Commentaires

Market Update

US tsys opening slightly lower in follow thru to Friday’s strong July non-farm payrolls, with the US 10Y 1.59 (unch) and the curve slightly steeper out to ten yrs. European stocks higher led by banks, which are higher for the fourth straight day, the Nikkei surged 2.5% led by fin’ls as well.. Euro govt bonds mixed – UK gilts higher as the BOE purchase facility is set to start this week , while German bunds are lower after Ger ind prod surprised to the upside rising 0.8% in June vs 0.7% exp. GOCs modestly higher after outperforming tsys Friday after a very weak Cdn July payroll: -31K with losses concentrated in the full time sector. Can/US ended 6-10 bps tighter across the curve. Provis opening unch, Ont 26s trading down at 84 this morn. Light data this week both sides of the border so bonds likely to key off stocks,Fedspeak etc.

 News headlines                                                                     

• Stock markets and U.S. dollar both climb as ‘risk-on’ mode dominates (Reuters) Stock markets rose on Monday and the dollar extended gains as risk appetite revived following strong U.S. job figures that bolstered expectations of faster growth in the world’s biggest economy. The MSCI All-Country World index .MIWD00000PUS rose 0.4 percent, while the pan-European STOXX 600 index gained 0.2 percent. European stock markets were supported by a broad equity rally on Friday’s payrolls data, and as Europe’s under-pressure banks .SX7P extended gains from lows reached at the end of last month after industry stress-tests showed many of them with relatively weak balance sheets.
• Oil market on path to rebalancing, OPEC monitoring situation – Qatar (Reuters) Qatar’s energy minister, and current OPEC president, said on Monday the oil market is on the path to rebalancing despite the recent decline in global oil prices, adding that OPEC was in continuous talks to stabilise the market. « The recent decline observed in oil prices and the current market volatility is only temporary, » Mohammad bin Saleh al-Sada, Qatar’s minister of energy and industry said in a statement.
• China stocks rise despite weak trade data; Hong Kong up (Reuters) China shares inched up on Monday morning, as a surge in coal stocks and sustained interest in property shares ignited by the Vanke drama offset the impact of worse-than expected trade data. Hong Kong equities rose to eight-month highs, as strong U.S. jobs data on Friday lifted risk appetites globally.
• K. Mortgage Bonds Are the Collateral Damage in Carney’s Stimulus (Bloomberg) Sales of U.K. residential mortgage-backed securities are set to decline, starving investors of highly-rated assets. Bank of England Governor Mark Carney’s exceptional stimulus package will help the U.K. economy ride out the Brexit shock. It won’t help the country’s 77 billion pound ($100 billion) mortgage bond market though. Call it collateral damage: the BOE’s new Term-Funding Scheme, or TFS, — a 100-billion pound program designed to help lower borrowings costs feed through to the real economy — will discourage issuance, according to Bank of America Corp. analysts led by Alexander Batchvarov. Supply of new deals matters because Britain’s residential mortgage-backed securities (RMBS) market is the biggest in Europe and is relied on by investors ranging from pension funds to asset managers as a source of highly-rated paper.
• BOJ board divided on whether monetary easing has limits: July meeting summary (Reuters) Stark divisions in the views of Bank of Japan board members were highlighted on Monday, with some defending unlimited easing of monetary policy and others arguing the BOJ had done enough – to the point of driving big market swings and sapping bond market liquidity. The debate underscores the challenges the central bank face as it attempts to address stagnant price growth and entrenched economic weakness with a dwindling set of policy tools.
• Draghi Jumps Brexit Hurdle to Find Oil Damping Price Outlook (Bloomberg) Whenever Mario Draghi clears a hurdle on his path to higher inflation, a new one appears. Just as the 19-nation economy sends encouraging signals that challenges from Brexit to terrorism won’t derail the modest recovery, a new decline in oil prices is casting a shadow over an expected pick-up in inflation. With growth not strong enough to generate price pressures, the European Central Bank president may have to revise his outlook yet again.
• Allergan’s Profit Beats Estimates as Botox Sales Surge (Bloomberg) Allergan Plc posted second-quarter profit that beat analysts’ estimates as sales surged for its blockbuster wrinkle treatment Botox. Earnings excluding some items were $3.35 a share, the company said Monday in a statement. Analysts surveyed by Bloomberg predicted $3.31 a share. Revenue rose 1.5 percent to $3.68 billion, short of the $3.72 billion average estimate. Allergan, which is based in Dublin but has executive offices in New Jersey, completed the $40.5 billion sale of its generic drugs business to Teva Pharmaceutical Industries Ltd. last week. Chief Executive Officer Brent Saunders has said Allergan plans to use some of the proceeds to pay off debt and buy back shares, though it also will look for “tuck-in deals” that fit its existing lines of business. In April, its $160 billion planned merger with Pfizer Inc. fell through after U.S. regulators introduced rules to limit the tax benefits of the transaction.

