Back Yuan, Curb Outflows (Bloomberg) China has studied possible scenarios for the yuan and capital outflows this year and is preparing contingency plans, according to people familiar with the matter. The offshore yuan surged the most in a year.

Trump Tariff on GM Would Violate Nafta. That May Not Stop Him (Bloomberg) As president, Donald Trump won’t be able to punish General Motors Co. for building cars in Mexico without violating Nafta. That may not stop him from taking an unprecedented step against an American company. Trade experts agree that presidents have wide latitude to impose penalties on imports, at least temporarily, even if courts later find them unlawful.

Investment banking fees fall 7 percent in 2016 dragged down by equity raisings (Reuters) Investment banking fees fell 7 percent worldwide in 2016, dragged down by a 23 percent fall in equity capital market (ECM) fees, Thomson Reuters data showed on Wednesday, raising the pressure on banking giants fighting to restore profitability.

Overnight markets     

Overview: US 10yr note futures are down -0.1385% at 123-30, S&P 500 futures are up 0.23% at 2257.75, Crude oil futures are up 0.67% at $52.68, Gold futures are up 0.32% at $1165.7, DXY is down -0.28% at 102.92, CAD/USD is down -0.79% at 0.7507.

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