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Market update

US Treasuries open NY firmer. TOKYO was closed for a holiday, as was Thailand. Tsy futures initially rose on news of the Turkey coup; then some sellers came in, including a seller of 1,600 Tsy ten year futures at 131.30. Also a seller of Sept16 10yr tsy futures: of 3,994 contracts prior to 10.23 pm ET Sunday at  132.00+. Asian stocks indexes rose. LONDON saw some mild safe haven bid. But then a rethink occurred that downplayed danger of the brief weekend Turkish coup; and Tsys moved lower. Nymex crude oil moved lower. Turkish lira currency rebounded. Brisk paying  ccurred in Us swaps. Uk Ftse 100 stock index up. Turkish stock index had been off as much as 5% at one point. TEVA Pharmaceuticals to sell its seven part US$ debt deal today, it appears. US 10-year note is at 1.580%.  Both UST and GoC bond yields are trading 1-2 bps higher after a quiet overnight session. After a brief pop overnight, North American fixed income markets opened largely unchanged and then traded weaker all day Friday.  In Canada, CGB’s initially led the down trade before 5’s and, especially, 30’s played catch up.

News headlines

• S&P 500 Futures Rise as Turkish Lira Rebounds After Failed Coup (Bloomberg) Financial markets showed signs of resilience following a failed coup attempt in Turkey, with the lira leading a recovery in developing-nation currencies and U.S. equity-index futures gaining ground. Haven assets including the yen, gold and Treasuries fell. The lira clawed back some of its losses from Friday, when news that army officers had tried to seize power triggered the currency’s steepest slide since 2008.
• Bond Investors in Italy Counting Winnings After U.K. Brexit Vote (Bloomberg) As Italian bank shareholders mourn their losses, government bond investors are counting their winnings. Money managers stepped up purchases of Italian and peripheral bonds after the U.K. voted on June 23 to exit the European Union, narrowing the spread between Italian 10-year securities and their German peers to its tightest since the start of that month.
• Oil prices largely unchanged as market shrugs off Turkey coup bid (Reuters) Oil prices were largely unchanged on Monday as traders shrugged off the impact of the attempted coup in Turkey, while disruptions to crude exports in Libya and upbeat U.S. economic data lent prices some support. Brent crude futures rose 2 cents to $47.63 a barrel by 0924 GMT, while U.S. crude futures eased by 4 cents to $45.91 a barrel.
• German economy to rebound after weak second quarter: Bundesbank (Reuters) Germany’s economy will rebound in the coming months after a weak second quarter and any impact from Britain’s decision to leave the European Union in the near future could be limited, the Bundesbank said in a monthly report on Monday. The euro zone’s biggest economy has struggled since a superb first quarter with falling industrial production, weak orders and dropping exports raising doubts about its prospects and suggesting that Germany may be succumbing to a broader global slowdown.
• Britain’s May to meet Merkel for Brexit talks in first foreign visit (Reuters) Theresa May will meet German Chancellor Angela Merkel on Wednesday to discuss how they can work together as Britain prepares to leave the European Union in her first foreign visit as prime minister, a spokeswoman said on Monday.
• Bank of England’s Weale sees little urgency to cut interest rates (Reuters) Bank of England policymaker Martin Weale said on Monday he was unsure whether he would back an interest rate cut at next month’s BoE meeting, in contrast to most of his colleagues who think stimulus is likely after Britain voted to leave the EU. Weale – who will step down after the August meeting – did not see panic among consumers or businesses after the June 23 Brexit vote and said the central bank should not be afraid of disappointing markets.
• Bank of America profit falls 19.4 percent as interest income drops (Reuters) Bank of America Corp (BAC.N), the second-largest U.S. bank by assets, reported a 19.4 percent fall in quarterly profit on Monday as low lending rates dented its interest income. However, the bank’s profit beat lowered market expectations.

