Commentaires

Market update

US Tsys sharply lower/steeper, futures underperforming on high volume with 411K Sep 10Y contracts traded. Tsys lower with most global bonds as global stocks soar highlighted by the Nikkei’s 2.46% gain, 1.93% gain in Italy and 1.76% gain in Spain. USD mostly lower vs the majors though higher vs JPY, last 103.93. Commodities mixed, energy better, metals lower, gold off 0.56% at $1347.91 while grains are tiny mixed. MBS and US Swap spreads tighter. US Tsys 10Y opened 1.4235% vs 1.432% at 3:00 pm ET on Monday. It was pretty much straight south for the Tsy mkt from the getgo largely as oil was on a tear higher. Fed Mester again was on the tape, repeating commentary from Monday.

News headlines

• Stocks Advance on Stimulus Bets as Investors Bail on Bonds, Yen (Bloomberg) Global stocks advanced for a fourth day and commodities rose, buoyed by the prospect of stimulus in major economies. Government bonds sank with the yen. The MSCI All-Country World Index reached its strongest level since June 24, and the yen had its biggest two-day slide since 2014 after Japanese Prime Minister Shinzo Abe vowed to speed up efforts to defeat deflation. The pound rose for a third day as Home Secretary Theresa May prepared to take over as the U.K.’s next prime minister. Daimler AG led gains in European stocks and credit markets strengthened after earnings that beat analysts’ predictions. U.S. crude rebounded from a two month low.
• Carney Defends BOE Against ‘Extraordinary’ Brexit Accusations (Bloomberg) Mark Carney denied that the Bank of England undermined its independence by highlighting the risks of a British decision to quit the European Union in the run-up to the referendum. “It’s extraordinary, in all senses of the word,” the BOE governor responded when asked by U.K. lawmakers on Tuesday whether he helped shape the views of financial-stability officials. “That’s not the way the committee works. The chair doesn’t guide conclusions.”
• Futures rise a day after S&P 500 hits record high (Reuters) U.S. stock index futures were higher on Tuesday, a day after the S&P 500 .SPX hit a record high as investor optimism was propelled by a set of strong economic data. The benchmark index, which came close several times this year to topping its May 2015 record, finally broke through on Monday to a new high of 2,143.16.
• Japan to craft stimulus by end-July, may issue construction bonds (Reuters) Japanese Prime Minister Shinzo Abe on Tuesday told his economy minister to compile an economic stimulus package by the end of this month to revive a flagging economy in the face of sluggish private consumption and investment. On Monday, after a landslide victory in Upper House elections and as evidence mounted the corporate sector is floundering due to weak demand, Abe ordered a new round of fiscal stimulus spending.
• May ally says Britain to trigger EU divorce ‘when we’re ready’ (Reuters) Britain will not rush to trigger divorce proceedings with the European Union, a leading ally of incoming Prime Minister Theresa May said on Tuesday as David Cameron bowed out at his final cabinet meeting. May, 59, will on Wednesday replace Cameron, who is resigning after Britons rejected his advice and voted on June 23 to quit the EU, plunging the country into political and economic uncertainty.
• Merkel urges Britain to quickly clarify relationship with EU (Reuters) German Chancellor Angela Merkel said on Monday access to the European Union’s single market meant accepting the bloc’s basic freedoms and rejected suggestions from London that Britain could retain full EU market access while curbing immigration. Speaking at the annual diplomatic corps reception in Meseberg, north of Berlin, Merkel said Britain should clarify quickly how it wants to shape its future relationship with the EU, adding she wanted London to remain an important partner.
• Bank Demand for BOE Liquidity Rises as Brexit Fears Linger (Bloomberg) Banks’ demand for cash increased in the Bank of England’s third liquidity operation since the U.K. vote to leave the European Union sparked financial market turmoil. At the auction of funds in exchange for collateral, 19 days after Britain opted for a so-called Brexit, banks were allotted 2.005 billion pounds ($2.7 billion). That compared with 3.1 billion pounds at a sale in the days following the vote and 1.35 billion pounds last week. The allotment matches the banks’ bids.

Overnight markets

• Overview: US 10yr note futures are down -0.2347% at 132-27, S&P 500 futures are up 0.43% at 2139.5, Crude oil futures are up 2.61% at $45.93, Gold futures are down -0.73% at $1346.7, DXY is down -0.29% at 96.288.

US Economic Data

• 10:00 AM: Wholesale Inventories, m/m, May,  est. 0.2% (prior 0.6%)
  • Wholesale Trade Sales, m/m, May, est. 0.5% (prior 1.0%)
  • JOTLS Job Openings, May,  est. 5650 (prior 5788)

 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 marginally lower, belly underperforming, futures in line on avg volume with 246K Sep 10Y traded so far this session. Global stocks sharply higher highlighted by a 3.98% in the Nikkei, 1.65% gain in Dax and 1.31% gain in Eurostoxx. E-mini S&Ps were last up 7.5 pts while E-mini Nasdaq was up 23 pts. USD is mixed, higher vs JPY, but lower vs GBP and EUR. US Tsys 10Y opened Tokyo at 1.3663% vs 1.3629% Friday and printed a session low of 1.3562% around midnight then rose to 1.3847%. The Tsy will sell its 1pm ET today $24B 3Y auction, then $20B 10Y reopening Tues and $12B 30Y reopening Wed, totalling $56B.

