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20/06/2016

by admin | Jun 20, 2016 | comments

Market update

Tsys sharply lower led by the 10Y with the curve ~2bps steeper, US 10Y 1.67 (+6bps) as remain side seen gaining in latest Brexit polling, the GBP . Euro stocks ~3.0% higher, core Euro bonds lower led by 10Y gilts (+9bps) while EU peripheral spds tighter vs Germany. The latest CFTC COT report for June 14th showed large specs unwinding shorts in the front end in front of last week’s FOMC and this week’s Brexit vote. GOCs are opening lower, led by 10s which are ~4bps cheaper on the curve vs 2s & longs, spds 1-2bps wider vs tsys. Provis 2bps tighter in ‘risk on’ move, Ont 26 95/94, Ont 46 106/105.

News headlines

Stocks Surge With Pound as Brexit Chances Decline; Naira Weakens (Bloomberg) Global equities rallied and the pound strengthened the most since 2008 on signs the campaign for the U.K. to stay in the European Union was gaining momentum. The yen declined with U.S. Treasuries and gold as haven demand eased. The Stoxx Europe 600 Index headed for its biggest gain since August and emerging-market shares advanced for a second day. Sterling jumped after a poll showed the campaign for the U.K. to remain in the EU leading by three percentage points before the referendum on Thursday. Spanish and Italian bonds gained and credit risk fell the most since March.
Oil rallies as fears over Brexit abate (Reuters) Oil rallied on Monday, lifted by a wave of investor confidence and a weaker dollar after polls showed a diminishing chance that Britain may vote to leave the European Union later this week. August Brent crude futures were up 85 cents at $50.02 a barrel by 5.55 a.m. ET, set for a gain of 6 percent in two trading days. NYMEX crude for July delivery, which expires on Tuesday, was up 80 cents at $48.78 a barrel.
Sterling rallies as Brexit worries ebb, yen drops (Reuters) Sterling jumped nearly 2 percent against a trade-weighted basket of currencies on Monday after opinion polls swung in favor of the campaign for Britain to stay in the European Union, boosting risk sentiment and sending the safe-haven yen tumbling. The implied probability of a “Remain” vote in Thursday’s referendum rose to around 78 percent after falling as low as 60 percent last Thursday, according to odds from gambling website Betfair.
Japan’s exports drop for 8th month in a row in May (MarketWatch) Japanese exports fell for the eighth straight month in May, buffeted by the strong yen and slowing global growth. Merchandise exports decreased 11.3% from a year earlier to Y5.091 trillion ($49 billion) last month, after falling 10.1% in the previous month, according to data released Monday by the finance ministry. Economists surveyed by The Wall Street Journal had expected a 10.4% decrease. The data underlines how Prime Minister Shinzo Abe’s growth policy has lost momentum in the face of moderating global demand and the yen’s resurgence to its highest level in over a year and a half against the dollar. A stronger yen reduces the value of repatriated profits and undermines Japan’s export competitiveness.
German trade body lowers export forecast: ‘Brexit is poison’ (Reuters) German exports will grow less than expected this year due to external risks, including a British exit from the European Union and uncertainties ahead of elections in the United States and France, the head of the BGA trade association said on Monday. Britain votes on Thursday on whether to stay in the 28-member bloc, a choice with far-reaching consequences for politics, the economy, defence and diplomacy on the continent.
Factbox: Bank of England risks being caught in Brexit cross-currents (Reuters) The Bank of England could be pulled in very different directions if British voters take the historic step of leaving the European Union in Thursday’s referendum. The Bank, along with most private economists, has warned that a Brexit vote would deliver a shock to Britain’s economy. The BoE could attempt to soften the hit by cutting interest rates from their current record low of 0.5 percent.
Couche-Tard acquires assets of Premium 7 network in Estonia (GlobeAndMail) Alimentation Couche-Tard Inc. continues its growth trajectory in Europe with a deal to buy 23 convenience stores and fuel stations in Estonia. Laval, Que.-based Couche-Tard said on Monday it has struck an agreement to acquire the majority of the assets operated under the Premium 7 brand from Sevenoil Est OU and its affiliates. The purchase price was not disclosed. The agreement follows on other European acquisitions, including a deal late last year to buy the Topaz chain in Ireland and a deal prior to that to buy Royal Dutch Shell PLC’s retail and other businesses in Denmark.

