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Market Update

– Tsys opening higher,10Y yields lower for a fifth straight day, on ‘risk off’ session as Euro stocks are off 1.6%, Nikkei fell 1.25% & US stock futures moving lower as well. Deutsche Bank fell ~7% to a record low on news the German govt has ruled out assistance.  Crude oil rebounding on speculation producers will agree to cur production at this Wednesday’s meeting in Algiers. German bunds trading higher on sharp declines in bank stocks with the 10Y bund ~1bp lower at -0.096%. German business sentiment rebounded sharply in Sept, based on the 3pt jump in the latest IFO index to a 27-month high. JGBs mixed with the long end lower, curve 4bps steeper – Kuroda said the BOJ’s move to control the Japanese govt yield curve will give them more flexibility with its bond purchase program. In Canada, GOCs opening higher lagging the rally in tsys by 1-2bp across the curve, yet after Friday’s impressive 6bp outperformance on weak Cdn CPI & retail sales. Strong buying in CGBs led the 10Y sector higher Friday, ~2bps narrower on the GOC curve. Provi spreads resisted the move lower in GOC yields, 10Y Onts trading up at 82.5 Fri aft – Ont 10Y yield has broken below the lows of July at 1.85%. Spds opening this morn unch, Ont rumoured for this morn given where spds/yields are.  First Cap Realty reopened their 10Y issue on Thurs at 217, now 220/215.

News headlines                                                                                                                                  

– Stocks Drop on Bank, Commodity Company Woes; Turkish Lira Falls (Bloomberg) European stocks headed for their biggest drop since July as banks and energy producers dragged equities lower around the world, prompting investors to retreat to   the safety of government bonds and the yen.

– Oil rises as OPEC meets, volatility hits post-Doha high (Reuters) Oil rallied on Monday as the world’s largest producers gathered in Algeria to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April. Scepticism about any deal being reached has prompted money managers to cut their bullish bets to a one-month low last week, when prices fell by nearly 5 percent, dented by signs Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production.

– Deutsche Bank Slumps to Fresh Record Low on Capital Concerns (Bloomberg) Deutsche Bank AG shares dropped to a record low amid concerns that mounting legal bills, including a looming fine over its pre-crisis mortgage bond business, may force the German lender to raise capital. The shares declined as much as 6.9 percent and traded at 10.71 euros at 12:38 p.m. in Frankfurt, down 6.1 percent. That brings losses to about 53 percent this year. The 38-member Bloomberg Europe Banks and Financial Services Index slipped 2.4 percent, with Deutsche Bank the worst performer.

– IMF welcomes BOJ new policy framework, sees 2 percent inflation elusive (Reuters) The International Monetary Fund said on Monday that a new monetary policy framework adopted by the Bank of Japan marked “progress”, but stuck to its view that the central bank won’t be able to hit its ambitious 2 percent inflation goal anytime soon.

– China launches $52.5 billion state enterprise restructuring fund, report says (Reuters) China has launched a 350 billion yuan ($52.5 billion) restructuring fund as the government pushes ‘supply-side’ reforms that have included mergers of inefficient state enterprises and laying off workers in struggling sectors such as coal and steel. The China State-owned Enterprises Restructuring Fund will be managed by the State-owned Assets Supervision and Administration Commission (SASAC), the Economic Information Daily, a newspaper run by the official Xinhua news agency, reported on Monday.

– Carney’s Corporate-Bond Purchases May Worsen Liquidity Squeeze (Bloomberg) The start of the Bank of England’s corporate-bond buying program on Tuesday may exacerbate already tight liquidity in the sterling debt market. The central bank plans to purchase 10 billion pounds ($13 billion) of sterling investment-grade corporate debt over 18 months, heightening competition in a relatively small market that is dominated by investors who favor sterling assets, such as U.K. pension funds. It also adds to a wider debt-market pinch, partly caused by the start of a similar European Central Bank corporate-bond buying program in June.                                                                                                                  

Overnight markets

– Overview: US 10yr note futures are up 0.1431% at 131-7, S&P 500 futures are down -0.43% at 2148.75, Crude oil futures are up 1.39% at $45.1, Gold futures are up 0.07% at $1342.6, DXY is down -0.27% at 95.222.

