Commentaires

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

Market update

US Tsys back to bull flattening, futures outperforming on high volume with 319K Sep 10Y contracts traded so far. EGBs higher, bund curve flatter, USD lower vs majors, JPY last 104.64. Global stocks up, highlighted by a 0.84% gain in the Nikkei, 0.64% gain in IBEX while the Dax and Eurostoxx are up 0.14% and 0.20%, respectively. Commodities are mixed, energies down with WTI and Brent off 1.11% and 1.42%, respectively, after rising sharply following yesterday’s API data that showed a 2.2M build. Fed Kashkari was on the tapes in Tokyo, noting the Fed can be patient on raising rates, Fed Mester followed with comments that gradual rate increases are appropriate.Treasuries open NY firmer, 10-year note 1.469%. US stock index futures fractionally higher. Tsy will sell the 1pm ET $12B 30Y reopen Wed; traders may approach it cautiously as weak 10Y reopen Tues broke a string of very strong 10Y auctions.

News headlines

• Stocks Climb With Copper as Brexit-Induced Volatility Subsides (Bloomberg) Wherever you look in global financial markets, signs are emerging that the fallout from Britain’s vote to leave the European Union is under control.  Global stocks are rising for a fifth day, having recovered almost $4 trillion in value lost in the days following the U.K.’s June 23 referendum, and emerging-market shares are at an eight-month high. Copper is rising, boosted by signs policy makers are prepared to act to limit the fallout, while acquisitions have resumed and corporate bond sales are showing signs of picking up. Havens such as the yen and government bonds have given back much of the gains they made since the Brexit vote.
• Brexit, what Brexit? Shares near 2016 highs (Reuters) Stock markets traded within sight of their highest levels this year on Wednesday as the prospect of stimulative economic policy across the developed world eased immediate concern over Britain’s vote to leave the European Union. The swift moves by the Conservative Party that see Theresa May replacing David Cameron as prime minister on Wednesday have helped fund a recovery that, aside from sterling itself, has wiped out the negative reaction to the June 23 vote.
• Japan Cuts Forecasts as Abe Advisers Urge Coordinated Stimulus (Bloomberg) Japan cut its forecasts for growth and inflation as two key advisers to Prime Minister Shinzo Abe urged coordinated stimulus from the government and the central bank to support the ailing economy. Current thinking in the government is for a fiscal package of about 10 trillion yen ($96 billion), according to people familiar with the discussions. Koichi Hamada and Etsuro Honda, who helped the prime minister shape his Abenomics policies, said in separate interviews on Wednesday that any fiscal injection should be done in concert with a boost in monetary policy from the Bank of Japan, which meets later this month.
• Fed’s Mester heartened by U.S. job rebound in June (Reuters) The sharp rebound in U.S. job growth last month eased concerns that the country’s labor market had regressed, a top Federal Reserve official said on Wednesday, repeating she continues to expect gradual interest rate rises.  Cleveland Fed President Loretta Mester, speaking in Sydney, largely repeated a July 1 speech in London in which she said it was too early to judge the full effect of Britain’s vote to leave the European Union on the U.S. economy.
• OPEC sees tighter 2017 oil market, Brexit drag on economy (Reuters) OPEC on Tuesday gave an upbeat outlook for the oil market in 2017, saying global demand for its crude would be higher than its current production and pointing to a supply deficit rather than a sizeable surplus that has weighed on prices. However, the Organization of the Petroleum Exporting Countries in a monthly report also cut its forecast for world economic growth this year, citing increased uncertainty following Britain’s vote to leave the European Union and said the pace of oil demand growth would slow slightly next year, in its first 2017 forecast.
• Spanish Banks Surge as Fears Subside Over EU Mortgage Ruling (Bloomberg)  Spanish banks such as Banco Popular Espanol SA surged after an aide to the European Union’s top court said they may avoid having to refund billions of euros to customers who paid too much interest on home loans before a 2013 ruling on so-called mortgage floors. Spain is entitled to apply the time limit due to the “macroeconomic issues associated with the scale” of the unfair mortgage terms, Advocate General Paolo Mengozzi of the EU Court of Justice said in a non-binding opinion Wednesday. The Luxembourg-based EU tribunal follows such advice in a majority of cases.
• Carney Opens Lehman Playbook at Bank of England (Bloomberg) Mark Carney looks poised to repeat a strategy that served him well during the global financial crisis. As the Bank of England governor seeks to stave off any turmoil after Britain’s decision to quit the European Union, he has cited his experience at Canada’s central bank in 2008 as a guide. Acting early to prevent a deeper downturn became the hallmark of his approach in the prelude to the international slump, a perspective he can bring to the Monetary Policy Committee’s debate this week on whether to cut interest rates.

Overnight markets                                                                                          

• Overview: US 10yr note futures are up 0.1887% at 132-25, S&P 500 futures are up 0.19% at 2149.75, Crude oil futures are down -0.9% at $46.38, Gold futures are up 0.61% at $1343.5, DXY is down -0.06% at 96.38.

US Economic Data

• 8:30 AM: Import Price Index, m/m, June,  0.2%, est. 0.5% (prior 1.4%)
  •      Import Price Index, y/y,  June, -4.8%, est. -4.6% (prior -5%)
• 14:00AM : U.S. Federal Reserve Release Beige Book

 Canadian Economic Data

• 8:30 AM:  Teranet/National Bank HPI, m/m, June, 2.3%, prior 1.8%
  •       Teranet/National Bank HPI, June, 189.55 (prior 185.24)
• 10:00 AM: Bank of Canada Rate Decisions, est. 0.50% (prior 0.50%)

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