Commentaires

Market Update

• Tsys higher & flatter, yields 2-4 bps lower led by the long end, US 10Y 1.688 (-2.4), volumes light in tsy futures (191k in TY1) as Japan returns from vacation. Core Euro bonds higher, bund & gilt curves both sharply flatter as well – strong demand seen at UK 30Y gilt auction. GOCs higher, spds ~1bp wider vs tsys, yields ~2bps lower with the 10Y 1.17%. Poloz scheduled to deliver a speech entitled ‘lower for longer’ in Quebec City at 12:50PM. More buying of long provis yest left spreads 2-3bps tighter led by the long end the and Ont 10/30 credit curve 1bp flatter 13.4/13 from 14.5 on Friday. Ont 26s lifted late in the day at 83, Ont 48s closed 96 bid. Spds opening firm despite lower Cda yields, could still see some supply ahead of FOMC.

 News headlines                                                                            

• Dollar Falls With Treasuries Amid Fed, BOJ Countdown; Oil Rises  (Bloomberg) The dollar dropped with Treasuries as traders braced for key policy decisions in the U.S. and Japan. Oil rallied. The dollar dropped with Treasuries as traders braced for key policy decisions in the U.S. and Japan. Oil rallied.
• Fed again poised to cut longer-run interest rate forecast (Reuters) U.S. Federal Reserve policymakers are set this week to again cut their forecasts for how high interest rates will need to go in an economy where output, productivity and inflation are growing at a slower pace than in past decades. It would be the fourth time in 15 months that the U.S. central bank has been forced to admit its estimate of this so-called neutral rate was too optimistic, raising questions about the health of the economy in the coming years.
• Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets (Bloomberg) There’s uncommon dissent in the ranks of the Federal Reserve’s primary dealers over the central bank’s interest-rate decision this week. Two of the Fed’s 23 preferred bond-trading partners — Barclays Plc and BNP Paribas SA — are betting against their peers and the bond market by forecasting officials will raise rates Wednesday. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show. Economists at both banks say traders have too steeply discounted officials’ intent to hike after the Fed has remained on hold for longer than expected.
• BOJ seen easing policy on Wednesday; economists split on next move (Reuters) The Bank of Japan is expected to further ease its ultra-loose policies at this week’s meeting, a Reuters poll of economists found on Tuesday, as it struggles to overcome chronic stagnation and quell speculation that it is running out of options. The economists polled Sept. 14-20 were largely split over whether the BOJ’s next move would be to cut its negative interest rate even deeper, or to ramp up or recalibrate its asset purchase program, or even do both.
• OPEC may decide on extra meeting immediately after Algiers: Algeria (Reuters) OPEC members could decide to hold an extraordinary meeting to discuss oil prices immediately after an informal gathering in Algiers next week, Algerian Energy Minister Noureddine Bouterfa said on Tuesday. Bouterfa told local radio he was optimistic that participants would reach a consensus on how to stabilize the oil markets at the Algiers meeting of OPEC and non-OPEC producers on Sept. 26-28.
• Encana unveils stock sale to pay down debt, fund spending (The Globe And Mail) Encana Corp. is raising more than $1-billion (U.S.) in a marketed share issue, a departure from priced bought deals that are more often used to raise money in the oil patch. Encana plans to use half the proceeds from the sale of 107 million shares to help fund its 2017 capital spending, much of which will be in the Permian shale oil play in Texas. The rest will be used to reduce debt, which has hovered slightly above industry norms.
• Export Development Canada sets up shop in London in Brexit’s wake (The Globe And Mail) Export Development Canada is opening an office in London and hopes to take advantage of opportunities created by Brexit. “Some people may be asking why EDC would choose the U.K. at this time. The answer is simple: Where some see risk and volatility after the Brexit vote, EDC sees opportunity,” said Mairead Lavery, EDC’s senior vice-president of business development.

Overnight markets

• Overview: US 10yr note futures are up 0.0479% at 130-16, S&P 500 futures are up 0.35% at 2140.5, Crude oil futures are down -1.18% at $42.79, Gold futures are down -0.08% at $1316.8, DXY is up 0.1% at 95.936.

