Commentaires

Market Update

US tsys slightly higher on avg volume in TY1 futs, curve flatter & US 10Y 1.55% (-1bp)- tsys barely reacting to better than expected ADP (179k vs 170k). Euro equities slightly higher, giving up earlier gains after yest saw the Euro Stoxx down 2.0% its largest loss since June 27th. HSBC up over 4.0% after announcing share buyback despite posting a 29% drop in earnings. GOCs opening higher , rebounding after ADP as stocks decline, weaker oil. Provis unch after closing 1.5bps wider yest

• News headlines                                                                                        
  • Stocks Slip as Emerging Markets Bear Brunt With Crude Below $40 (Bloomberg) A gauge of global stocks fell for a third day as a rebound in European banks failed to trigger a broader recovery. Emerging markets sank and the ringgit weakened with oil holding below $40 a barrel. S&P 500 futures were lower even with European equities little changed as HSBC Holdings Plc, Europe’s biggest bank, jumped after announcing a share buyback. Crude halted a two-day drop before an update on U.S. oil inventories, while gold was near its highest price since July 11. Industrial metals declined and the Malaysian ringgit and Turkish lira were some of the biggest losers among developing nations’ currencies. Treasuries advanced as a four-day selloff in Japanese government bonds abated.
  • World’s Largest Oil Hedge Set to Make Billions for Mexican State (Bloomberg) Mexico is on track to receive billions of dollars from its 2016 sovereign oil hedge, the first time it will reap the windfall two years in a row, according to data compiled by Bloomberg. The potential payout — after Mexico already got a record $6.4 billion in 2015 — is likely to sharpen the market’s attention to the Latin American nation’s effort to lock in prices for 2017. Mexico usually hedges in midsummer against a drop in oil through a series of deals with banks that in the past have included Goldman Sachs Group Inc. and JPMorgan Chase & Co.
  • China July service sector growth eases, employment falls for first time in four months: Caixin PMI (Reuters) Growth in China’s services sector cooled in July, with weaker expansions in activity and new work prompting companies to shed staff for first time in four months as they looked to cut costs, a private survey showed on Wednesday. The findings contrast with a more upbeat official survey on Monday, raising concerns that China is still facing hurdles to its plans to transform the economy into one more reliant on domestic consumption than heavy industry and exports.
  • Bitcoin worth $72 million stolen from Bitfinex exchange in Hong Kong (Reuters) Nearly 120,000 units of digital currency bitcoin worth about US$72 million was stolen from the exchange platform Bitfinex in Hong Kong, rattling the global bitcoin community in the second-biggest security breach ever of such an exchange. Bitfinex is the world’s largest dollar-based exchange for bitcoin, and is known in the digital currency community for having deep liquidity in the U.S. dollar/bitcoin currency pair.
  • China’s state planner drops call for monetary easing from statement (Reuters) A research office at China’s top economic planner on Wednesday called for the central bank to cut interest rates and bank reserve requirements, but later removed the remarks in an updated statement posted on its website. The National Reform and Development Commission (NDRC) also removed a call for subsidies to help reduce inventories of unsold homes without any explanation for the change.
  • Futures lower ahead of economic data (Reuters) U.S. stock index futures were lower ahead of a raft of corporate results and data, including a report on private-sector hiring. Futures were also pressured by U.S. crude prices, which remained below $40 per barrel amid oversupply fears.
  • AIG profit beats estimates on lower costs, shares rise (Reuters) American International Group Inc (AIG.N), the largest commercial insurer in the United States and Canada, reported an operating profit that beat analysts’ estimate, driven by lower costs and strong underwriting during the quarter. Shares of the company, whose board also authorized an additional $3 billion share buyback program, were up 2.5 percent at $55.50 in extended trading on Tuesday.

  Overnight markets

  • Overview: US 10yr note futures are up 0.0354% at 132-19, S&P 500 futures are down -0.17% at 2149, Crude oil futures are up 0.86% at $39.85, Gold futures are down -0.07% at $1371.6, DXY is up 0.19% at 95.242.