Overnight markets

• Overview: US 10yr note futures are down -0.1064% at 132-0, S&P 500 futures are up 0.1% at 2179, Crude oil futures are up 1.84% at $42.57, Gold futures are down -0.22% at $1341.4, DXY is up 0.16% at 96.352.

US Economic Data

• 10:00 AM: Labor Market Condition Index, est. -1.9

Canadian Economic Data

• 8:30 AM: Building Permits, m/m, June, -5.5%, est. 1.5% (prior 1.9%, revised -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 tsys lower after July payrolls surprised to the upside rising 255k vs 188k exp with both May & June revised higher and AHE up 0.3% vs 0.2% exp. Volumes in tsy futures light overnight, flows saw sellers of 5s from foreign CB and Japanese life ins buying of the long end according to MNI. European stocks slightly higher, USD index lower, crude unch, cutting earlier losses and holding close to $42.  German govt bonds lower, curve steeper with long end weighed by profit taking in the long end. GOCs lagging the move lower in tsys as cdn empl disappointed falling 31k vs 10k increase exp, with the unemp rate rising to 6.9% from 6.8% in June. The CAD is sharply lower on the diverging reports – off 140pps at 1.3158. Provis trading down after payrolls, Ont 26 @ 84, Ont 48s @ 96. 10Y spds are ~10 bps narrower over the past month despite a record July for provi (& corp) issuance (~19bln).

 News headlines                                                                          

• Global Stocks Advance With Metals on Stimulus as Dollar Slips (Bloomberg)  Stocks rose around the world and metals gained on speculation central bank stimulus measures will support the global economy. The dollar weakened before a report forecast to show growth in payrolls slowed to this year’s average pace. Miners led European shares to a third day of gains, while emerging markets extended their weekly advance as negative interest rates in Europe and Japan boost demand for riskier assets. Aluminum and zinc led metals higher. A measure of the dollar fell for the first time in three days and Treasuries were little changed. Vodafone Group Plc was offering the longest-maturity corporate bond in sterling this year after borrowing costs in the currency tumbled the most since May 2009.
• Oil prices slip as short-covering rally fizzles (Reuters) Oil prices dipped on Friday, ending a two-day rally, as a glut of crude and refined products weighed on markets and investors eyed a possible stutter in China’s imports. U.S. West Texas Intermediate (WTI) crude futures CLc1 fetched $41.74 per barrel at 0930 GMT (0530 ET), down 19 cents from their last close, after trading as low as $41.44 earlier in the day. They were on track roughly to break even on the week.
• BoE stimulus lifts stocks as U.S. jobs data looms (Reuters) British equities surged to one-year highs on Friday, lifted by the Bank of England’s new stimulus plan, while sterling clambered off one-week lows and the dollar slipped as currency markets positioned for U.S. jobs data.
• German Factory Orders Slide Amid Dwindling Euro-Region Demand (Reuters) German factory orders unexpectedly declined in June as demand for investment goods from within the euro area slumped in the run-up to Britain’s referendum on European Union membership. Orders, adjusted for seasonal swings and inflation, fell 0.4 percent from May, when they rose a revised 0.1 percent, data from the Economy Ministry in Berlin showed on Friday. That’s the third consecutive month demand remained below economists’ estimates. The median in a Bloomberg survey was for an increase of 0.5 percent. Orders dropped 3.1 percent from a year earlier.
• ECB Leaves Investors Guessing on Some Banks’ Stress-Test Results (Bloomberg) The European Central Bank is letting a pall of secrecy hang over the health of some of the continent’s banks. While fellow regulator the European Banking Authority published results of stress tests for 51 banks from Banca Monte dei Paschi di Siena SpA to Deutsche Bank AG, the ECB decided against publicly disclosing the outcome of its own parallel test for 56 additional banks. The ECB, the continent’s top banking regulator, instead left it up to lenders whether they made public information on capital levels, loan quality and leverage.
• Bombardier Posts Wider Than Estimated Loss on C Series Costs (Bloomberg) Bombardier Inc. reported a wider-than-expected second-quarter loss amid rising costs for increased production of the new C Series airliner while managing to burn through less of its cash. The planemaker swung to an adjusted loss of 6 cents a share, according to a statement Friday. Analysts had predicted a loss of 5 cents, according to the average of estimates compiled by Bloomberg. Revenue decreased 6.7 percent to $4.31 billion, compared with an average estimate of $4.18 billion.
• Canada’s Telus posts higher-than-expected profit (Reuters) Telus Corp T.TO TU.N, one of Canada’s three biggest telecom providers, reported a higher-than-expected quarterly profit, helped by lower operating expenses.
• Vancouver-based Telus also raised the low end of its full-year consolidated revenue forecast to C$12.78 billion ($9.82 billion) from C$12.75 billion. It maintained the high end at C$12.88 billion.