US Economic Data

• 8:30 AM: Housing Starts, Aug, 1142k , est. 1190k (prior 1211k, revised 1212k )
  • Housing Starts, m/m, Aug, , est. -1.7% (prior 2.1%, 1.4%)
  • Building Permits, Aug, , est. 1165k (prior 1152k, 1144K)
  • Building Permits, m/m, Aug, , est. 1.8% (prior -0.1%, -0.8%)

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

• US tsys advancing in NY trade after quiet, range bound o/n session on extremely light volume (135k TY), with Japan closed today and the mkt setting up for the Fed and BOJ on Wednesday. German govt bonds lower, yield curve steeper. MNI story quoted ECB sources as saying ECB will stay put until the end of the year. Belgium long dated supply also weighed on l.t. bunds – E850mln 2047 bonds at 1.136% vs 1.09% in July. European stocks up 1.2% led by financials, crude rebounding 1.3% at 43.60 on escalating conflict in Libya preventing the resumption of exports. GOCs off slightly, curve unch – 2s/10s ~6bps steeper over the week with the BOC set to auction 2s this thurs – $3.9bln reopened Nov 18s. Provi spds in 0.5bps this morn after closing 1bp tighter Friday – supply less likely before Fed and BOJ meetings on Wed. Ont 10/30 credit curve ~0.5bps flatter since reaching new wides on Thursday at 14.5bps – decent buying of longs seen on Friday supported by $4.25bln CMB 26s dropping out of the long index as well.

 News headlines                                                                                        

• Stocks Rally as Crude Rebounds; Dollar Slides Before Fed Meeting (Bloomberg) Stocks rose around the world, buoyed by higher commodities prices, and the dollar weakened before central bank policy meetings this week. The Stoxx Europe 600 Index gained the most in more than two weeks. Crude rebounded from a one-month low as fighting disrupted supplies from Libya, boosting the currencies of oil-exporting nations.
• For Yellen, a September Fed surprise could close confidence gap (Reuters) Market volatility is low, U.S. census data shows income gains have reached the middle class, and workers are clawing back a larger share of national income. For now, at least, no international risk stands out and inflation may even be picking up.
• Oil climbs as Venezuela sees output deal (Reuters) Oil prices rose on Monday from multi-week lows after Venezuela said OPEC and non-OPEC producers were close to a deal to stabilize the market and as clashes in Libya disrupted attempts to boost crude exports. Brent crude futures were at $46.32 per barrel at 1043 GMT, up 55 cents from their previous settlement and off an earlier peak of 46.62. U.S. crude was up 61 cents, or 1.4 percent, at $43.64 a barrel.
• China big city home prices surge in August adding to worries (Reuters) Shenzhen lost its place as the hottest spot in China’s property market in August, but the tech boomtown bordering Hong Kong remained one of the major cities driving rapid price growth as concerns mount over funds pouring into property. Prices for new homes rose 36.8 percent in Shenzhen from a year ago, cooling from 40.9 percent in July, allowing the coastal city of Xiamen to take over as the city in China with the fastest rising prices.
• Hard Brexit will cost City of London its hub status, warns Bundesbank boss (TheGuardian) The head of Germany’s central bank has warned that London’s position as a financial centre would be dealt a severe blow if the UK left the single market because banks would be denied the right to operate across the 27 remaining members of the EU.
• Ottawa to impose a national carbon price on the provinces (The Globe And Mail) The Liberal government will move this fall to impose a minimum, national carbon price on provinces that fail to adopt their own pricing system for reducing greenhouse-gas emissions, a plan that is adamantly opposed by some key premiers.
• Quebec pension fund ups stakes in infrastructure test case (Reuters) Quebec’s public pension fund, the Caisse, is about to take on one of its toughest investment challenges yet – helping the commuters of Montreal. Keen to boost returns, Canada’s second-biggest pension fund is financing and overseeing the construction of a new 67 kilometer (41.6 miles) public transit system in Montreal, the third largest automated transportation system in the world behind those in Dubai and Vancouver.

Overnight markets

• Overview: US 10yr note futures are up 0.0479% at 130-15, S&P 500 futures are up 0.41% at 2141.25, Crude oil futures are up 1.46% at $43.66, Gold futures are up 0.48% at $1316.5, DXY is down -0.27% at 95.847.

US Economic Data

• 10:00 AM: NAHB Housing Market Index, Sep, est. 60 (prior 60)

Canadian Economic Data

• 10:00 AM: Bloomberg Nanos Confidence Index, Sep 16 (prior 57.7)

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 trading lower after CPI came in above exp (core 2.3% vs 2.2% exp), unwinding gains after ‘risk off’ o/n session and follow thru buying after yest weak US retail sales data. Core European bonds higher, curves flatter, the 10Y bund close to zero from high of 0.07% Tuesday.  Euro stoxx down 1.25% on ~8.0% plunge in Deutsche Bank – the WSJ reporting the Bank may have to pay as much as $14bln in fines related to its sale of mortgage backed securities. DB had set aside ~$5bln for legal costs so this latest demand from the US govt is a real shocker. GOCs higher led by the 10Y sector in a directional move, 5s10s ~2bps flatter after steepening ~11bps since the end of August. Provis opening firm after closing 1bp tighter yest despite $1.225 bln in supply and CMB 5Y.  Cominar Reit in the news yest after  $200mln equity financing in bought deal with proceeds to pay down debt – spds in 20-30 bps.

