Commentaires

Market Update

US tsys trading higher, US 10Y 2.451% (-2bps), curve flatter supported by move in European bonds.  European investors spending cash which had piled up in the selloff as EGB supply drops off into year end.  Gold trading lower, European stocks ~1.0% higher fairly broad based rally.  UK gilts 4-5bps lower despite higher than exp rise in UK inflation to 2 yr high– CPI 1.2% vs 0.9% exp in Nov, yet prices bolstered by reinvestment flows. US eco calendar light with only import prices, the US auctions $12bln in 30Y bonds at 1:00pm with the WI 30Y 3.117% vs 2.90% at previous auction Nov 10th. The latest JPM survey showed shorts among active clients the highest since Sept 2014. This comes after latest CFTC COT report which had large specs at record short Eurodollar futures. GOCs higher, 10Y 1.70% (-3bps), provis well bid to start after closing 1-1.5bps tighter yest led by longs. This morning Ont 48s trading down @ 94, 26s @ 81. CMB 5Y expected to price this morning, Dec 21s @ 44 – now 44/43.5 on 1.25/21, the new issue will have cpn closer to 1.525, we are sold out.

News headlines 

Stocks Rally as Italian Banks Lift Europe, Yen Falls Before Fed (Bloomberg) Global stocks advanced, and the yen fell, amid optimism the Federal Reserve’s meeting this week won’t unsettle markets as the central bank boosts interest rates to reflect a strengthening economy. Italian equities and bonds surged on bank recapitalization plans. Futures on the S&P 500 Index signal a rally that pushed it to a record last week has more to run.

Oil prices rise as Middle East producers confirm supply cuts (Reuters) Oil prices rose on Tuesday, supported by strong demand in Asia and supply cuts by Abu Dhabi, Kuwait and Qatar as part of production curbs organized by OPEC and other exporters. But traders said the market was pressured by investors closing financial positions that profited from strong gains the day before.

China property sales growth slides to lowest since November 2015 (Reuters) Home sales in China slowed sharply in November in the wake of government cooling measures, and new property investment slowed significantly from recent record levels – suggesting a key economic driver could be losing steam. Property sales growth slid in November to 7.9 percent from a year ago, its lowest since November 2015, and well short of October’s 26.4 percent increase.

UniCredit Plans $13.8 Billion Stock Sale, Cuts to Boost Profit (Bloomberg) UniCredit SpA plans to raise 13 billion euros ($13.8 billion) in a rights offer, betting that a balance-sheet cleanup and cost cuts will persuade investors that Italy’s biggest bank can restore profitability even without much revenue growth.

German Investor Confidence Unchanged as Economy Gathers Pace (Bloomberg) German investor confidence remained unchanged in a sign that Europe’s largest economy is on track to end the year on a strong note. The ZEW Center for European Economic Research in Mannheim said on Tuesday that its index of investor and analyst expectations, which aims to predict economic developments six months ahead, held at 13.8. Economists in a Bloomberg survey predicted an increase to 14.0. A gauge for current conditions rose to the highest level in more than a year.

UK inflation hits highest level in more than two years (TheGuardian) UK inflation climbed to 1.2% in November, the highest level in more than two years, in a sign that the fall in the value of the pound since the Brexit vote is fuelling a rise in the cost of living. The rise in the consumer prices index, from 0.9% in October, was largely driven by higher petrol and clothing prices according to the Office for National Statistics. November’s rate was the highest since October 2014, and slightly above the 1.1% forecast by City economists.

Morneau pulls Bank Act changes from budget bill after objections from Quebec, Senate (GlobeAndMail) Finance Minister Bill Morneau has agreed to remove controversial changes to the Bank Act from his latest budget bill in response to strong objections from Quebec and some Senators. The Quebec government opposes a section of Bill C-29 that asserts the federal government’s exclusive jurisdiction over Canada’s banking sector. Quebec insists that provinces have constitutional authority in areas such as consumer protection for bank customers and warns the bill would impose weaker standards than those currently in place provincially.

Overnight markets                                                                     

Overview: US 10yr note futures are up 0.2142% at 124-9, S&P 500 futures are up 0.36% at 2258.5, Crude oil futures are up 0.47% at $53.08, Gold futures are down -0.09% at $1164.7, DXY is down -0.11% at 100.92, CAD/USD is down -0.2% at 0.763.

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

Tsys sharply lower after overnite spike in oil on new OPEC cuts, yet so far 2.50% bringing in buyers, tied to selling of yen according to MNI. Overnite the 10Y hit 2.525% in Tokyo as Saudi agreed to cut more oil and non OPEC members are ready to sign on as well. JGB curve ~8bps steeper, long yields highest since March on BOJ taper rumours. GOCs lower actually underperforming in the pullback, GOC 10Y above 1.75% curve 2bps steeper. Provis starting well bid after ending the week unch.  Supply still likely before the holidays.

News headlines 

Crude Soars as Output Deal Weighs on Bonds; China Shares Tumble (Bloomberg) Crude oil surged to the highest in 17 months amid efforts to cut production, pushing up the outlook for global inflation and sending 10-year Treasury yields above 2.5 percent for the first time since October 2014. Chinese equities tumbled. Oil jumped about 4 percent in New York and London after Saudi Arabia signaled it will cut output by more than previously agreed amid a weekend deal to tackle oversupply with competitors such as Russia. Longer-dated securities led declines as government bonds around the world tumbled, while climbing energy shares bucked a drop in Europe’s wider benchmark stock gauge. China’s Shanghai Composite Index sank the most since June as a gauge of smaller companies in Shenzhen plunged more than 5 percent.