  US Economic Data

  • 8:15 AM: ADP Employment Change, July, 179k, est. 170k (prior 172k, revised 176k)
  • 9:45 AM: Markit US Services PMI, July F, est. 51.0 (prior 50.9)

  Markit US Composite PMI, July F, (prior 51.5)

  • 10:00 AM: ISM Non-Manf. Composite, July, est. 55.9 (prior56.5)

   

  Canadian Economic Data

  • There is no major economic data 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 lower, curve bear steepening as longs underperform, US 10Y 1.56 (+3.4bps), despite another weak session for European equities (-1.5%) with and the Nikkei -1.5%. The RBA cut rates to a record low 0.50%.Main focus overnite was continued rout in Japanese govt bonds after weak 10Y JGB auction. Reuters also reported that the Japanese govt is set to issue ‘several hundred billion’ in 40 year JGBs to fund Abe’s stimulus package. Fed Kaplan saying there is evidence that inflation is moving towards the Fed’s 2.0% goal, and that consumer spending is strong. European govt bonds lower after selloff in JGBs – also rumors ECB may slow purchases this month. GOCs sharply lower, catchup mode after yesterday’s losses in US, erasing Friday’s post GDP rally and 10s ~6bps weaker on the curve. Provis opening unch at new lows.

 News headlines                                                                                                     

• European shares hit two-week lows, yen rises as Japan backs stimulus (Reuters) European stocks fell to two-week lows on Tuesday, dragged down by banks, while the yen rose against the dollar and government bonds sold off after Japan’s cabinet approved a fiscal stimulus package to revive the flagging economy. Oil fell again, with U.S. crude dipping below $40 a barrel as a supply glut weighed on prices.
• Australia Rejoins Global Disinflation Fight With Record Low Rate (Bloomberg) How the mighty have fallen. Australia’s record low interest-rate following Tuesday’s cut underscores the demise of its economic exceptionalism: swept up in a wave of global disinflation, policy makers had little choice but to step in line with international peers as a strengthening currency threatens to push prices lower still. It’s a far cry from five years ago when the benchmark rate was a developed-world high 4.75 percent and the local dollar was worth more than the greenback as a mining investment bonanza went into overdrive.
• Yen Surges to Three-Week High as Japan Stimulus Underwhelms (Bloomberg) The Japanese yen appreciated to the strongest level in three weeks against the dollar as extra spending announced by the government amounted to only a small part of a headline number flagged by Prime Minister Shinzo Abe last week. The currency climbed against all of its 16 major peers after Japan’s government announced 4.6 trillion yen ($45 billion) in extra spending for the current fiscal year, as Abe seeks to bolster the economy without abandoning targets for improving fiscal health.
• Oil takes breather from losses but oversupply concerns remain (Reuters) Oil edged higher on Tuesday after falling by up to 10 percent in just one week, but investors remained concerned about oversupply weighing on prices. Global benchmark Brent crude was trading up 49 cents at $42.63 a barrel at 1031 GMT (0631 EDT). U.S. West Texas Intermediate (WTI) crude was up 38 cents at $40.44 a barrel, after briefly dipping below $40.
• Ruble Gains With Oil as Exporters Convert Dollars for Dividends (Bloomberg) The ruble gained as oil rebounded after falling into a bear market and Russian companies sold dollars to prepare for dividend payments. The currency of the world’s largest energy exporter rose 0.4 percent to 66.60 per dollar by 2:45 p.m. in Moscow. Brent crude increased 1.6 percent after Bank of America Merrill Lynch said on Tuesday crude’s 15 percent decline in the past month represents a good buying opportunity.
• Volkswagen Seeks Dismissal of U.S. Investor Class-Action Lawsuit (Bloomberg) Volkswagen AG asked a U.S. district court to dismiss a class-action lawsuit filed on behalf of investors, arguing the tribunal can’t hear disputes over shares trading mostly in Germany. The filing urges the judge in the court for the northern district of California to rely on a 2010 landmark Supreme Court ruling that says litigation over shares traded outside the U.S. can’t be heard in the country, VW said Tuesday in an e-mailed statement. Among the cases VW cited is also one by its holding company Porsche SE, which won dismissal of a $2 billion hedge fund case filed in the Manhattan U.S. district court.
• Credit Suisse, Deutsche index exclusion another blow to European banks (Reuters) Two of Europe’s biggest banks – Credit Suisse (CSGN.S) and Deutsche Bank (DBKGn.DE) – will be dropped from an index of Europe’s top 50 blue-chip companies next week in a further blow to the embattled sector. For Deutsche Bank, it will be the first time since 1998 that it will no longer be a member of the STOXX 50 .STOXX50.

