Commentaires

Market update

US tsys lower, yields 2-4 bps higher, curve flatter with longs outperforming, US 10Y 1.477 (+3.7bps) vs 1.458 at the close yest. Euro stocks 2.7% higher, EU peripheral spds tighter led by Spain. Tsys fell in Asian on Asia real money selling, weakness in core European bonds. GOCs lower, yields 1-2bps higher, GOC 10Y below 1.10%. Provis opening better, Ont 46s trading up at 105,  supply more likely should equities manage to maintain a positive footing.

News headlines

• US. Stock Futures Rise as Stimulus Hopes Outweigh Brexit Fears (Bloomberg) U.S. equity futures climbed, signaling the S&P 500 Index may advance for the first time since the Brexit vote, as optimism grew that policy makers will move to support financial markets. ontracts on the S&P 500 expiring in September jumped 0.8 percent to 2,001.50 at 12:32 a.m. in New York, after the underlying index tumbled 1.8 percent on Monday. More than $974 billion has been erased from S&P 500 stock values in the past two days, the third-most in history, according to data compiled by S&P Dow Jones Indices.
• Battered sterling gets a reprieve, yen’s rally pauses (Reuters) Higher-yielding, riskier currencies such as the Australian dollar rose along with sterling on Tuesday as investors took a breather from a brutal selloff sparked by Britain’s vote to leave the European Union. Safe-haven currencies such as the yen JPY= and the Swiss franc EURCHF=, which had gained sharply since last Thursday’s vote, were weaker, although risk sentiment was fragile.
• Brexit Steamrolls Fed Model for Stock Bulls as Bond Yields Drop (Bloomberg) The dangers of relying on valuation as a tool for market timing are on display right now in U.S. equities. At issue is something known as the Fed Model, a comparison of stock and bond yields that has been pointing bulls to equities for three months. As bond yields fell from their March highs, an investor guided by the theory would have bought shares, betting they’d rally as money flowed into them from fixed-income.
• Japan should not give up right to intervene if yen rises sharply (Reuters) Japan should not give up the right to intervene in currency markets if the yen sharply rises as it will threaten the nation’s economy, a key economic adviser to Prime Minister Shinzo Abe said on Tuesday, after Britain’s vote to exit the European Union caused market turmoil.
• Soros Wagered Deutsche Bank Would Drop in Brexit Turmoil (Bloomberg) Soros Fund Management took a short position in Deutsche Bank AG of about 7 million shares as turmoil from the U.K.’s decision to leave the European Union sent bank stocks lower. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank’s share capital, according to a German filing published on Monday. The document doesn’t show at which price the fund took the position. The position taken on Friday was equivalent to 0.51 percent of Deutsche Bank’s share capital, according to a German filing published on Monday. The document doesn’t show at which price the fund took the position.
• China economy to grow 6.6 percent, needs policy support: government think tank (Reuters) China’s economy will grow at about 6.6 percent this year, and will need to be underpinned by policy support in the second half to counter downward pressures, according to the China Academy of Social Sciences (CASS). The forecast from one of China’s top government think-tanks was reported by the official Shanghai Securities Journal newspaper on Tuesday, and marked a slightly more downbeat outlook that one given in May, when CASS had forecast growth of 6.6 percent to 6.8 percent for the year.
• S.-UK alliance seen outweighing Brexit trade concerns (Reuters) The United States looks unlikely to follow through on a threat to relegate Britain to second-class trade status once its ally leaves the European Union, as it weighs the potential costs of undermining the countries’ close diplomatic and military ties. President Barack Obama had warned ahead of Thursday’s « Brexit » referendum that Britain would move to the back of the queue on U.S. trade priorities if it voted to leave the bloc, well behind a much-larger U.S.-European trade deal now under negotiation.

 Overnight markets                                                                                    

• Overview: US 10yr note futures are down -0.0938% at 133-5, S&P 500 futures are up 1.26% at 2010, Crude oil futures are up 3.02% at $47.73, Gold futures are down -0.63% at $1316.4, DXY is down -0.63% at 95.934.

US Economic Data

• 8:30 AM: GDP Annualized, q/q,  1Q, 1.1%, est. 1.0% (prior 0.8%)
  • Personal Consumption, 1Q,  1.5%, est. 2.0% (prior 1.9%)
  • GPD Price Index, 1Q, 0.4%, est. 0.6% (prior 0.6%)
  • Core PCE, q/q, 1Q, 2.0%, est. 2.1% (prior 2.1%)
• 10 :00 AM : Consumer Confidence Index, June, est. 93.5 (prior 92.6)
  • Richmond Fed Manufacturing Index, June, est. 3 (prior -1)

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 rallying hard for a second day, yields down 5-10 bps across the curve as the British pound fell below Friday’s post Brexit vote low 1.3250. The FTSE is off 2.0% led by a 7.7% decline in financials. Core European bonds sharply higher, UK 10Y below 1.0% after hitting all time low 0.929%, mkts pricing in near certain odds of a 25 bp rate cut from the MPC at the Sep meeting. IG credit spreads pushing wider, the IG 26 +1.3bps to 87.95 a three month high and the HY cash index +10.5bps to 633. GOCs higher, curve 2bps flatter with the 10Y ~1.12%. Provi spreads another 1-2bps wider after 4bp move on Friday -supply unlikely unless mkt tone improves.