Overnight markets

Overview: US 10yr note futures are down -0.237% at 131-18, S&P 500 futures are up 1.29% at 2085.5, Crude oil futures are up 2.21% at $49.04, Gold futures are down -0.67% at $1286.1, DXY is down -0.66% at 93.58.

US Economic Data

There is no major economic data for today

Canadian Economic Data

8:30 AM: Whole Trade Sales, m/m, April, 0.1% est. 0.5% (prior -1.0% revised at -0.8%)

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

17/06/2016

by admin | Jun 17, 2016 | comments

Market update

Tsys opening lower, curve steeper, US 10Y 1.60% (+1.5bps) on heavy volume in TY1 futures (412k). Core Euro bonds lower, with the long end underperforming, the bund 5s30s curve 5bps steeper after reaching one year lows yest below 100bps. EU peripheral spreads tighter, European equities higher, crude on the rebound, above $47.00 (47.24). GOCs lower, short end reacting to lower May CPI – 0.4% vs 0.6% exp (1.5% vs 1.7%) with the core 2.1% unch. Provi spds better bid , Ont 46s 108/107, Ont 26 97/96. Yest saw $2.5bln in provi issuance fairly easily absorbed: (i) $600mln new Ontario 2048 at -0.5bps vs Ont 46s – opening at -0.7bps and (ii) Alberta $1.9bln in new 5Y benchmark – 1.35% Sep 21 @ 77, opening 76/75. So far this month weve seen $4.35bln in provi issuance against ~12bln in maturities/cpn pmts , yet domestic issuance in May came in at $5.8bln after a slow April ($1.9bln).

News headline

Stocks Climb With Pound as Brexit Campaign Suspended; Oil Gains (Bloomberg) Global stocks rebounded from a four-week low and commodities advanced with the pound as campaigning in Britain’s referendum on European Union membership was suspended for a second day. German bonds fell as demand for haven assets cooled. All 10 industry groups in the MSCI All-Country World Index advanced, while South Africa’s rand and Russia’s ruble led gains in emerging-market currencies. U.S. crude snapped a six-day losing streak and industrial metals rallied. Sterling rebounded from a two-month low as an opinion poll on voter intentions in next week’s referendum was delayed. Ten-year bonds in Japan and the U.K. declined for the first time in more than a week.
Sell-off abates as Brexit supporters suspend campaign (Reuters) Shares, oil and bond yields rose on Friday after a tumultuous week and as campaigning for Britain’s EU membership vote next week was suspended after the killing of a pro-“Remain” politician. European bourses rebounded 1.5 percent after a third straight week of falls and bond markets saw benchmark 10-year German bond yields claw back up to the zero mark as risk appetite slowly began to return.
Crude oil prices rise for first time in seven days (Reuters) Crude oil prices rose on Friday for the first time in seven days, but trading remains volatile less than a week before Britain goes to the polls over the country’s EU membership. Brent crude futures were up 69 cents at $47.88 a barrel at 0903 GMT after slumping 3.6 percent in the previous session. U.S. West Texas Intermediate crude futures rose 46 cents to $46.67 a barrel. The contract fell 3.8 percent in the previous session.
Sterling, euro recover as chance of Brexit seen falling (Reuters) Sterling rose half a percent in early London trading on Friday and the euro added to gains in the past 24 hours on expectations that the killing of a pro-EU British lawmaker may alter the balance of opinion in Britain’s referendum on EU membership. Speculation was rife among traders after the murder of Jo Cox on Thursday that Prime Minister David Cameron might push back the vote due to take place on June 23.
Louis Fed’s Bullard says U.S. may only need single rate hike for now (Reuters) The U.S. economy, stuck in a slow-growth pattern that is likely to persist for the forseeable future, may need no more than a single additional rate hike for as long as 2.5 years, St. Louis Fed President James Bullard said on Wednesday. Bullard, a former inflation hawk whose views of the economy have been shifting, said he now sees current growth, unemployment and inflation rates as so persistent, there is basically no reason to change the Federal Funds policy rate, currently set in a range of between .25 and .50 percentage points.
Pipelines are all about ‘trade-offs,’ Trudeau says: ‘You don’t ever hope for total 100% unanimity’ (FinancialPost) Prime Minister Justin Trudeau acknowledged Thursday he won’t be able to please all Canadians on the oilsands pipeline issue that has pitted Alberta’s desperate need for an economic boost with intense concerns in B.C. and Quebec. Trudeau, in an exclusive interview, also refused to say whether his 2015 election commitments would hand vetoes to local communities and First Nations who vehemently oppose oilsands pipelines in their midst.
Bank of Canada can’t do anything to stop housing ‘inferno,’ warns BMO economist (FinancialPost) Scorching prices in Canada’s top housing markets are unlikely to see declines because the major drivers are beyond the reach of traditional monetary policy, according to Bank of Montreal’s top economists. “Monetary policy can’t do anything about the inferno,” according to the draft of a report led by Douglas Porter, the bank’s chief economist . “None of the major drivers of Vancouver and Toronto’s housing market are pointing downward.”

