Comments

Market Update

• US tsys under pressure, US10Y 1.55 (+1.2bps) after ECB decision to leave both its main rate and size of its Asset Purchase Program unchanged and leave the QE end date at March 17. Core Euro bonds sharply lower, 10Y yields 3-4bps higher since the ECB. Euro at two week high close to 1.13, gold is slightly higher, and crude up 1.6% on bullish API data. S&P futs slightly lower. Draghi press conference ongoing. GOCs lower in line with tsys, after outperforming  3-4 bps yest post BOC. City of Toronto long deal rumored again for this morning.  Inter Pipeline (BBBh/BBB+) in the mkt with a $750MM 7Y deal in the area of 182 bps , proceeds to fund the acquisition of Williams Co. Cdn nat gas business. IPL 25s in trading ~190 so this looks to be ~10bp concesssion. IPL’s last issue was in March 2015 , $300MM 10Y @ 178.

 News headlines                                                                                                         

• Stock futures flat ahead of economic data, ECB meeting (Reuters) U.S. stock index futures were little changed on Thursday as investors awaited weekly jobless claims data and a European Central Bank decision that may hint at more monetary stimulus.
• Oil extends gains after big U.S. crude stock draw (Reuters) Oil prices rose more than 1.5 percent on Thursday after U.S. industry data showed a large drawdown in crude stocks, reflecting the temporary impact of an Atlantic storm. U.S. crude stocks fell by 12.1 million barrels last week, data from the American Petroleum Institute showed after the market settled on Wednesday, compared with expectations for an increase of about 200,000 barrels.
• China Aug imports rise for first time in nearly two years as demand picks up (Reuters) China’s imports unexpectedly rose in August for the first time in nearly two years, boosted by coal and other commodities, suggesting domestic demand may be picking up and putting the world’s second-largest economy on a more balanced footing. Exports also showed signs of improvement, falling by a less-than-expected 2.8 percent from a year earlier, as demand in the United States, Europe and even Japan showed some signs of improvement, data showed on Thursday.
• BOJ’s Nakaso says won’t rule out deepening negative rates (Reuters) Bank of Japan Deputy Governor Hiroshi Nakaso said the central bank would not rule out deepening negative interest rates or any other easing steps needed to achieve its price target. Nakaso said the BOJ’s comprehensive assessment of its policy effects to take place later this month will look at ways to accelerate achievement of its 2 percent inflation target. It will not discuss ways to withdraw its ultra-loose monetary policy.
• German growth expected to halve in 2017 as Brexit bites (Reuters) German economic growth will nearly halve in 2017 as Brexit and other risks hit exporters, the DIW institute said on Thursday, although it predicted a pick up to 1.9 percent this year due to strong domestic demand. The subdued outlook followed a string of economic data which painted a bleak picture for German manufacturing, with industrial orders barely rising in July and output posting its steepest drop in nearly two years.
• The Caisse sees a future in laser eye surgery with $25M Lasik MD investment (Financial Post) Caisse de dépôt et placement du Québec is investing $25 million to finance the global expansion of Lasik MD, Canada’s largest network of laser vision correction clinics. The pension and insurance fund manager says this investment will help Lasik acquire a minority interest in Vision Group Holdings, a U.S. laser vision correction company with 140 clinics in 40 states and one in Ontario.
• Brazil urged to expand land rental market but small farmers aren’t convinced (Reuters) Brazilian farmer Ivan Engler shakes his head at the thought of renting out his land, where he grows sweet potato and passion fruit, despite overtures from a big agricultural company keen to expand its territory. For years, the farmer raised his family on this 11-hectare plot of land outside Brasilia. The proceeds have fed, clothed and provided his children with an education.

Overnight markets

• Overview: US 10yr note futures are down -0.1784% at 131-4, S&P 500 futures are down -0.14% at 2175, Crude oil futures are up 1.76% at $46.3, Gold futures are up 0.07% at $1350.2, DXY is down -0.41% at 94.563.