Overnight markets                                                                                           

• Overview: US 10yr note futures are up 0.2133% at 132-5, S&P 500 futures are up 0.27% at 2158.5, Crude oil futures are down -1.09% at $45.45, Gold futures are up 0.08% at $1328.5, DXY is up 0.02% at 96.598.

 US Economic Data

• 10:00 AM: NAHB Housing Market Index, July, est. 60 (prior 60)
• 16:00 AM: Total Net TIC Flows, May, (prior 80.4b)
  • Net Long-term TIC Flows, May, (prior -79.6b)

 Canadian Economic Data

• 8:30 AM int’l Securities Transactions, May, (prior 15.52b)

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 modestly mixed/steeper on slightly better than avg volume. EGBs lower, global stocks mixed, highlighted by Nikkei up 0.68%, Europe almost entirely lower, DAX off 0.11%, Eurostoxx down 0.33%, US futures showing tiny gains headed into NY. USD mixed, higher vs JPY last 105.77 and commodities mostly lower including metals, gold off 0.07%, grains lower, while energies see mild gains. Real money sold intermediates and the long end while credit players also sold longer dated issues.

News headlines

• European Stocks Trim Week’s Gain as China Lifts Emerging Markets(Bloomberg)  European stocks halted this week’s rally, weighed down by company earnings and a deadly terror attack in France. Equities in emerging markets gained for a seventh day after Chinese economic data beat estimates, while the yen and gold fell as demand for havens waned. Travel and leisure shares were among the worst performers in Europe after the attack in Nice while a slump in profit for Swatch Group AG dragged luxury-goods makers lower. In developing nations, shares rose in the longest rally since April amid signs of stabilization in the world’s second-largest economy. Japan’s currency extended its biggest weekly drop since 1999 and gold headed for its first weekly loss since May. The pound was poised for its biggest weekly rally since 2009.
• UK can make demands about EU market access, we have demands too: Germany (Reuters)  Germany’s finance minister believes it is reasonable for Britain to demand access to the EU market for London’s banks, but Berlin will also make demands in talks on Britain’s future relationship with the bloc, a ministry spokesman said. The spokesman was clarifying comments made on Thursday by Finance Minister Wolfgang Schaeuble, who said it was “very reasonable” of his British counterpart to want access to the EU single market for financial institutions in London.
• Bank of England’s chief economist says UK needs prompt, muscular stimulus (Reuters) The Bank of England needs to act “promptly as well as muscularly” to stimulate the economy and boost confidence, its chief economist said on Friday, a day after the central bank upset markets by not cutting rates. In his first speech since Britain voted last month to leave the European Union, Andrew Haldane said the BoE needed to come up with a “package of mutually-complementary monetary policy easing measures” in time for a rate-setting meeting on Aug. 4.
• China Growth Steadies on Consumer, Dimming Stimulus Expectations (Bloomberg) China’s growth stabilized as lending and consumer spending picked up, suggesting the economy is responding to stepped up policy support. Gross domestic product rose 6.7 percent in the second quarter from a year earlier, compared with 6.6 percent seen by economists Bloomberg surveyed and in line with the government’s growth target of at least 6.5 percent for the full year. Industrial output and retail data for June beat estimates, investment slowed, and a report from the central bank showed the broadest measure of new credit beat all 29 analyst forecasts.
• Japan may be on route for a “soft” form of helicopter money (Reuters) Japanese policymakers, who won’t go as far as funding government spending through direct debt monetization, might pursue a mix of aggressive fiscal and monetary expansion to battle deflation, say sources familiar with the matter. In the past week, Japanese markets have seen hyped-up speculation that the government will resort to using what’s called “helicopter money”, where a central bank directly finances budget stimulus through programs such as perpetual bonds.
• Consumer Prices in U.S. Increased in June as Fuel, Rents Climbed (Reuters) The cost of living in the U.S. rose in June, propelled by a rebound in fuel prices and sustained gains in rents that is driving inflation closer to the Federal Reserve’s goal. The consumer-price index climbed 0.2 percent for a second month, Labor Department figures showed Friday in Washington. A second consecutive decrease in food costs held it below the median forecast of 82 economists surveyed by Bloomberg, which called for a 0.3 percent advance.