Overnight markets

Overview: US 10yr note futures are down -0.1063% at 132-5, S&P 500 futures are down -0.19% at 2066.5, Crude oil futures are up 2.14% at $47.2, Gold futures are down -0.59% at $1290.7, DXY is down -0.16% at 94.422.

US Economic Data

8:30 AM: Housing Starts, May, 1164k, est. 1150k (prior 1172k, revised 1167k)
Housing Starts, m/m, May, -0.3%, est. -1.9% (prior 6.6%, 4.9%)
Building Permits, May, 1138k, est. 1145k (prior 1116k, revised 1130k)
Building Permits, m/m, May, 0.7%, est. 1.3% (prior 3.6%, 4.9%)

Canadian Economic Data

8:30 AM: CPI NSA, m/m, May, 0.4%, est. 0.5% (prior 0.3%)
CPI, y/y, May, 1.5%, est. 1.6% (prior 1.7%)
CPI Core, m/m, 0.3%, est. 0.3% (prior 0.2%)
CPI Core, y/y, 2.1%, est. 2.1% (prior 2.2%)

Disclosure and Disclaimer

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

14/06/2016

by admin | Jun 14, 2016 | comments

Market update

Tsys higher, yields 2-3bps lower across the curve, risk aversion overnite as Brexit vote dominates as four polls showed the ‘leave’ side gaining momentum, the GBP falling 1.0% back to yest low 1.4125. Ten year gilts sharply higher, 10Y gilt record low 1.144 (-6.4bps) , while the 10Y bund fell below 0% for the first time. JGB yields hit record low, the Nikkei fell below 16,000 while Euro-Yen fell to a 38-month low below 119. Euro stocks 1.2% lower, oil lower. Fed begins two-day meeting with odds of rate hike priced out for this meeting and 13% for July from ~50% at the start of the month. GOCs higher yet pressured by stronger US retail sales/ Cda Teranet home prices. Ont spds out 1-1.5bps, Ont 46 109/108, Ont 26 98.5/98. CMB 5Y to price this morning , 50.5/50 (+0.5bps)