Japan October core machinery orders rise, beating expectations (Reuters) Japan’s October core machinery orders rose for the first time in three months to beat expectations, government data showed – a tentative sign of a pickup in capital expenditure. Core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, rose 4.1 percent in October from the previous month, Cabinet office data showed on Monday. The results handily beat the economists’ median estimate of a 1.0 percent increase.

Asian banks provide 800 mln euros in loans to Russia’s Gazprom (Reuters) Japan’s Mizuho Bank, Sumitomo Mitsui Banking Corp and JPMorgan Chase & Co have provided 800 million euros ($848 million) in loans to Gazprom, the Russian gas giant said in a statement on Monday.

Merkel, Tsipras to discuss Greek financial situation December 16 (Reuters) German Chancellor Angela Merkel will hold talks with Greek Prime Minister Alexis Tsipras in Berlin on Friday, one day after a summit of European Union leaders in Brussels, a government spokeswoman said on Monday.

Canadian oil producers hope to OPEC-proof their higher spending plans for next year (Financial Post) Following an extremely challenging two years of persistently low oil prices, Canadian energy companies are beginning to increase spending again, though executives don’t expect a dramatic rebound in crude prices.

Quebec Paves Way for Oil, Gas Exploration With New Energy Plan (Bloomberg) Quebec’s legislature passed a bill that will pave the way for more oil and gas exploration, providing a boost to drillers such as Junex Inc. while drawing criticism from environmental, aboriginal and citizen groups.

Overnight markets

Overview: US 10yr note futures are down -0.1512% at 123-27, S&P 500 futures are down -0.01% at 2254.5, Crude oil futures are up 4.19% at $53.66, Gold futures are up 0.06% at $1162.6, DXY is down -0.45% at 101.13, CAD/USD is down -0.39% at 0.7618.

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

Tsys rebounding from earlier losses on news ECB will not grant Monte Paschi’s requests for more time to raise capital boosting the likelihood of a state bailout. US 10Y 2.404% after hitting 2.44% in NA trading. Core Euro bonds also pairing losses, 10Y bund 6bps lower @ 0.325%, bunds also supported by disappointing French ind production and German trade balance. UK gilts lagging, longs weighed by BOE survey showing inflation expectations jumped the most in six years. Next week supply picks up both in Europe and the US – the US auctions 3, 10Y and 30Y bonds for $56bln. The last 10 & 30Y auctions came in the wake of the Trump victory and were poorly received yet yields are ~50bps higher, yet with the FOMC scheduled for next Wednesday alongside Nov inflation data, successful takedown of supply is not a given. GOCs lower, curve at new wides 2s/10s +3bps @97bps with the GOC 10Y approaching 1.70% high from last Thursday. Provis did better yest after the QC 10Y issue, are opening unch this morning.

News headlines 

Futures rise as ‘Trump rally’ rolls on (Reuters) U.S. stock index futures edged up on Friday, indicating that investors were still eager to buy into the post-election rally that has propelled a host of Wall Street indexes to record highs. The « Trump rally » has been running for the past month as investors bet President-elect Donald Trump’s policies will boost economic growth and inflation. The three main U.S. indexes closed at record levels for the second day in a row on Thursday, while the small cap Russell 2000 and the Dow Transport .DJT hit all-time highs.

Oil Advances as European Stocks Extend Gains; Korean Won Slides (Bloomberg) Oil rose for a second day on signs producers are following through with agreed production cuts while most other financial markets took a breather from a rally that has propelled European stocks to their biggest weekly gain since February. Oil rose for a second day on signs producers are following through with agreed production cuts while most other financial markets took a breather from a rally that has propelled European stocks to their biggest weekly gain since February.

UK trade deficit narrows more than expected in October, construction falls (Reuters) Britain’s trade deficit narrowed more than expected in October after big upward revisions to previous months following an error in how trade in gold was recorded, official figures showed on Friday. Construction output fell slightly on the month and in the three months to October continued its downward trend, the Office for National Statistics said, bucking more positive signs in some industry surveys.

Trump Says China Will Have to Play by Rules Under New Ambassador (Bloomberg) U.S. President-elect Donald Trump vowed that China would soon have to “play by the rules,” as Chinese state media issued its clearest warning yet about its bottom line on Taiwan. “China is responsible for almost half of America’s trade deficit,” Trump said at a rally Thursday evening Des Moines, Iowa. “China is not a market economy … they haven’t played by the rules, and they know it’s time that they’re going to start. They’re going to start. They’re going to.”

Exclusive: ECB rejects Monte Paschi’s request for more time to raise cash – source (Reuters) The European Central Bank has rejected a request by ailing Italian lender Monte dei Paschi di Siena (BMPS.MI) for more time to raise capital, a source said on Friday, in a move that piles pressure on the Italian government to bail out the bank. The country’s third-largest lender, and the world’s oldest, had asked for a three-week extension until January 20 to try to wrap up a privately funded, 5 billion euros ($5.3 billion) rescue plan in the face of fresh political uncertainty.

Trudeau’s Pipeline Approval, OPEC Deal Resurrect the Oil Sands (Bloomberg) Canadian oil sands producers are finally ready to grow again as Cenovus Energy Inc. and Canadian Natural Resources Ltd. announce they are pushing ahead with expansion projects two years into the worst crude slump in decades. Cenovus said Thursday that the company will proceed with its 50,000 barrel a day phase G expansion at its Christina Lake oil sands site. The announcement comes more than a month after Canadian Natural said it was resuming work on its 40,000 barrel a day Kirby North project.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.1004% at 124-13, S&P 500 futures are up 0.11% at 2245, Crude oil futures are up 1.06% at $51.38, Gold futures are down -0.26% at $1169.4, DXY is up 0.36% at 101.46, CAD/USD is down -0.16% at 0.7593.

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