US Economic Data

– 10:00 AM:  New Home Sales, Aug, est. 600k (prior 654k)

New Home Sales, m/m, Aug, est. -8.3% (prior 12.4%)

– 10:30 AM:  Dallas Fed Manufacturing Activity, Sep, est. -3.0 (prior -6.2)

Canadian Economic Data

-There is 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

Tsys opening slightly higher, flatter, US 10Y 1.616%, on muted volume in TY futures. European bonds lower led by the 10Y, profit taking after yest rally brought the 10Y bund/tsy spd to 3 month wides. Reuters story that Saudia Arabia would cut production if Iran agreed to freeze output also weighing on bonds thou is crude slightly is lower on the day ($46.24). Eurozone composite PMI fell to a 20-month low in Sep on weakness in services, pointing to Q3 growth of 0.3%, unch vs Q2. Based on Eonia futures the mkt is now pricing in ~40% odds of a rate cut by March. GOCs reacting as expected to much weaker CPI/retail sales figs – GOCs rallying led by 5s, curve ~2bps steeper – mkt now pricing 25% odds of 25bp rate cut by year end based on OIS. Provi spds hanging in so far depsite 10Y yields ~14bps lower on the week. Buying across the curve yest sparked by 10Y Quebec which went extremely well- issued @ 89, 88.5 bid this morn. 

News headlines

• Europe’s Economy Sees No Traction as Germany Loses Momentum (Bloomberg) The euro-area economy saw its pace of growth dip to a 20-month low at the end of the third quarter, highlighting the challenge facing policy makers to build momentum. IHS Markit said its monthly composite Purchasing Managers Index declined to 52.6 in September from 52.9 in August. Services weakened and manufacturing improved, with all three measures staying above the 50 mark that divides expansion from contraction.
• German Economy Loses Momentum as Services Restrain Growth (Bloomberg) At a national level, there was a surprise in the German data, where services PMI came in at 50.6, well below the 52.1 expected by economists surveyed by Bloomberg. Germany’s economy lost momentum at the end of the third quarter as near-stagnation in the services sector offset an improvement in manufacturing.
• France overtakes Germany (CNBC) The data showed that France saw a robust increase in service sector activity which offset its ongoing stagnation in manufacturing. This led the French Composite PMI to rise above its German counterpart for the first time in over four years, according to IHS Markit.
• Oil Rebounds as Saudi Arabia Said to Offer Output Deal to Iran (Bloomberg) Oil rebounded to head for a weekly gain after Saudi Arabia was said to have offered to reduce production if Iran agreed to freeze its output.
• Former OPEC President Optimistic There Will Be Deal in Algiers (Bloomberg) Chakib Khelil, the former Algerian energy minister who steered OPEC the last time it decided to cut supply, said he’s confident the group will reach an accord next week as low oil prices force members to act.
• Asian Stocks Pare Best Weekly Gain Since July as Topix Declines (Bloomberg) Asian stocks fell for the first time in six days, with the regional benchmark gauge paring the biggest weekly advance since July, as Japanese exporters retreated and a rally in Hong Kong equities lost steam. The MSCI Asia Pacific Index dropped 0.2 percent to 142.00 as of 4:10 p.m. in Hong Kong, halting a five-day increase. The measure has advanced 3.6 percent this week.
• Facebook Overestimated Key Video Metric for Two Years (WSJ) Big ad buyers and marketers are upset with Facebook Inc. after learning the tech giant vastly overestimated average viewing time for video ads on its platform for two years, according to people familiar with the situation.
• CBOE Said in Talks to Buy Exchange Operator Bats Global (Bloomberg) CBOE Holdings Inc. is in talks to acquire Bats Global Markets Inc., according to people familiar with the matter, a deal that would combine a 43-year-old Chicago firm that still runs trading pits where humans buy and sell options with a fully electronic exchange.
• LSE’s Rolet Says 100,000 Jobs at Risk If Clearing Leaves London (Bloomberg) One-hundred thousand jobs would be at risk if clearing leaves the U.K., said London Stock Exchange Group Plc Chief Executive Officer Xavier Rolet.

Overnight markets

• Overview: US 10yr note futures are up 0.1552% at 131-2, S&P 500 futures are down -0.09% at 2166.25, Crude oil futures are down -0.3% at $46.18, Gold futures are down -0.07% at $1343.7, DXY is down -0.01% at 95.441.

