Commentaires

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

Market Update

• Tsys basically unch from after volatile overnite session following BOJ’s policy announcement, the 10Y yield rising sharply by ~4bps to 1.74% then falling back close to unch @ 1.68%. The BOJ left rates unch, deciding instead to target the yield curve – the 10Y JGB yield rose to 0% for the first time since March, yet ended at -0.04%. The Yen fell initially yet is now sharply higher with USDJPY below 101.40 support – clearly the mkt remains unconvinced as far as the BOJ’s new ‘tweaking’ measures. GOCs slightly lower in line with tsys, provis opening 0.5bps weaker with supply less likely prior to FOMC this aft. In corps we have seen buying in 5Y NVCC and bank FRNS lately, expect that a status quo FOMC this afternoon will be supportive for credit in general, higher beta in part.

 News headlines                                                                                                

• Banks Emerge as Winners From BOJ With Bonds, Yen Erasing Losses (Bloomberg) The Bank of Japan shifted the focus of its monetary stimulus Wednesday from expanding the money supply to controlling interest rates, which some economists deemed as further evidence that BOJ policy had reached the limits of its effectiveness. The central bank said it would adjust the volume of its asset purchases, the core of its framework until now, as necessary in the short term to control bond yields, while keeping it at about 80 trillion yen ($780 billion) annually over the long term.
• Oil jumps after surprise drop in U.S. crude inventories (Reuters) Oil prices jumped 2 percent on Wednesday after a surprisingly large drop in U.S. crude inventories and as an oil services workers strike in Norway threatened to cut North Sea output. Brent crude futures LCOc1 were up 91 cents at $46.79 per barrel by 1113 GMT, while West Texas Intermediate (WTI) crude futures CLc1 rose by 96 cents to $45.01 a barrel.
• Fed expected to keep rates unchanged, may signal year-end hike (Reuters) The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday amid tepid inflation and recent weak economic data, but could signal an increased likelihood of a hike by the end of the year. The U.S. central bank raised its benchmark overnight interest rate to a range of 0.25 percent to 0.50 percent in December, the first hike in nearly a decade, but has held rates steady this year.
• German retail, construction associations lift 2016 sales forecasts (Reuters) Germany’s HDE retail association and the HDB construction association on Wednesday raised their sales forecasts for 2016 in a further sign that private consumption and building activity will propel growth in Europe’s biggest economy this year.
• BoE paper says system-wide stress-testing would bring benefits (Reuters) Extending bank stress testing to the wider financial system could be the next step by regulators to root out weaknesses that undermine stability, a Bank of England paper said on Wednesday. The Bank has been conducting its own stress test of banks since the 2007-09 financial crisis, supplementing European Union tests. The aim is to spot flaws in business models and check if lenders are holding enough capital to withstand big market shocks.
• OECD Sees Globalization Stalling as Weak Trade Hurts Economy (Bloomberg) A collapse in trade growth suggests that globalization may be stalling and is contributing to a stagnation in world economic output, the Organization for Economic Cooperation and Development said. The OECD trimmed its global growth forecasts by 0.1 point for this year and next to 2.9 percent and 3.2 percent, respectively. The volume of world trade declined in the first quarter and will fall short of overall output growth in the full year, the Paris-based organization said Wednesday in a report.
• Expect lower interest rates for some time to come, Bank of Canada signals (Financial Post) The Bank of Canada governor is not alone in warning that weak economic growth and low interest rates have been with us for far longer than anticipated, and that trend is unlikely to change any time soon. It’s not just a domestic concern either, Stephen Poloz said Tuesday, but a global one that requires a lot of economic repairs across borders.

Overnight markets    

• Overview: US 10yr note futures are down -0.0479% at 130-14, S&P 500 futures are up 0.29% at 2137.25, Crude oil futures are up 1.66% at $44.78, Gold futures are up 1.12% at $1332.9, DXY is down -0.17% at 95.856.

US Economic Data

• 8:30 AM : Wholesale Trade Sales, m/m, Jul, 0.3%, est. 0.3% (prior 0.7%)
• 14:00 AM : FOMC Rate Decision, Sep 21th, est. 0.25%-0.50% (prior 0.25%-0.50%)
  •         Fed Summary of Economic Projections

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