Overnight markets  

• Overview: US 10yr note futures are down -0.4353% at 132-7, S&P 500 futures are down -0.18% at 2160.5, Crude oil futures are up 1.35% at $40.6, Gold futures are up 0.81% at $1370.6, DXY is down -0.47% at 95.262.

US Economic Data

• 8:30 AM: Personal Income, June, 0.2%, est. 0.3% (prior 0.2%)
  •      Personal Spending, June, 0.4%, est. 0.3% (prior 0.4%)
  •      PCE Core, m/m, June, 0.1%, est. 0.1% (prior 0.2%)
  •      PCE Core, y/y, June, 1.6%, est. 1.6% (prior 1.6%)

 Canadian Economic Data

• 9:30 AM:  RBC Canadian Manufacturing, July, (prior 51.8)

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 rebounding from o/n losses after Q2 GDP came in way below expectations 1.2% vs 2.5% exp with Q1 revised lower as well, US 10Y 1.51 (+1bps). GDP shortfall mainly an inventory story as inventories subtracted 1.2% while final sales were 2.4% vs 1.2% in Q1. Strong volume (~2x avg) overnite in TY futures (548K) after BOJ disappointment re stimulus, which led to huge losses in JGBs and pressured core European govt bonds lower. US stock futures lower post GDP, European stocks maintaining slight gains ~0.50% higher. GOCs higher, outperforming after May GDP came in -0.6% – the largest drop since March 2009 on lower oil production.  Provi spds opening unch after closing 0.5% tighter yest again, lower cda yields & lack of supply bringing in buyers.  Supply unlikely with early Cda close.                                                                                                                                       

