Comments
06/10/2016
Market Update
-Tsys trading lower after 8:30 claims data, ‘risk on’ as Euro stocks rise, crude at new highs WTI above $50 for first time since June 24th , US 10Y 1.72 (+1.5bps). Euro stocks higher led by fincls – DB up another 2.0% despite news the Bank mismarked loans. Core Euro bonds lower after rising initially after ECB Sep 8 minutes showed the CB was ready to add to QE beyond March 2017 if needed. GOCs lower led by the 10Y sector, 10Y rolls wider, the M22/5Y roll also continuing to widen post auction yest, now 5.5bps. Decent bid for longs, 10s30s ~1bp flatter @ 65.8bps. Provis wider after closing 0.5bps wider yest, this morn Ont48s traded down at 95.5, Ont 26s 84.5/84, Alberta longs tradign up this morn on strength in crude.
News headlines
–Fed Rate Bets Boost Dollar, Damp Treasuries; Europe Stocks Fall (Bloomberg) The Federal Reserve is back in the financial-market spotlight, with strengthening speculation that an interest rate hike is imminent buoying the dollar and spurring the yield on two-year Treasuries to the most in 10 years versus German notes.
–Oil steady near 2016 highs after U.S. inventory drop (Reuters) Oil prices were steady on Thursday, underpinned by a surprisingly large drop in U.S. inventory levels the previous day to stay within sight of this year’s highs hit in June. Brent crude futures were unchanged at $51.86 per barrel at 0913 GMT, after hitting a high of $52.09 the previous day. U.S. futures were down 5 cents at $49.78 a barrel
–Strong German data allay growth concerns, Merkel promises tax cuts (Reuters) Strong demand from euro zone countries and domestic customers drove a bigger-than-expected rise in German industrial orders in August, suggesting factories will contribute to growth in Europe’s economic powerhouse in coming months.
–UK’s economic productivity finally returns to pre-crisis peak: ONS (Reuters) Britain’s economic productivity – the key driver of living standards – has finally clawed back the ground it lost during and after the financial crisis, but remains almost a fifth below where it might have been had the crisis never happened.
–Deutsche Bank’s $14 Billion Scare (Bloomberg) This summer, U.S. Justice Department officials working on a mortgage securities investigation of Deutsche Bank AG expected the bank to settle the matter for $2 billion to $3 billion, according to people with knowledge of the matter.
–Monte Paschi Said to Plan Debt-Swap Deadline Before Italian Poll (Bloomberg) Banca Monte dei Paschi di Siena SpA intends to rush through provisional bondholder agreements in a debt-for-equity swap before Italy’s Dec. 4 referendum, according to people with knowledge of the matter.
–End of Canada’s ‘unique’ mortgage system means higher bank costs (Financial Post) The days when Canada’s banks could offload much of the risk of underwriting mortgages onto taxpayers may be drawing to a close. Canadian Finance Minister Bill Morneau disclosed plans Monday to begin consultations on sharing the risk of mortgage default with the country’s lenders. The move was part of a package of measures designed to stabilize the housing market after years of soaring prices in Vancouver and Toronto.
Overnight markets
-Overview: US 10yr note futures are down -0.084% at 130-4, S&P 500 futures are down -0.16% at 2149.75, Crude oil futures are up 0.68% at $50.17, Gold futures are down -0.52% at $1262, DXY is up 0.36% at 96.469.
US Economic Data
-8:30 AM: Initial Jobless Claims, Oct 1st, 249k, est. 256k (prior 0.8%)
-Continuing Claims, Sep 24th, 2058k, est. 2081k (prior 2062k, revised 2064k)
-9:45 AM: Bloomberg Consumer Comfort Index, Oct 2nd, (prior 41.6)
Canadian Economic Data
-8:30 AM: Building Permits, m/m, Aug, 10.4%, est. 1.0% (prior 0.8%, revised 3.4%)
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
05/10/2016
Market Update
– US tsys slightly higher in NA trade, US 10Y 1.685 (-0.3bps), mostly ignoring the small miss in the ADP empl (154k vs 165k exp). Tsys firmer in Asia yet fell after Fed Evans said he was ‘comfortable’ with rate hikes this yr. Tsys also pressured on the back of lower bunds on latest ECB ‘taper tantrum fears’ & higher crude (49.60 + 1.9%). Short tsys lagging on higher 3M libor set, +.00036 at 0.8679%. GOCs higher, outperforming tsys ~1bp in 10s, despite news exports rose for a third month in August, with the trade deficit falling to $1.9bln from $2.2bln in July. BOC auction at noon – $3.8bln in new March 2022s with the WI/5Y roll at 4.9bps this morn, which seems cheap given the J22/5Y roll is barely 0.3bps higher at 5.3bps. The benchmark 2s5s curve has steepened ~4bps over the week, yet this wouldn’t account for the ~1.5bp cheapening in the WI roll over the period. Other old 5Y rolls (i.e. Sep21/Mar21) are closer to 3bps. Provis opening 0.5bps wider on the bid, after closing 0.5bps better on higher Cda yields, lack of supply.