 News headlines                                                                                     

• Stocks Weighed Down by Deutsche Bank, Oil; Russian Bonds Drop (Bloomberg) European shares slid as a $14 billion U.S. Justice Department claim against Deutsche Bank AG and weakening oil prices dragged lenders and energy companies lower. All but two of the 19 industry groups on the Stoxx Europe 600 Index declined and S&P 500 Index futures also fell. Russia’s ruble and bonds slipped after its central bank cut interest rates and said the move would be its last of the year. U.S. crude traded below $44 a barrel amid concern rising exports from Nigeria and Libya will add to a glut. A rally government bonds sent German’s 10-year yields below zero for the first time in a week. The pound fell versus all its major peers.
• Oil hits two-week lows as growing supplies stoke glut concerns (Reuters) Oil prices fell to roughly two-week lows on Friday as news of rising Iranian exports and returning supplies from Libya and Nigeria fueled concerns that the global glut will persist. Benchmark Brent crude futures fell below the $46-a-barrel mark, trading down 1.7 percent at $45.79 a barrel, down 80 cents, at 1045 GMT. U.S. West Texas Intermediate futures were down 73 cents, or 1.7 percent, at $43.18 a barrel, a two-week low.
• Deutsche Bank to fight $14 billion demand from U.S. authorities (Reuters) Deutsche Bank (DBKGn.DE) said it would fight a $14 billion demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany’s largest lender. The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank’s expectations that the DoJ would be looking for a figure of only up to 3 billion euros ($3.4 billion).
• Bank of England aims to revamp interbank payment system by 2020 (Reuters) The Bank of England said on Friday it aimed to revamp Britain’s interbank payment system by 2020, and that future users would pay for this through a temporary increase in charges. The BoE’s real-time gross settlement system (RTGS) suffered a major outage in October 2014, and in June BoE Governor Mark Carney said he wanted to make it easier for smaller financial firms to access the system directly rather than going through large incumbent banks.
• Ottawa making housing fix a top priority, minister says (The Globe And Mail) The minister responsible for drawing up a national housing strategy says he and other senior cabinet members are having extensive discussions about how Ottawa should act to bring Canada’s housing market under control. Jean-Yves Duclos said he is “in direct and intense contact over those issues” with Finance Minister Bill Morneau and Revenue Minister Diane Lebouthillier as the government prepares for Monday’s return of Parliament.
• Johnson Said to Tell Italy Exit Talks Likely to Start Early 2017 (Bloomberg) Foreign Secretary Boris Johnson told his Italian counterpart that the U.K. will likely begin formal Brexit negotiations early next year, according to an official briefed on the conversation. Johnson, who campaigned for Britain to leave the European Union, met with Paolo Gentiloni  in Florence on Thursday, telling reporters afterward that the U.K. “must supply clarity, certainty” on its plans. Gentiloni said, “We need certainty on timings for Brexit.”

Overnight markets

• Overview: US 10yr note futures are up 0.1318% at 130-20, S&P 500 futures are down -0.12% at 2135.5, Crude oil futures are down -2.16% at $42.96, Gold futures are down -0.36% at $1313.3, DXY is up 0.51% at 95.774.

US Economic Data

• 8:30 AM: CPI, m/m, Aug, 0.2%, est. 0.1% (prior 0.0%)
  •    CPI Ex Food and Energy, m/m, Aug, 0.3%, est. 0.2% (prior 0.1%)
  •    CPI, y/y, Aug, 1.1%, est. 1.0% (prior 0.8%)
  •    CPI Ex Food and Energy, y/y, Aug, 2.3%, est. 2.2% (prior 2.2%)
• 10:00 AM: University of Michigan, Sep P,  est. 90.6 (prior 89.8)
• 16:00 AM:  Total Net TIC Flows, Jul, (prior -202.8b)
  •      Net Long-term TIC Flows, Jul, (prior -3.6b)

Canadian Economic Data

• 8:30 AM : Manufacturing Sales, m/m, July, 0.1%, est. 1.0% (prior 0.8%)
• Int’l Securities Transactions, July,  5.23b (prior 9.02b)

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