Commentaires

Market update

Both UST and GoC bond yields are trading 1-2 bps higher after another quiet overnight session, with the curve a touch steeper as the longer-end of the curve underperforms. The yield on the benchmark 2Y was last trading at 0.702%, with the 5Y at 1.125%, the 10Y at 1.565% and the Bond at 2.281%. The 2/10-yr curve was last at 86.1 bps, with 2/30s at 157.8 bps. After a busy start to the week, our long end was relatively quiet with only a couple accounts picking away in cash 30s in small size. Dollarama issued $450mm 5-year and there were rumors of a BNS USD 3-year tap (ba/libor offered by .25-.75 bps again led by the front end). ross-border trade saw the 10-yr US/German spread at 160 bps. Donald Trump was confirmed as the 2016 Republican presidential candidate last night at the Republican Convention with Mike Pence confirmed as his running mate for Vice-President.

News headlines

• Stocks Gain With S&P 500 Futures on Earnings as Treasuries Drop (Bloomberg) Positive earnings set the tone for equity markets while the dollar traded at a seven-week high as speculation grew the U.S. will raise interest rates this year. Technology companies and carmakers led the Stoxx Europe 600 Index higher after earnings from software maker SAP SE and Volkswagen AG beat analysts’ estimates. U.S. stock futures signaled shares will approach all-time highs, the dollar advanced for a second day against the euro while Treasuries declined. The lira fluctuated near a record-low as the country’s president vowed to make an “important” announcement in the wake of a failed coup attempt. Gold headed for the lowest close this month.
• Oil edges up in subdued trade before U.S. stocks data (Reuters) Oil prices edged higher on Wednesday in muted trading as investors awaited a clearer signal from weekly U.S. crude inventory data on whether a glut was easing in the world’s largest oil-consuming nation. Global benchmark Brent crude prices LCOc1 were up 20 cents at $46.86 a barrel at 0947 GMT. On Tuesday, the contract settled down 30 cents, or 0.6 percent.
• K. Unemployment Falls Below 5% for First Time Since 2005 (Bloomberg) The U.K. labor market showed continued strength before the country’s decision to leave the European Union. The unemployment rate fell to 4.9 percent in the three months through May, the lowest since the third quarter of 2005, the Office for National Statistics in London said on Wednesday. Economists in a Bloomberg survey had expected the rate to stay at 5 percent. The number of people in work rose 176,000, the most this year, to a record 31.7 million.
• Bank of England sees no clear evidence of sharp Brexit hit yet (Reuters) The Bank of England said it saw « no clear evidence » that a sharp economic slowdown was yet under way after last month’s vote to leave the European Union, though there were signs investment and hiring were being put on hold. The BoE’s regional agents – who are spread around Britain and speak regularly with companies – said on Wednesday that business uncertainty « had risen markedly » but there was little evidence so far that consumers were spending less.
• Brookfield plans $1-billion investment in Indian distressed assets (GlobeMail) Canada’s Brookfield Asset Management Inc plans to invest about $1-billion in Indian distressed assets through a joint venture with the largest lender in the South Asian nation where banks are battling a record $120-billion of sour debt. Brookfield and State Bank of India have signed a preliminary agreement to set up a joint venture for the investments, the firms said on Wednesday. SBI aims to contribute up to 5 per cent of the total investments targeted by the venture, which may also rope in other banks at a later stage, they said.
• Dollar index at 4-month high on strong U.S. data, Fed hike hopes (Reuters) The dollar hit a four-month high against a basket of currencies on Wednesday, bolstered by strong U.S. data and growing expectations that the Federal Reserve may raise rates before the end of the year. Commerce Department data showed U.S. housing starts surged 4.8 percent, underpinning a theme of strength in the economy.
• Canada the G7 dark horse as IMF projects improved growth in 2017 (Financial Post) As the International Monetary Fund cuts its global forecast for the next two years and warns of more fallout from Brexit, Canada is projected to emerge as a dark horse among the world’s advanced economies — at least in the short term. The IMF predicts Canada will bounce from being the third-slowest-growing G7 economy in 2016 to be second strongest — behind only the U.S. — in 2017, according to an outlook released Tuesday, which revised projections from the Washington-based organization’s last report in April.

Overnight markets                                                                     

• Overview: US 10yr note futures are down -0.1063% at 132-3, S&P 500 futures are up 0.22% at 2163.5, Crude oil futures are down -0.2% at $44.56, Gold futures are down -1.03% at $1318.6, DXY is up 0.01% at 97.069.