News headlines
–European Stocks Fall With Emerging Markets on Central Bank Angst (Bloomberg) European stocks fell with emerging markets as the prospect of monetary policy turning less accommodative in the world’s biggest economies damped appetite for higher-yielding assets. The Stoxx Europe 600 Index dropped for the first time in seven days and the MSCI Emerging Markets Index halted a two-day rally after Bloomberg News reported an informal consensus was building in the European Central Bank that quantitative easing will need to be tapered once a decision is taken to end the program.
–Oil hits highest since June on possible U.S. inventory drop (Reuters) Oil rose towards $52 a barrel on Wednesday, hitting its highest since June, supported by an industry report that U.S. inventories probably fell for a fifth straight week and OPEC’s deal to cut supply. The American Petroleum Institute (API) said on Tuesday that U.S. crude inventories dropped 7.6 million barrels, which would be the fifth straight weekly decline if confirmed by U.S. Energy Information Administration (EIA) data on Wednesday. [API/S]
–Gold drops below US$1,300 as central bank tightening looms (Financial Post) Gold slipped below US$1,300 an ounce Tuesday, surrendering all the gains it had made since the surprise Brexit vote in June sent it on a rally. Bullion’s capitulation came alongside a “day of setbacks” for gold miners, with Barrick Gold Corp. announcing a longer suspension of operations at its Argentina mine and Goldcorp Inc. shutting down a mine in Mexico after a week-long blockade.
–Fed’s Evans “fine” with Dec hike if data stays firm (Reuters) Chicago Federal Reserve Bank President Charles Evans said he would be “fine” with raising U.S. interest rates by year end if U.S. economic data continued to come in firm, though any further moves would need to see inflation accelerating.
–BOJ Kuroda: interest rates would rise when 2 percent price goal is met (Reuters) Bank of Japan Governor Haruhiko Kuroda said on Wednesday that interest rates would rise when the central bank’s 2 percent inflation target is achieved although it’s unlikely borrowing costs would increase anytime soon.
–Global Banks Fight Back on Brexit, Warning $51 Billion at Stake (Bloomberg) Britain crashing out of the European single market could cost banks and associated businesses in the U.K. almost 40 billion pounds ($51 billion) in lost revenue, undermining a key sector of the economy, an industry report warned on Tuesday.
Overnight markets
–Overview: US 10yr note futures are down -0.0718% at 130-13, S&P 500 futures are up 0.22% at 2149.5, Crude oil futures are up 1.93% at $49.63, Gold futures are up 0.53% at $1276.4, DXY is down -0.04% at 96.133.
US Economic Data
-8:15 AM: ADP Employment Change, Sep, 154k, est. 165k, (prior 177k, revised 175k)
-8:30 AM: Trade Balance, Aug, -40.7b, est. -39.2b (prior -39.5b)
Int’l Merchandise Trade, Aug, -1.94b, est. -2.45b (prior -2.49b, revised -2.19b)
-9 :45 AM: Markit US Service PMI, Sep F, est. 51.9 (prior 51.9)
Markit US Composite PMI, Sep F, (prior 52.0)
-10:00 AM: ISM Non-Manufacturing Composite, Sep, est. 53.0 (prior 51.4)
Factory Orders, Aug, est. -0.2% (prior 1.9%)
Factory Orders Ex Trans, Aug, (prior 0.2%)
Durable Goods Orders, Aug F, est. 0.0% (prior 0.0%)
Durables Ex Transportation, Aug F, (prior -0.4%)
Cap Goods Orders Nondef Ex Air, Aug F, (prior 0.6%)
Cap Goods Ship Nondef Ex Air, Aug F, (prior -0.4%)
Canadian Economic Data
-There is no major economic data 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
04/10/2016
Market Update
– Tsys trading slightly weaker, curve flatter, US 10Y 1.62%, narrow overnite range in TY futures. European stocks higher, reserve Bank of Australia kept rates unch, big decline in Aussie bonds pressured tsys, Aussie curve ~6bps steeper. Order book said to be quite strong for Italy’s first 50yr bond – over E18bln for E5bln deal. Crude lower slightly lower48.34, gold below $13,00 for the first time since the Brexit vote in June. Cleveland Fed Mester said yest aft she favored Nov rate hike. GOCs unwinding early gains as German bunds/ UK gilts succumb to selling pressure. The GBP at new lows after May refused to grant any special favors to British financial services sector in the leadup to a ‘hard Brexit’. Provies opening unch with issuance exp after nothing yest, Alberta 5Y , Ontario in 10s & longs. Ontario 2016 fiscal update – deficits will be smaller than exp this FY – $5bln vs $5.7bln projected in Feb., thou net debt is $10.7bln higher.