News headlines

• Global Stocks Gain With Dollar as Investors Count on Stimulus (Bloomberg) Rising stock markets, a weaker yen and a dollar that’s rallying with industrial metals are showing investor confidence that a sprinkling of stimulus may contain the worst effects of Britain’s vote to leave the European Union, without encouraging the Federal Reserve to raise interest rates. The MSCI All-Country World Index rose for a third day and U.S. equity index futures climbed after a better-than-forecast U.S. jobs report at the end of last week brightened the economic outlook. Japanese shares advanced the most since February and the yen fell for the first time in a week after Prime Minister Shinzo Abe’s ruling coalition won a fresh mandate to unleash pro-growth policies after Sunday’s election. Nickel advanced with copper and crude oil fell to less than $45 a barrel.
• Deutsche Bank chief economist calls for 150 billion euros in EU bank bailout-Welt (Reuters) Deutsche Bank’s (DBKGn.DE) chief economist urged the European Union to set up a 150 billion euro ($165.39 billion) rescue fund to recapitalize European banks, German newspaper Die Welt reported on Monday. « We won’t be able to avoid setting up a bigger program to recapitalize banks, » David Folkerts-Landau told the daily in an interview. « European banks can be recapitalized with 150 billion euros, » he added.
• K.’s FTSE 100 Defies Brexit Blues to Head for Bull Territory (Bloomberg) A third day of gains has put the U.K.’s FTSE 100 Index on course to close in bull-market territory. After recovering from its post-Brexit plunge in just four days, the gauge of U.K. megacaps continued its rally, and is now up 20 percent from its February low. A dramatic plunge in the pound has made the gauge’s multinational companies more attractive since the country’s vote to leave the European Union. Analysts have joined investors and strategists in taking note, boosting profit-growth estimates for FTSE 100 members by about 4.5 percent in just over a week, the biggest such upgrade in more than a decade.
• Japan Abe orders new stimulus package after election win (Reuters) Japanese Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending after a crushing election victory over the weekend as evidence mounted the corporate sector is floundering due to weak demand. Abe did not give details on the size of the package, but Japanese stocks jumped nearly 4 percent and the yen weakened over perceptions a landslide victory in upper house elections now gives him a free hand to draft economic policy.
• Carney Poised to Steady Ship as BOE Mulls Interest Rate Cut (Bloomberg) Mark Carney’s third week managing Britain’s response to the economic shock of Brexit is about to begin. With U.K. politics in disarray after the nation opted to split from the European Union, the Bank of England governor has been leading the charge in offering stability. After boosting liquidity, freeing banks to lend more and signaling a willingness to loosen monetary policy, Carney will in coming days address lawmakers in parliament and oversee the central bank’s first interest-rate decision since the Brexit vote.
• Dividend cuts ‘a last resort’ for banks under severe oil and gas stress: Moody’s (FinancialPost) Severe stress in the oil and gas sector could prompt some Canadian banks to reduce their dividends, but that would be a last resort, according to analysts at Moody’s Investors Service. In a report Monday, the debt-rating agency stress-tested the impact on bank capital of a severe scenario stemming from low oil prices, and concluded that there are a number of steps Canada’s seven largest banks could take to conserve capital before resorting to trimming their dividend payouts.
• Canadian PM says Russia not been ‘positive partner’ on Minsk ceasefire (Reuters) Canadian Prime Minister Justin Trudeau said on Monday that Russia has not been a « positive partner » as regards its obligations in the Minsk ceasefire agreement to end a Russian-backed separatist conflict in eastern Ukraine. On a visit to Kiev, Trudeau also announced $13 million in new humanitarian aid for Ukraine and an increase in the number of Canadian observers for the Organization for Security and Co-operation in Europe (OSCE) in the eastern Donbass region.

Overnight markets                                                                            

• Overview: US 10yr note futures are down -0.2686% at 133-14, S&P 500 futures are up 0.34% at 2127.75, Crude oil futures are down -0.35% at $45.25, Gold futures are down -0.13% at $1356.6, DXY is up 0.22% at 96.515.