US Economic Data

• There is no major economic data for today

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

Both UST and GoC bond yields are trading 2-3 bps lower after another quiet overnight session.  Equity futures are opening the day down (S&P futures -7.25) with oil prices flat (WTI -0.07%). Tokyo mkts returned after holiday, Jpn stocks up, most Asian stocks lower Outside of Japan many equity markets in Asia have lost ground overnight. Sources cited 10-year UST futures buying while US real money bought 5s, 10s; Asian banks also buying 10s. Credit desks and trading accounts sold 10s. China yuan set at lowest since Oct. 2010. Then London saw Tsys squeezed up, Bunds bid as European stocks extended loss, as traders cite Bloomberg headlines on EU courts decision to back EU state aid rules for national banks, which hurt Italian banks shares. UK had real money and bank portfolio buying in short-end Tsys, bank portfolio seen selling in 10s, swap paying in 2s and 5s, portfolio receivers in 30s. 10) Turkey trims overnight lending rate to 8.75%. Bloomberg reports that the EU and the IMF have agreed to Bank of Greece proposals for easing of some capital controls. IMF head, Lagarde, spoke in New York, covering a broad range of topics including the situation in Turkey, Brexit and Italian banks but there was little to give markets direction.

News headlines

• Stocks Take a Breather as Earnings Disappoint, Treasuries Gain (Bloomberg) After the S&P 500 Index yesterday set its fifth all-time high in six days,  futures signaled on Tuesday that stocks will retreat. The Stoxx Europe 600 Index had its biggest drop in two weeks as Akzo Nobel NV and Rio Tinto Group posted results that missed estimates. U.S. Treasuries and gold rose as investors sought havens, while the Australian and New Zealand dollars weakened after the countries’ central banks signaled they are moving toward interest-rate cuts.
• UK will not invoke EU Article 50 this year, government lawyer says (Reuters) Britain will not begin its formal divorce from the European Union by invoking Article 50 of the Lisbon Treaty this year, a government lawyer told the High Court on Tuesday. Lawyer Jason Coppell indicated however that the government’s current position could change.
• IMF to cut UK and global growth forecasts following Brexit vote (TheGuardian) All eyes will be on the IMF today as it provides its latest update on the global economy. The Washington-based Fund, headed by Christine Lagarde, is expected to downgrade its previous prediction that the global economy will grow by 3.5% in 2017.
• China economy growing, but at only half of official estimates: SMI survey (Reuters) A survey of Chinese sales managers indicates that the economy is growing but at only about half the rate of official estimates, a private survey showed on Tuesday. China’s economy has bottomed out and continues to grow at a low but stable pace, but a major pickup in growth is unlikely this year, according to the latest China Sales Manager Index (SMI) published by World Economics on Tuesday.
• Dollar Climbs Before Data Seen Showing Housing Sector Resilient (Bloomberg) The dollar advanced before an economic report on Tuesday that analysts forecast will show resilience in the U.S. housing sector. Bloomberg’s Dollar Spot Index rose for a third day. Economic data this week are forecast to show housing starts rose in June after contracting in May and continuing claims on unemployment benefits dropped in the week ended July 9, according to Bloomberg surveys of analysts. The dollar’s gain helped to trim this year’s decline that was driven by investors paring expectations for interest-rate increases by the Federal Reserve.
• Goldman Sachs quarterly profit jumps 78 percent (Reuters) Goldman Sachs Group Inc (GS.N) reported a 78 percent jump in quarterly profit as the Wall Street bank earned more from bond trading and its expenses fell. Net income applicable to Goldman’s common shareholders rose to $1.63 billion, or $3.72 per share, in the second quarter ended June 30 from $916 million, or $1.98 per share, a year earlier, when Goldman set aside $1.45 billion for regulatory and mortgage-related legal settlements.
• Turkey Put on Review for Downgrade by Moody’s After Coup Attempt (Bloomberg) Turkey had its debt put on review for a downgrade by Moody’s Investors Service after President Recep Tayyip Erdogan thwarted a coup attempt that erupted over the weekend. Moody’s will look at Turkey’s Baa3 credit rating, the lowest level of investment grade, to “assess the medium-term impact” of the failed coup on the country’s growth and policy-making institutions, according to a statement.

Overnight markets                                                                                           

• Overview: US 10yr note futures are up 0.0947% at 132-5, S&P 500 futures are down -0.19% at 2156, Crude oil futures are up 0.18% at $45.32, Gold futures are up 0.16% at $1331.4, DXY is up 0.58% at 97.124.

US Economic Data

• 8:30 AM Housing Starts, June, 1189k, est. 1166k (prior 1164k, revised 1135k)
  •   Housing Starts, m/m, June, 4.8%, est. 0.2% (prior -0.3%, -1.7%)
  •   Building Permits, June, 1153k, est. 1150k (prior 1138k, revised 1136k)
  •   Building Permits, m/m, June, 1.5%, est. 1.2% (prior 0.7%)

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 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