Commentaires

Market Update

• Tsys getting crushed for a second day, yields 2-6bps higher & the curve steeper with the US 10Y firmly above 1.60%, now 1.65 (+5bps). German govt bonds lower, yield curve steeper in follow thru to yest ECB decision. JGB curve ~8bps steeper – Reuters story on BOJ studying options to steepen yield curve as curve flattening has hurt bank profits. European stocks lower, financials bucking the trend – Deutsche Bank up 4% on reports the bank is near a settlement with the US on its sale of RMBS leading up the financial crisis. GOCs lower, curve steeper led by 10s with the 10Y at 1.13% the highest since June 30th. Cda Employment rose 26.2k in August vs 14k exp led by 52.2k full time jobs. Alberta long deal at 17 over Ontarios well received, now 16.8 bid on screens. Three corp deals yesterday all did well in secondary (Suncor & CWB breaking 10bps tighter), with more supply expected (reits & utilities, banks, Couche Tard).

 News headlines                                                                                                         

• Bond, Stock Slide Deepens as Stimulus Outlook Wanes; Oil Falls (Bloomberg) Selloffs in bonds and stocks around the world deepened on signs central banks are starting to question the benefits of further monetary easing. Oil pared a weekly gain, leading commodities lower.
• German exports plummet in July, hit trade surplus (Market Watch)  Germany’s trade surplus in July came in lower than expected as exports plummeted, the latest in a string of weak economic data from Europe’s industrial powerhouse at the start of the third quarter. Germany’s trade surplus, adjusted for seasonal swings and calendar effects, fell to 19.4 billion euros ($21.9 billion) from a revised EUR21.4 billion in June, the Federal Statistical Office, Destatis, said Friday. Economists polled by The Wall Street Journal had forecast a surplus of EUR22.7 billion.
• China’s Aug inflation trends point to stabilizing economy (Reuters) China’s consumer price inflation slowed to its weakest pace in almost a year in August, pulled down by abating food costs, although an encouraging moderation in producer price deflation added to growing evidence of a steadying economy. Indeed, the broader inflation trends shown in Friday’s data confirm recent signs of a more sure-footed recovery in the world’s second-biggest economy, allowing authorities to resist any fresh monetary easing as they move to curb an unsustainable build up of credit in the financial system.
• Wells Fargo will pay $190 million to settle customer fraud case (Reuters) Wells Fargo has long been the envy of the banking industry for its ability to sell multiple products to the same customer, but regulators on Thursday said those practices went too far in some instances.
• Canada’s economy could take 15 years to ‘reinvent’ itself, warns head of Royal Bank of Canada (Financial Post) Canada’s economy could take 15 years to reinvent itself after manufacturing and service industries began to shrink in the wake of the financial crisis, Royal Bank of Canada CEO David McKay said.
• Canada’s new housing prices rise more than expected on Toronto strength (Financial Post) Canadian new housing prices rose more than expected in July, climbing 0.4 per cent from June on continued strength in the hot market of Toronto, Statistics Canada data indicated on Thursday. The monthly increase, the 16th in a row, was greater than the 0.2 per cent advance forecast by analysts in a Reuters poll.

Overnight markets

• Overview: US 10yr note futures are down -0.2391% at 130-13, S&P 500 futures are down -0.56% at 2158.75, Crude oil futures are down -2.35% at $46.5, Gold futures are down -0.07% at $1340.6, DXY is up 0.17% at 95.186.

US Economic Data

• 10:00 AM: Wholesale Inventories, m/m, July F, est. 0.1% (prior 0.0%)
  Wholesale Trade Sales, m/m, July, est. 0.2% (prior 1.9%)

Canadian Economic Data

• 8:30 AM: Unemployment Rate, August, 7.0%, est. 7.0% (prior 6.9% )
  Net Change in Employment, August, 26.2k, est. 14.0k (prior -31.2k)

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 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