US Economic Data

• 10:00 AM: Labor Market Conditions Index, June, est. 0.0 (prior -4.8)

Canadian Economic Data

• 8:15 AM: Housing Starts, June, est. 189.0k (prior 188.6k)

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 June non farm payrolls surged 287K vs 180K exp with the 3mo avg 147K, with the unemployment rate up 0.2% at 4.9% – Us 10Y 1.415 (+2.9bps). S&P minis higher after strong figures, Euro Stoxx +2.0%. Canadian empl fell 0.7k last month from 13.8K in May thou full time rose 39.4k showing some strength in the mix. CAD lower , USD index higher after data, crude slightly higher after massive 5% selloff yest on EIA inventory data. Provi spds wider this morn 1-1.5bps after ending 1bp wider yest . Ont 48 102/101 from 100 at issue yest.

News headlines

• European Stocks Rise as Dollar Slips Before Jobs Data; Oil Gains (Bloomberg) European stocks rose for a second day while the dollar weakened against most of its major peers before a U.S. jobs report that may set the tone for Federal Reserve monetary policy. The Stoxx Europe 600 Index pared losses in the biggest weekly decline in two months. New Zealand’s currency and Britain’s pound, the world’s worst performing major currency this year, led gains against the dollar on Friday. Crude clawed back some of the last session’s 4.8 percent plunge, which was triggered by data showing a smaller-than-expected decrease in U.S. supplies.
• Oil bounces off two-month lows but faces sharp weekly loss (Reuters) Crude prices bounced back on Friday from two-month lows hit in the previous session, but benchmark Brent was in line for its largest weekly decline since January as bearish economic indicators weighed on oil. Prices have gyrated as a glut of refined products and slowing economic growth contrasted with the risk of supply disruptions and expectations that the world’s overhang of crude would soon begin to recede.
• Pound Overtakes Argentine Peso to Become 2016’s Worst Performer (Bloomberg) The pound headed for a third week of declines spurred by the Brexit vote, winning itself the title of 2016’s worst performer among major currencies. Sterling’s rally Friday barely dented its 2.7 percent slide versus the dollar in the preceding four days. The U.K. currency this week overtook the Argentine peso as the biggest loser versus the dollar among 31 major peers in 2016 as investors continued to digest the fallout from the June 23 referendum decision to leave the European Union.
• Italy State Intervention on Banks May Be Needed, Visco Says (Bloomberg) State intervention to support Italian banks may be needed because of the risk that current difficulties could undermine trust in the nation’s financial industry, said Bank of Italy Governor Ignazio Visco. “Given the risk that, in a context of high uncertainty, limited problems could undermine the trust in the banking system, a public intervention cannot be excluded,” Visco said in a speech on Friday at the Italian Banking Association’s annual meeting in Rome.
• S. payrolls seen rebounding in June in boost to economy (Reuters) U.S. job growth likely rebounded in June as striking Verizon (VZ.N) employees returned to work and wages probably rose steadily, more evidence the economy has regained speed after a first-quarter lull. The U.S. Labor Department’s jobs tally due on Friday is likely to show nonfarm payrolls increased by 175,000 jobs last month after a meager 38,000 gain in May, according to a Reuters survey of economists. The unemployment rate is forecast rising to 4.8 percent from an 8-1/2-year low of 4.7 percent a month earlier as some job seekers returned to the labor market.
• Obama says confident Britain will have orderly Brexit transition: FT (Reuters) U.S. President Barack Obama said he was confident that Britain and the European Union would be able to agree an orderly transition to a new relationship after last month’s Brexit vote. « As difficult as it will be, I am confident that the UK and the EU will be able to agree on an orderly transition to a new relationship, » Obama said in an article for the Financial Times, calling upon NATO to stand united against global challenges.
• EU-U.S. commercial data transfer pact clears final hurdle (Reuters) A commercial data transfer pact provisionally agreed by the EU executive and the United States in February received the green light from EU governments on Friday, the European Commission said, paving the way for it to come into effect next week. Its introduction should end months of legal limbo for companies such as Google, Facebook and MasterCard after the EU’s top court struck down the previous data transfer framework, Safe Harbour, on concerns about intrusive U.S. surveillance.

Overnight markets                                                                                                

• Overview: US 10yr note futures are up 0.0117% at 133-23, S&P 500 futures are up 0.61% at 2104.75, Crude oil futures are up 1.51% at $45.82, Gold futures are down -0.67% at $1353, DXY is down -0.08% at 96.254.

US Economic Data

• 8:30 AM: Change in Nonfarm Payrolls, June, est. 180k (prior 38k)
  • Change in Private Payrolls, June, est. 170k (prior 25k)
  • Change in Manufacturing Payrolls, June, est.  -3k (prior -10k)
  • Unemployment Rate, June, est. 4.8% (prior 4.7%)
  • Average Hourly Earnings, m/m, June, est. 0.2% (prior 0.2%)
  • Average Hourly Earnings, y/y, June, est. 2.7% (prior 2.5%)

Canadian Economic Data

• 8:30 AM:  Unemployment Rate, June, est. 7.0% (prior 6.9%)
  • Net Change in Employment , June,  est. 5.0k (prior 13.8k)
  • Participation Rate, June,  (prior 25k)

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