Overnight markets                                                                               

• Overview: US 10yr note futures are down -0.2478% at 132-2, S&P 500 futures are up 0.09% at 2159.25, Crude oil futures are up 1.09% at $46.18, Gold futures are down -0.13% at $1330.5, DXY is up 0.05% at 96.129.

 US Economic Data

• 8:30 AM: Retail Sales Advance, m/m, June, 0.60% , est. 0.10% (prior 0.50%, revised 0.20%)
  •    Retail Sales Ex Auto, m/m, June, 0.70%, est. 0.40% (prior 0.40%)
  •    CPI, m/m, June, 0.20%, est. 0.30% (prior 0.20%)
  •    CPI Ex Food and Energy, m/m, 0.20%, est. 0.20% (prior 0.20%)
  •    CPI, y/y, June, 1.00%, est. 1.10% (prior 1.00%)
  •    CPI Ex Food and Energy, y/y, June, 2.30%, est. 2.20% (prior 2.20%)
  •    Empire Manufacturing, July,  0.55, est. 5 (prior 6.01)
• 9:15 AM: Industrial Production, m/m, June, est. 0.30% (prior -0.40%)
  •    Capacity Utilization, June, est. 75.10% (prior 74.90%)
• 10:00 AM: University of Michigan Sentiment, July P, est. 93.5 (prior 93.5)

 Canadian Economic Data

• 8:30 AM: Manufacturing Sales, m/m, May,  -1.00%, est. -0.80% (prior 1.00%)
• 9:00 AM: Existing Home Sales, m/m, June, (prior -2.80%)

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

UST sys sharply lower/steeper, Tsy futures underperforming on high volume with 435K Sep 10Y contracts traded so far this session. BOE Unch, Bank of Korea Unch. EGBS sharply lower, stocks up nicely highlighted by a 0.95% gain in the Nikkei, 0.90% gain in Eurostoxx and 1.25% improvement in DAX. USD lower vs most majors though higher vs JPY which was last 105.64. Commodities are mixed, energies up with WTI and Brent up 1.88% and 2.16%, respectivelyTsys started to decline headed into the London open with 10Y opened London at 1.4929%, rising all the way to 1.5326%. Fast money was said to be the big seller on the London to NY crossover. Traders were also focused on the FTSE Italia All Share Banks Index, which was up sharply, UniCredit Chair says to Consider Raising Capital according to Reuters. Tsys receded a bit lower, after selling spurred by higher than expected 0.5% June PPI and 0.4% core PPI and steady initial weekly jobless claims; but then dip buying quickly came in.