News headline

U.S. Index Futures Fall Amid Brexit Concern Before Fed Decision (Bloomberg) U.S. stock-index futures fell, signaling equities will extend losses for a fourth day, amid growing uncertainty about the U.K.’s future in the European Union, and as investors awaited Wednesday’s Federal Reserve announcement. Contracts on the S&P 500 Index expiring in September retreated 0.2 percent to 2,066 at 7:25 a.m. in New York. The equity benchmark fell to a three-week low on Monday, capping its worst three-day performance since February. Dow Jones Industrial Average futures lost 24 points, or 0.1 percent, to 17,615, today.
German Bunds Reach New Milestone as Yield Declines Below Zero (Bloomberg) The yield on Germany’s 10-year government bund, Europe’s benchmark security, fell below zero for the first time on record, as investors’ seemingly insatiable demand for haven assets created another bond-market milestone. The nation joined Japan and Switzerland in having 10-year bond yields of less than zero. The plunge in yields, which has been driven by European Central Bank’s policy of negative interest rates and asset purchases, has accelerated amid a weakening global economic outlook and as polls indicate the “Leave” campaign in Britain’s European Union referendum is gaining momentum.
U.K. Moves Closer to Brexit as The Sun Backs ‘Leave’ Vote (Bloomberg) Four polls put the “Leave” campaign ahead of “Remain” as The Sun newspaper came out in favor of Britain quitting the European Union, sending stocks and the pound down. Sterling approached a two-month low against the dollar and investors rushed to havens Tuesday after a series of new polls the previous evening put “Leave” ahead with just nine days of campaigning left. The final blow came when The Sun, Britain’s biggest-selling newspaper, backed a so-called Brexit on its front page.
Oil falls as Brexit threat rattles markets (Reuters) Oil fell on Tuesday, as investor nervousness over next week’s vote on Britain’s possible European Union exit swept financial markets, eclipsing signs of a return to health for crude prices. Perceived safe-haven assets such as the Swiss franc EURCHF= and German Bunds DE10YT=RR rallied, while industrial commodities and equity markets, seen as more vulnerable to economic risk, fell after polls showed Britain’s “Leave” campaign leading before a referendum on EU membership.
Yen hits three-year highs vs euro as Brexit worries mount (Reuters) The yen surged to its strongest level against the euro for more than three years on Tuesday as the chances of Britain voting next week to leave the European Union grew, pushing investors towards the security of Japan and other traditional safe havens. As opinion polls continued to show the “Leave” camp moving ahead before the June 23 vote, and Britain’s biggest selling paper, the Sun, came out in favour of leaving the bloc, sterling fell 1 percent to a two-month low of $1.4112.
IEA sees global oil market returning to surplus in early 2017 (Reuters) Global oil supply and demand appear to be balancing in 2016, after a series of unplanned production outages, but the market is expected to return to a surplus in the first half of next year, the International Energy Agency said on Tuesday. The agency said demand growth in 2017 is likely to be flat at around 1.3 million barrels per day (bpd), which is where it now estimates growth will be this year.
IMF housing heat map shows Canadian household debt scorching (TheGlobeandMail) The International Monetary Fund is warning policy makers they may have to take action that would cool Canada’s hot housing markets and ease the consumer debt binge. It’s not the first time that the IMF has issued such an alert. For that matter, such warnings have been pouring in from far and wide amid a surge in home prices in Vancouver and Toronto and their surrounding regions.

Overnight markets

Overview: US 10yr note futures are up 0.1897% at 132-1, S&P 500 futures are down -0.31% at 2063.25, Crude oil futures are down -1.21% at $48.29, Gold futures are down -0.04% at $1286.4, DXY is up 0.44% at 94.78.

US Economic Data

8:30 AM: Import Price Index, m/m May, 1.4%, est. 0.7% (prior 0.3%, revised 0.7%)
Import Price Index, y/y, May, -5.0%, est. -5.9% (prior -5.7%, revised -5.3%)
Retail Sales Advance, m/m, May, 0.5%, est. 0.3% (prior 1.3%)
Retail Sales Ex Auto, m/m, May, 0.4%, est. 0.4% (prior 0.8%)
Retail Sales Ex Auto & Gas, m/m, May, 0.3%, est. 0.3% (prior 0.9%)
10:00 AM: Business Inventories, April, est. 0.2% (prior 0.4%)

Canadian Economic Data