Overnight markets

• Overview: US 10yr note futures are down -0.2938% at 132-18, S&P 500 futures are up 0.35% at 2166.75, Crude oil futures are down -0.02% at $41.92, Gold futures are down -0.99% at $1353.9, DXY is up 0.47% at 96.205.

US Economic Data

• 8:30 AM: Trade Balance, June, -44.5b, est. -43.0b (prior -41.1b, revised -41.0b)
• Change in Nonfarm Payrolls, July, 255k, est. 180k (prior 287k, revised 292k)
• Change in Private Payrolls, July, 217k, est. 170k (prior 265k, revised 259k)
• Change in Manufacturing Payrolls, July, 9k , est. 4.0k (prior 14k, revised 15k)
• Unemployment Rate, July, 4.80%, est. 4.80% (prior 4.90%)
• Average Hourly Earnings, m/m, July, 0.30%, est. 0.20% (prior 0.10%)
• Average Hourly Earnings, y/y, July, 2.60%, est. 2.60% (prior 2.60%)

 Canadian Economic Data

• 8:30 AM: Int’l Merchandise Trade, June, -3.63b, est. -2.84b (prior -3.28b, revised -3.50b)
  • Unemployment Rate, July, 6.90% , est. 6.90% (prior 6.80%)
  • Net Change in Employment, July,-31.2k, est. 10.0k (prior -0.7k)
  • Participation Rate, July, 65.4%,  (prior 65.5%)
• 10:00 AM: Ivey Purchasing Managers Index, July, (prior 51.7)

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 are trading higher with the long end outperforming following the BOE monetary stimulus – a 25bp rate cut and QE of 70bln consisting of 60bln in gilts & 10bln in corporate bonds. UK gilts are 6- 12 bps lower in yield with the curve 5bps flatter led by the 8-10 yr sector. Short sterling futures also saw large buying in the minutes after the BOC decision with the curve 3bps flatter implying easing to zero as soon as the Dec meeting. European/UK stocks reacting favorably – the FTSE up 1.5% led by banks & insurers. GOCs higher, ~1bp flatter, yields 1-2bps lower in line with the muted rally in US tsys. Provis opening tighter, rumlurs of Ont & alberta 10Y.