News headlines

• Stocks Rise as Talk of Helicopter Money Sinks Yen; Pound Jumps(Bloomberg)   Stocks climbed with U.S. equity-index futures as commodities gained and better-than-estimated earnings pointed to resilience in the economy. The yen slumped on speculation Prime Minister Shinzo Abe is contemplating so-called helicopter money to revive Japan. European shares rose to a three-week high and emerging-market equities advanced for a sixth day. South Africa’s rand and Russia’s ruble were among the biggest gainers against the yen after a gauge of metal prices climbed to a nine-month high and oil rebounded from a two-month low.
• Bank of England Signals August Stimulus as Rate Kept at 0.5% (Bloomberg) The Bank of England left its key interest rate at a record low and signaled it’s readying stimulus for August as the economy reels from Britain’s decision to quit the European Union. The nine-member Monetary Policy Committee, led by Governor Mark Carney, voted 8-1 to keep the benchmark at 0.5 percent, with only Gertjan Vlieghe saying the outlook justified an immediate reduction. The decision is likely to shock investors, who had priced in more than an 80 percent chance the rate would be lowered. While policy makers discussed what measures could help the economy, they stopped short of detailing what those might be.
• Oil bounces after big losses but glut persists (Reuters) Oil prices rallied from sharp losses on Thursday but brokers said the downtrend could resume soon as record-high stocks and worries over slowing economic growth dampened sentiment. Brent crude oil was up 60 cents at $46.86 a barrel by 1015 GMT. U.S. crude was up 60 cents at $45.35. “The oil market is oversupplied, OPEC production is on the rise and we had a rather bearish weekly U.S. oil stats report,” said Tamas Varga at London brokerage PVM Oil Associates.
• Fed’s Harker now sees just up to two rate hikes this year (Reuters) The Federal Reserve could hike interest rates up to two times before year end, a top U.S. central banker said on Wednesday, slightly downgrading his expectations for monetary tightening even though he said the economy is on “fairly firm footing.” Philadelphia Fed President Patrick Harker, when he last spoke publicly in late May, predicted two to three rate increases this year. Since then U.S. jobs growth plunged one month and then shot back up the next, while Britons voted to leave the European Union.
• Hammond Pledges ‘Whatever Measures’ Needed for U.K. Economy (Bloomberg) Philip Hammond, the U.K.’s newly appointed chancellor of the exchequer, said that the vote to leave the European Union had “rattled confidence” and he will take “whatever measures” needed to shore up the British economy. “The number one challenge is to stabilize the economy, send signals of confidence about the future, the plans we have for the future to the markets, to business, to international investors,” Hammond said in a Sky News interview on Thursday.
• JPMorgan Profit Beats Estimates on Bond Trading, Loan Growth (Bloomberg) JPMorgan Chase & Co., the biggest U.S. bank by assets, said second-quarter profit fell 1.4 percent, beating analysts’ estimates as fixed-income trading revenue and loan growth jumped. Net income dropped to $6.2 billion, or $1.55 a share, from $6.29 billion, or $1.54, a year earlier, the New York-based company said Thursday in a statement. Excluding an accounting adjustment and a legal benefit, earnings were $1.46 a share, 3 cents higher than analysts’ average estimate in a Bloomberg survey. Shares of the company rose 2.3 percent to $64.40 at 8:04 a.m. in New York.
• Bombardier Inc ‘certain’ to announce more CSeries orders this year, executive says (Financial Post) More airlines are expressing interest in Bombardier Inc.’s CSeries and the company is “certain” to announce more orders for the aircraft this year, according to a senior executive in the company’s commercial aircraft division. The aerospace industry’s most important trade event of the year is underway in the U.K. this week and it has been “very successful” for Bombardier even though the company hasn’t announced any new CSeries orders, said Ross Mitchell, Bombardier’s vice-president of commercial operations.                                   

Overnight markets                                                                                   

• Overview: US 10yr note futures are down -0.4% at 132-10, S&P 500 futures are up 0.79% at 2163, Crude oil futures are up 1.79% at $45.55, Gold futures are down -1.49% at $1323.6, DXY is down -0.18% at 96.047.

US Economic Data

• 8:30 AM: Initial Jobless Claims, July 9, 254k, est. 265k, (prior 254k)
  • Continuing Claims, July 2, 2149k, est. 2130k (prior 2124k, revised 2117k)
  • PPI Final Demand, m/m, June, 0.5%,est. 0.3% (prior 0.4%)
  • PPI  Ex Food and Energy, m/m, June, 0.4%, est. 0.1% (prior 0.3%)
  • PPI Final Demand, y/y, June, 0.3%, est. 0.0% (prior -0.1%)
  • PPI Ex Food and Energy, y/y, June, 1.3%, est.1.0% (prior 1.2%)
• 9:45 AM: Bloomberg Consumer Comfort Index, July 10, (prior 43.5)

 Canadian Economic Data

• 8:30 AM: New Housing Price Index, m/m, May, 0.7%, est. 0.2% (prior 0.3%)
  • New Housing Price Index, y/y, May, 2.7%, est. 2.2% (prior 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