News headlines                                                                 

• Yen Jumps as BOJ Disappointment Sinks Bonds; Europe Stocks Climb (Bloomberg) The Bank of Japan’s most anticipated policy announcement in years left investors underwhelmed, sparking a surge in the yen and sending government bonds and emerging-market stocks lower. Japan’s currency rallied against all of its 31 major peers after the BOJ kept its bond-buying target and policy rate unchanged, opting instead to boost purchases of exchange-traded funds.
• Eurozone GDP growth halves as French economy stalls (BBC News) Eurozone economic growth halved in the second quarter, but the 19-nation single currency area moved away from deflation. GDP rose by 0.3% between April and June, in line with expectations but below 0.6% growth in the first quarter. France, the eurozone’s second-largest economy, saw no growth after expanding by 0.7% in the first quarter. Eurozone inflation rose to 0.2% in July from 0.1% in June as a result of higher food, alcohol and tobacco prices. Data also revealed that the eurozone jobless rate remained at 10.1% in June.The economic growth figures are the first to be published since Britain voted to leave the European Union (EU).
• Brexit Sees U.K. Consumer Confidence Fall Most Since 1990 (Bloomberg) Sentiment among British households fell this month at its fastest pace in more than a quarter century, reflecting uncertainty about the outlook for the economy in the wake of the Brexit vote. The 11-point drop in GfK’s monthly gauge was the most since March 1990, when house prices were falling, interest rates stood at 15 percent and thousands were protesting in London against Prime Minister Margaret Thatcher’s poll tax. GfK said households have become more pessimistic about their personal finances and the economy since the U.K.’s decision to leave the European Union.
• Italian Jobless Rate Rises as More People Enter Labor Market (Bloomberg) Unemployment increased to 11.6 percent from 11.5 percent in May, national statistics agency Istat saidFriday in Rome. The median estimate in a Bloomberg survey of nine analysts called for 11.4 percent in June. The euro-area unemployment rate for June was 10.1 percent, according to a separate release from the European Union’s statistics office.
• TransCanada CEO says climate change policies not the answer for struggling pipelines (FinancialPost) TransCanada Corp. president and CEO Russ Girling, who knows a thing or two about pipelines, says climate change policies aren’t working to lessen the resolve of opponents who block regulatory approvals. “It’s not evident at the current time,” Girling said in an interview Thursday, when TransCanada released its results for the second quarter. “I hope that over time that will change. With folks like these, it doesn’t appear to be affecting their decision making.”
• Air Canada’s profit tops estimates as fuel costs fall (FinancialPost) Air Canada, the country’s largest airline, reported a better-than-expected quarterly profit on lower fuel expenses and cut its cost estimate for the year. Air Canada said it now expected full-year adjusted cost per available seat mile (CASM), which excludes fuel costs, to fall in the range of 2.75-3.75 per cent. The airline had previously estimated a decline of 1.75-2.75 per cent.
• Google-parent Alphabet’s revenue rise beats Street (TheGlobeandmail) Alphabet Inc., Google’s parent, posted a 21.3-per-cent increase in second-quarter revenue, exceeding analysts’ expectations, driven by strong advertising sales on mobile devices and for video content. The company’s shares rose 5 per cent to $804 (U.S.) in after-hours trading on Thursday. Alphabet’s consolidated revenue rose to $21.5-billion in the three months ended June 30, from $17.73-billion a year earlier. Analysts on an average were expecting revenue of $20.76-billion, according to Thomson Reuters I/B/E/S.
• Amazon’s Profits Grow More Than 800 Percent, Lifted by Cloud Services (NYTimes) Amazon reported net income of $857 million in its most recent quarter, the second quarter in a row in which it has shown a record profit. Its net income for those three months was also more than nine times the amount for the same period last year. For the second quarter, which ended June 30, Amazon reported net income of $857 million, or $1.78 a share, up from $92 million, or 19 cents a share, a year ago. Revenue jumped 31 percent to $30.4 billion from $23.19 billion a year ago. The results were well above the average estimate of analysts surveyed by Thomson Reuters of $1.11 a share in earnings and $29.55 billion in revenue.

Overnight markets  

• Overview: US 10yr note futures are up 0.1768% at 132-26, S&P 500 futures are down -0.15% at 2161.5, Crude oil futures are down -0.44% at $40.96, Gold futures are up 0.92% at $1353.5, DXY is down -0.91% at 95.856.

US Economic Data

• 8:30 AM: GDP Annualized, 2QA, q/q, 1.20%, est. 2.50% (prior 1.10%, revised 0.80%)
  •      GDP Price Index, 2QA, 2.20%, est. 1.90% (prior 0.40%, revised 0.50%)
  •      Personal Consumption, 2QA, 4.20%, est. 4.40% (prior 1.50%,  revised 1.60%)
  •      Core PCE, 2QA ,  q/q, 1.70%,  est. 1.70% (prior 2.00%, revised 2.10%)
• 9:45 AM: Chicago Purchasing Manager Index, July, est. 54 (prior 56.8)
• 10:00AM: University of Michigan Sentiment, July F, est. 90.2 (prior 89.5)

Canadian Economic Data

• 8:30 AM: GDP, May, m/m,  -0.60%, est. -0.50% (prior 0.10%)
  •      GDP, May,  y/y, 1.00 %, est. 1.20% (prior 1.50%)
  •      Industrial Product Price, June, m/m, 0.60%, est. 0.10% (prior 1.10%, revised 1.20%)
  •      Raw Materials Price Index, June, m/m, 1.80%, est. 3.00% (prior 6.70%, revised 7.00%)

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