US Economic Data

• 8:30 AM:  Initial Jobless Claims, September 3^rd, 259k, est. 265k (prior 263k)
  •       Continuing Claims, August 27^th, 2144k, est. 2151k (prior 2159k, revised 2151k)
• 9:45 AM: Bloomberg Consumer Comfort Index, September 4^th, (prior 43.4)
• 15:00 AM: Consumer Credit, July, est. 16.0b$ (prior 12.32b $)

Canadian Economic Data

• 8:30 AM: Capacity Utilization Rate, 2Q, 80.0%, est. 79.6% (prior 81.4%, revised 81.4%)
  •     New Housing Price Index, July, 0.4%, est. 0.1% (prior 0.1%)
  •     New Housing Price Index, y/y, July, 2.8%, est. 2.5% (prior 2.5%)
  •     Building Permits, m/m, July, 0.8%, est. 2.9% (prior -5.5%, revised -5.3%)

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 tsys slightly lower to unch, the US 10Y yield close to two week low @ 1.53%, prices close to yesterday’s post ISM highs. Fed Williams repeated his call for the Fed to raise rates ‘sooner rather than later’ in a speech in Reno yest. Tsys were briefly pressued in Europe after weak 10Y bund auction, also BlackRock CIO said the co. no longer likes long term tsys, afraid the Fed will let inflation overshoot.  Core Euro bonds higher led by long term bunds, gilts before ECB decision tommorow, UK gilts outperforming on ~Stg44bln in coupon & redemption payments. In US corporates the new issue mkt opened in full force, with over $23bln in IG issuance including a 5-part $6bln deal from Siemens (A1/A+). GOCs small higher led by longs after rally yest, 10Y closing in on 1.0%. Provis well bid here despite lower cda yields, expect supply to heat up  with all in yields at attractive levels for issuers. BOC decision the focus with no change expected, but Poloz may take on a dovish tone in an effort to talk down the CAD & sustain the rebound in exports seen in last week’s trade data. Enbridge/Spectra all stock deal lead to sharp tightening in ENB spreads (~20bps) with S&P affirming ENB at BBB+ late in the day.

 News headlines                                                                                        

• Emerging Markets Gain With Commodities on Receding Fed Wagers (Bloomberg) Emerging-market stocks gained with commodities as a slew of weak U.S. economic data quelled speculation the Federal Reserve will raise interest rates as early as this month. European equities traded near their highest level since April. An MSCI gauge of shares in developing nations to its highest levels in more than a year as relatively loose monetary policy in major industrialized nations fueled a search for higher yields.
• Oil rises, but doubt over output deal tempers rally (Reuters) Oil rose on Wednesday to pare some of the previous day’s losses, partly thanks to a weaker U.S. dollar, but the limited likelihood of a near-term agreement among the world’s biggest exporters to rein in production kept gains in check. November Brent crude futures rose 50 cents to $47.76 a barrel by 1105 GMT, while U.S. crude futures gained 40 cents to trade at $45.23 a barrel.
• K. Manufacturing Shrinks Most in a Year After Brexit Vote (Bloomberg) U.K. manufacturers cut production at the fastest pace in a year in July as Brexit trauma rocked the British economy, a downturn that may prove short-lived. Output fell 0.9 percent from June, far exceeding the 0.3 percent decline forecast in a Bloomberg survey, Office for National Statistics data published Wednesday show. Total industrial production rose 0.1 percent, thanks to a jump in oil and gas output.
• UK banks call for transitional trade arrangements after Brexit (Reuters) Britain should negotiate transitional arrangements with the European Union to avoid “cliff edge” disruption to markets once the country has left the bloc, a top banking official said on Wednesday. Anthony Browne, chief executive of the British Bankers’ Association, said there was a need for an orderly transition.
• Fed policymakers defend role of private bankers at central bank (Reuters) Two Federal Reserve policymakers plan to warn U.S. lawmakers against changing the Fed’s structure to reduce the role of private bankers at the U.S. central bank, according to statements seen by Reuters.
• Enbridge Inc deal to buy Spectra creates ‘energy infrastructure colossus’ with $48 billion of future projects (Financial Post) Enbridge Inc.’s $37-billion merger with Spectra Energy Corp. will create a new integrated pipeline “colossus” with a massive $48 billion worth of potential future projects. Calgary-based Enbridge announced Tuesday it would merge with Houston-based Spectra in an all-share deal to create the largest pipeline company by market value on the continent — leapfrogging competitor Kinder Morgan Inc.
• CMHC head warns of funding shortage to meet housing strategy demands (GlobeAndMail) The head of Canada’s housing agency is warning there simply will not be enough money available for Ottawa to meet expectations for a national strategy to tackle the wide-ranging problems in the housing market. Evan Siddall, the president and CEO of the Canada Mortgage and Housing Corp., said on Tuesday that consultations for a national housing strategy will intensify this week, but he cautioned that demands for new spending clearly exceed what will likely be in the 2017 federal budget.