US Economic Data 

• 9:45 AM : Markit US Manufacturing PMI, Sep P, est. 52.0 (prior 52)

Canadian Economic Data

• 8:30 AM: Retail Sales, m/m, July, -0.1%, est. 0.1% (prior -0.1%)
• Retail Sales Ex Auto, m/m, July, -0.1%, est. 0.5% (prior -0.8%, revised 0.6%)
• CPI, y/y, Aug, 1%, est. 1.4% (prior -0.2%)
• CPI Core, m/m, Aug, 0%, est 0.2% (prior 0.0%)
• CPI Core, y/y, Aug, 8%, est. 2.0% (prior 2.1%)

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 prices open NY higher, 10-yr note 1.648%, after ongoing post-FOMC relief in global stocks and bonds. TOKYO saw quiet trading as Japanese markets closed for final day holiday of Silver Week. Hong Kong stock index closed up mildly amid post Fomc relief. RBNZ left its rates unchanged. Global equity relief rally, gold and crude higher as well. London flow included domestic money manager, fast- and real$ buying 10s and 30s, rate receivers in 10s and 30s, curve flatteners/steepener unwinds, foreign central bank sales in 10s, bank portfolio 2-way in the intermediates.

News headlines                                                                                                  

• Stocks Advance in Unison With Bonds as Fed Inspires Global Rally(Bloomberg) From stocks in Sydney to bonds in Britain, financial markets rallied in unison around the world as the dollar weakened after the Federal Reserve left interest rates unchanged and scaled back its projections for future hikes.
• Oil rises on weaker dollar after U.S. crude stock draw (Reuters) Oil rose for a second day on Thursday as a weaker dollar and a surprisingly large drop in U.S. crude inventories emboldened investors ahead of next week’s meeting between OPEC members and Russia to discuss supply. Brent crude futures LCOc1 rose 44 cents to $47.27 a barrel by 1100 GMT, or a 3.2 percent gain so far this week, while U.S oil futures CLc1 were up 47 cents at $45.81 a barrel.
• Brexit Bulletin: Banks Throw in the Towel on Clearing (Bloomberg) Global investment banks are throwing in the towel in the battle to keep London the home for clearing of $570 billion of euro derivatives. Executives tell Bloomberg’s Gavin Finch and John Detrixhe they expect France or Germany to prevail in the tussle once Brexit is underway and are making plans to cope.
• Bank of England says UK faces ‘challenging period’ for financial stability (Reuters) Britain still faces a “challenging period” for financial stability despite resilience seen after the European Union referendum, and rules for banks must remain stay tight, the Bank of England said on Thursday.
• German economic growth will slow in second half, ministry says (Reuters) The German economy will lose steam in the second half of 2016 as weaker foreign demand causes industrial output to slow, the Finance Ministry said on Thursday, another sign that Europe’s biggest economy is set for a slowdown.
• French industry confidence unexpectedly picks up in September (Reuters) French industrial sentiment unexpectedly picked up in September along with broader business confidence, an official survey showed, raising hope of a rebound by the euro zone’s second-largest economy this quarter from stagnation in the spring.

Overnight markets

• Overview: US 10yr note futures are up 0.2034% at 130-28, S&P 500 futures are up 0.39% at 2164.75, Crude oil futures are up 2.05% at $46.27, Gold futures are up 0.63% at $1339.8, DXY is down -0.5% at 95.186.

US Economic Data

• 8:30 AM: Chicago Fed Nat Activity Index, Aug, -0.55, est. 0.15 (prior 0.27, revised 0.24)
  •      Initial Jobless Claims, Sep 17^th, 252k, est. 261k, (prior 260k)
  •      Continuing Claims, Sep 10^th, 2113k, est. 2140k (prior 2143k, revised 2149k)
• 9:00 AM: FHFA House Price Index, m/m, Jul, est. 0.3% (prior 0.2%)
• 10:00 AM: Existing Home Sales, Aug, est. 5.45m (prior 5.39m)
  •       Existing Home Sales, m/m, Aug, est. 1.1% (prior-3.2%)
  •       Leading Indicator, Aug, est. 0.0% (prior 0.4%)
• 11:00 AM: Kansas City Fed Manufacturing Index, Sep, est. -3 (prior -4)

 Canadian Economic Data

• There is 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