News headlines

• K. Chaos Infecting Markets as Pound Extends Its Record Loss (Bloomberg) Traders have had three days to digest the Brexit vote, and the pound’s slide just keeps getting steeper. Sterling dropped 3.5 percent to $1.3205 at 12:30 p.m. in London on Monday, after reaching a three-decade low of $1.3186 that surpassed its weakest levels during the panicked selling on Friday that followed the U.K.’s decision to leave the European Union. The turmoil extended that day’s unprecedented 8.1 percent tumble and showed that Chancellor of the Exchequer George Osborne’s attempts to calm markets failed to cancel out the effects of the paralysis spreading through U.K. politics.
• Oil prices ease again after Brexit vote (Reuters) Oil prices slipped on Monday as market participants absorbed the shock of Britain’s vote to leave the European Union though some analysts said Brexit would have a limited impact on global fuel demand. Brent crude futures were down 35 cents at $48.06 a barrel by 1123 GMT. U.S. crude was down 42 cents at $47.22 a barrel. Both crude benchmarks slumped about 5 percent on Friday amid plunging global financial markets after the British referendum results gave an unexpected 52 percent to 48 percent victory to the campaign to take Britain out of the EU.
• China Weakens Yuan Fixing by Most Since August as Dollar Surges (Bloomberg) China weakened its currency fixing by the most since last August as global market turmoil spurred by Britain’s vote to leave the European Union sent the dollar surging. The People’s Bank of China set the reference rate 0.9 percent weaker at 6.6375 a dollar. A gauge of the greenback’s strength jumped 2.4 percent in the past two days, the most since 2011, as the British pound and the euro tumbled. The yuan dropped 0.3 percent to 6.6473 as of 6:44 p.m. in Shanghai, heading for its weakest close since December 2010.
• Fed’s Yellen pulls out of ECB gathering in Portugal (Reuters) Federal Reserve Chair Janet Yellen is no longer due to speak at a global central bank summit starting on Monday, the second high-profile defection after the Bank of England’s governor pulled out following Britain’s vote to leave the European Union. An updated version of the program of the event, organized by the European Central Bank, showed on Monday that a panel with Yellen, ECB President Mario Draghi and BoE Governor Mark Carney had been taken out. Carney had canceled his attendance over the weekend
• Hoarding Cash in Vaults Seen More Attractive After Brexit Vote (Bloomberg) Investors will consider hoarding cash in vaults as government bond yields fall deeper into negative territory following the U.K.’s vote to leave the European Union, according to Talanx AG, Germany’s third-biggest insurer. “Storing physical cash as an alternative to paying negative interest rates does look increasingly attractive,” Chief Financial Officer Immo Querner said in an interview.
• Credit Markets Were Much Less Prepared for Brexit Than Stocks (Bloomberg) Have credit investors become so inured to years of cheap money and central bank bond buying that they simply sleepwalked into one of the biggest risks to financial markets in years? The credit markets shrugged off Britain’s referendum on European Union membership, according to Bank of America Corp. analysts led by Michael Contopoulos.

Overnight markets                                                                     

• Overview: US 10yr note futures are up 0.6374% at 133-7, S&P 500 futures are down -0.58% at 2006.75, Crude oil futures are down -1.99% at $46.69, Gold futures are up 0.84% at $1333.5, DXY is up 1.12% at 96.518.

 US Economic Data

• 8:30 AM: Advance Goods Trade Balance, May, -60.6b, est. -59.4b (prior -57.5b)
• 9:45 AM: Markit US Service PMI, June, est. 51.9 (prior 51.3)
  •      Markit US Composite PMI, June, (prior 50.9)
• 10:30 AM: Dallas Fed Manf.  Activity, June, est. -15.0 (prior -20.8)

 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 tsy yields 2-5bps higher, curve 2bps steeper as European bonds decline, stocks rise on latest Brexit polls which show ‘remain’ firmly in the lead. Euro stocks up 2.0% led by banks with the Euro Stoxx bank index up 3.0%, its fourth straight up day. Tsys pressured in Europe on heavier volume in TY futures (335k) as teo polls showed ‘remain’ camp leading as voting gets underway. Core Euro bonds lower led by 10Y gilts which are 6.5bps higher at 1.37% – yields have now retraced 50% of the April -June rally. GOCs sharply lower led by 5bp underperformance in 10s which are above 1.30% for the first time since June 1st. Provi spds in another 1bp, 7bps over the past week. In corps, we’ve seen client buying of NVCC and 5Y reits/telecom.