Overnight markets

• Overview: US 10yr note futures are up 0.1189% at 131-17, S&P 500 futures are down -0.06% at 2183.25, Crude oil futures are up 0.18% at $44.91, Gold futures are up 0.09% at $1355.2, DXY is up 0.02% at 94.843.                                                                                                                                                                                                                                                

US Economic Data

• 10:00 AM: JOLTs Job Openings, July, est. 5630 (prior 5624)
• 14:00 AM: U.S. Federal Reserve Releases Beige Book

Canadian Economic Data

• 10:00 AM: Bank of Canada Rate Decision, September 7^th, est. 0.50% (prior 0.50%)
  •        Ivey Purchasing Managers Index, August, est. 56.5 (prior 57.0)

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 tsys opening higher, curve slightly flatter, US 10Y 1.595 (-1bp). Tsys lagging the rally in core European bonds. Long term UK gilt yields 5bps lower ahead of BOE’s purchase operation in 15yr gilts this aft. German bunds higher led by longs amid lower crude oil, weak Factory Orders.   GOCs higher, in line with tsys, focus is on BOC tomorrow and employment Friday. We do not expect any change in rates from the BOC – growth is expected to rebound in the second half of the year (exports surged in July, non energy exports rose 4.1% m/m), more fiscal stimulus is on the way (the BOC’s $15bln in GOC issuance last month was the heaviest in seven yrs). Provis opening unch, QC update – deficit for Q1 fell to $529mln from $675mln yr ago, balanced budget for this FY still on target.

News headlines                                                                                                    

• Emerging market bulls push stocks higher (Reuters) World shares closed in on one-year highs on Tuesday as the prospect of prolonged cheap borrowing costs and a recent rise in oil prices set off a new emerging market bull run. Asian stocks reached one-year highs overnight and MSCI’s 46-country ‘All World’ index .MIWD00000PUS was close as most of Europe’s markets climbed 0.1 to 0.3 percent higher.
• Oil slips toward $47 as hopes for producer action wane (Reuters) Oil slipped toward $47 a barrel on Tuesday, falling further from the previous session’s one-week high on receding hopes for imminent action to tackle a supply glut. Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, prompting Brent to jump almost 5 percent only to pare gains after Saudi Energy Minister Khalid al-Falih said there was no need to freeze output for now.
• Enbridge Inc to buy Spectra Energy in stock deal worth $37 billion (Financial Post) Enbridge Inc, Canada’s largest pipeline company, said today it would buy Spectra Energy Corp in an all-stock deal valued at about $37 billion (US$28 billion) to create the largest North American energy infrastructure company.
• G20 a success for China, but hard issues kicked down the road (Reuters) China is lauding its successful hosting of the G20 summit in scenic Hangzhou, with open confrontation largely avoided and broad consensus reached over the fragile state of the global economy and the need for a wide range of policies to fix it.
• China’s Productivity Growth is the Worst Since the Asia Crisis (Bloomberg) Government employees playing badminton in a Tianjin office lobby in the middle of the  afternoon. Hundreds of miles away in the northern city of Tieling, workers manually cut rubber truck parts in a tiny family workshop that makes about $600 a month.
• China Is About to Get Serious With Bad Debt (Bloomberg) China’s banks, which dialed down fundraising efforts this year even as bad debts swelled, are making up for lost time. Both lenders and the companies set up to acquire their delinquent assets are bolstering their finances. China Citic Bank Corp. last month announced plans to raise as much as 40 billion yuan ($6 billion), while Agricultural Bank of China Ltd., Industrial Bank Co. and China Zheshang Bank Co. are also boosting capital. China Cinda Asset Management Co. and China Huarong Asset Management Co. are poised to tap investors.
• Bayer Sweetens Takeover Bid Again as Monsanto Mulls Options (Bloomberg) Bayer AG sweetened its takeover bid for Monsanto Co. to $56 billion, raising its offer for a second time in its pursuit to become the world’s largest producer of seeds and pesticides. Monsanto responded to say that it’s evaluating the Bayer offer as well as proposals from other parties and strategic alternatives.

Overnight markets

• Overview: US 10yr note futures are up 0.0119% at 130-31, S&P 500 futures are up 0.25% at 2172.75, Crude oil futures are up 1.25% at $43.7, Gold futures are up 1.01% at $1330.4, DXY is down -0.3% at 95.362.

US Economic Data

• 10:00 AM: Labor Market Conditions Index, August, (prior 1.0)
• ISM Non-Manufacturing Composite, August, est. 55.0 (prior 55.5)
• IBD/TIPP Economic Optimism Index, September, est. 48.1 (prior 48.4)

Canadian Economic Data

• 10:00 AM:  Bloomberg Nanos Confidence Index, September 2^nd, (prior 59.3)

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