News headlines
–U.S. Index Futures Little Changed as Investors Assess Hike Odds (Bloomberg) U.S. stock-index futures were little changed as investors assessed the odds of the Federal Reserve judging the world’s biggest economy strong enough to withstand an interest rate hike this year, while concerns over European banks eased.
–Oil eases as Iran, Libya output rises hit OPEC deal momentum (Reuters) Oil prices eased on Tuesday on news that Iran and Libya have continued to increase production, overshadowing an OPEC agreement struck last week to freeze output levels in a bid to stem a two-year price rout.
–Pound Drops to Lowest Since 1985 as Angst Builds Over Brexit (Bloomberg) The pound tumbled to its lowest level in three decades amid mounting concern the U.K. is heading for a so-called hard Brexit that would restrict access to the European Union’s single market. Sterling exceeded its lows versus the dollar set in the wake of the June 23 referendum and touched the weakest in three years against the euro. The slide extended as Prime Minister Theresa May was said to take the view that financial services would get no special favors in EU exit talks. The pound has fallen against all 16 of its major peers since the premier’s weekend announcement that she’ll trigger the formal process for quitting by March.
–Low rates are here to stay, ECB’s Praet tells bankers (Reuters) The European Central Bank is set to keep its interest rates low until it gets inflation back to its target, the ECB’s chief economist said on Tuesday, arguing it was not up to the institution to shore up meager bank profits.
–China September data seen tipping mild pickup in economy (Reuters) A flurry of data from China in coming weeks is expected to point to modest improvement in the economy in the third quarter as a government infrastructure spree and a housing boom boosts demand from steel and glass to furniture and appliances. Exports are expected to remain, weak, however, while fixed asset investment is likely to hover near 17-year lows, leaving the economy imbalanced and highly reliant on a rebound in heavy industry and government spending for growth.
–Federal government closes tax loophole used by foreign home buyers, hikes mortgage scrutiny (Financial Post) The federal government is taking aim at slowing Canada’s overheated housing market with new measures, including closing a tax loophole used by foreign buyers and stress testing more domestic mortgages. Finance Minister Bill Morneau announced the changes during a conference Monday, describing them as a way to ensure that the country’s housing market remains stable and affordable for Canadian buyers.
–U.S. apartment vacancy rate stays flat in third quarter (Reuters) U.S. apartment vacancy rate was unchanged at 4.4 percent in the third quarter from the second, while rent growth decelerated in a period that generally sees the strongest increase, real estate research firm Reis Inc (REIS.O) said on Monday. Asking and effective rents both expanded 0.9 percent during the quarter, compared with a 1.1 percent growth rate in the second. This was the third consecutive quarter of decelerating year-over-year rent growth.
–The Reserve Bank of India unexpectedly lowered its repo rate by 25 basis points to 6.25% (Reuters) The latest cut extends an easing cycle that began in January 2015 under Patel’s predecessor Raghuram Rajan and reduces the repo policy rate to its lowest since November 2010. The Indian rupee is weaker by 0.1% at 66.5425 per dollar.
Overnight markets
– Overview: US 10yr note futures are down -0.0835% at 130-27, S&P 500 futures are up 0.01% at 2153.5, Crude oil futures are down -0.31% at $48.66, Gold futures are down -1.32% at $1295.4, DXY is up 0.52% at 96.192.
US Economic Data
-9:45 AM: ISM New York, Sep, (prior 47.5)
Canadian Economic Data
-There is no major economic data 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