 News headlines                                                                                               

• Pound Retreats as BOE Cuts Interest Rates; European Stocks Rise (Bloomberg) The pound slid against its major peers as the Bank of England cut its key rate for the first time in more than seven years. Stocks rose in Europe and Asia as oil clung to most of the gains from Wednesday’s rally. Currency traders had braced for the BOE to provoke share price swings — a measure of overnight volatility for sterling against the dollar was near the highest since Britain voted to leave the European Union in June.
• BOE Cuts Rate to 0.25% With More QE to Fight Brexit Fallout (Bloomberg) The Bank of England cut its key rate for the first time in more than seven years and will restart the printing presses as it ramps up defenses against a Brexit-induced slump. Officials, led by Governor Mark Carney, slashed their growth forecasts by the most ever and voted unanimously to reduce the benchmark by 25 basis points to a record-low 0.25 percent. While saying they had scope to do more if needed, including taking the key rate close to zero, they also announced a plan to lend as much as 100 billion pounds ($132 billion) to banks to ensure the measures reach the real economy.
• Oil up 3 percent on big U.S. gasoline draw; WTI back above $40 (Reuters) Oil prices jumped more than 3 percent on Wednesday, with U.S. crude futures returning to above $40 a barrel, after a larger-than-expected gasoline draw offset a surprise build in crude stockpiles in the No. 1 oil consumer. U.S. crude inventories rose for a second week in a row, gaining 1.4 million barrels last week, compared with analysts’ expectations for a decrease of 1.4 million barrels, Energy Information Administration (EIA) data showed.
• S. small business borrowing rose in June: PayNet (Reuters) U.S. small business borrowing rose in June, data released on Thursday showed, but not enough to reverse three straight months of decline, pointing to sluggish economic growth ahead. The Thomson Reuters/PayNet Small Business Lending Index rose to 138.9 in June, from May’s upwardly revised 131.1. It was down 5 percent from a year earlier, as borrowing by companies in all major industry groups sagged.
• Greenspan Put Gone Wild as Critics See Markets Hamstringing Fed (Bloomberg) It’s the Greenspan put gone wild. Or so the Federal Reserve’s critics would have it. No longer is the Fed just waiting for financial markets to be hit by a bout of turbulence and then lowering interest rates in response — as former Chairman Alan Greenspan did. Instead, the critics contend, it’s become so sensitive to the risk of sharp market moves in the future that it’s pulling its policy punches now by repeatedly holding off on raising rates.
• FCA Canada Inc’s sales plunge 14% in July as plateau fears grip industry (FinancialPost) FCA Canada Inc.’s sales plunged 14 per cent in July as the company adopted a new way of counting its transactions following a reporting scandal south of the border. The decline was led by a 63 per cent drop in Fiat-brand vehicles and a 31 per cent drop in Chrysler-brand vehicles. Excluding fleet sales, the overall decline was 16 per cent.
• Canadian Tire profit beats as sports gear, apparel sales rise (Reuters) Retailer Canadian Tire Corp Ltd CTCa.TO reported a better- than-expected quarterly profit as sales of sports gear and apparel rose. Revenue from the company’s Canadian Tire retail stores rose 4.5 percent to C$1.91 billion ($1.46 billion) in the second quarter ended July 2. The business accounted for more than half of the company’s total revenue.

Overnight markets  

• Overview: US 10yr note futures are up 0.1768% at 132-26, S&P 500 futures are up 0.1% at 2159.25, Crude oil futures are down 0% at $40.83, Gold futures are up 0.27% at $1368.4, DXY is up 0.15% at 95.708.

US Economic Data

• 8:30 AM:   Initial Jobless Claims, July 30^th, 269k, est. 265k (prior 266k)
  •        Continuing Claims, July 23th, 2138k, est. 2130k (prior 2139k, revised 2144k)
• 9:45 AM:   Bloomberg Consumer Comfort Index, July 31th (prior 42.9)
• 10:00 AM: Factory Orders, June, est. -1.9% (prior -1.0%)
  •        Factory Order Ex Trans, June, est. -0.2% (prior 0.1%)
  •        Durable Goods Orders, June F, est. -4.0% (prior -4.0%)
  •        Durables Ex Transportation, June F, est. -0.4% (prior -0.5%)

Canadian Economic Data

• There is no major economic news 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