News headlines

• Stocks Rise With U.S. Futures as Pound Gains While U.K. Votes (Bloomberg) Stocks gained with U.S. equity-index futures and the pound strengthened to its highest level this year as the U.K.’s referendum on membership of the European Union got under way. European shares rose to a three-week high in above-average trading amid a vote that past opinion polls indicated was too close to call. A gauge of sterling advanced for a second day, while a measure of implied overnight price swings versus the dollar climbed to a record. Mexico’s peso and Russia’s ruble led gains among oil-exporting nations as crude advanced. The yen fell with gold as demand for haven assets eased, while perceived corporate credit risk fell for a fifth day.
• Sterling hits 2016 high, stocks climb as UK votes on Brexit (Reuters) Sterling hit a 2016 high and world stocks climbed for a fifth day running on Thursday, as British voters headed to the polls for a crucial vote on their European Union membership. Financial markets have been wracked for months by worries about what a potential Brexit would mean for Europe’s stability but the latest opinion polls showing the « Remain » camp holding a small lead have provided some comfort.
• Oil rises as investors focus on Britain’s EU referendum (Reuters) Oil prices rose by up to 2 percent on Thursday, shrugging off a smaller than expected draw on U.S. crude stocks as money and equity markets firmed after the last sweep of Brexit opinion polls raised optimism over Britain remaining in the EU. Global markets, including commodities, have been on tenterhooks for weeks ahead of Britain’s referendum on European Union membership on Thursday. The majority of results are expected to come in between 0100 and 0300 GMT following a YouGov poll shortly after voting closes at 2100 GMT.
• Euro zone business growth slows in June as services struggle (Reuters) Euro zone business growth decelerated more than expected this month, suggesting the current quarter’s economic performance won’t match the strong pace set at the start of the year, a survey showed. A surprising bounce in manufacturing activity was not enough to offset a marked slowdown in service industry growth, according to Markit’s flash Purchasing Managers’ Indexes. One of the first growth indicators in a month, the composite PMI fell to a 17-month low of 52.8 from May’s 53.1. A Reuters poll had predicted a more modest dip to 53.0.
• China industrial investment slowing amid tepid demand: deputy minister (Reuters) Growth in investment in China’s industry is slowing amid tepid external demand, the deputy industry minister said on Thursday. It will require hard work to meet China’s industrial growth targets for 2016, Feng Fei said, according to a statement on the Ministry of Industry and Information Technology’s website. China will accelerate reductions in capacity in some sectors in the second half this year, using market-based measures, he added.
• Air Canada Inc threatens to walk away from Bombardier Inc CSeries deal if legislation over maintenance isn’t passed (Financial Post) Air Canada is threatening to walk away from its plan to buy up to 75 CSeries jets from Bombardier Inc. unless the federal government gives it more flexibility over where it does its maintenance work. In testimony that appears to contradict the airline’s claims that politics had nothing to do with its decision to order the CSeries, an executive told a Senate committee reviewing changes to the legislation that governs Air Canada that it won’t buy the aircraft unless the government gives it more latitude.
• BlackBerry Misses Sales Estimates as Phone Unit Shrinks Further (Bloomberg)  BlackBerry Ltd. reported earnings that exceeded analysts’ earnings estimates but came up short on revenue, dragged down by ever-shrinking smartphone sales that offset efforts to boost the company’s bottom line through software products.

 Overnight markets                                                                                         

• Overview: US 10yr note futures are down -0.3569% at 130-28, S&P 500 futures are up 0.91% at 2095.75, Crude oil futures are up 1.53% at $49.88, Gold futures are down -0.54% at $1263.2, DXY is down -0.58% at 93.172.

 US Economic Data

• 8:30 AM: Chicago Fed Nat Activity Index, May, -0.51, est. 0.11 (prior 0.10, revised 0.05)
  Initial Jobless Claims, June 18, 259k, est. 270k (prior 277k)
  Continuing Claims, June 11, 2142k, est. 2150k (prior 2157k, revised 2162k)
• 9:45 AM : Markit US Manufacturing PMI, Jun P, est. 50.9 (prior 50.7)
• 10:00 AM: New Home Sales, May, , est. 560k (prior 519k)
  New Homes Sales, m/m, May, , est. -9.5% (prior 16.6%)
  Leading Index, May, est. 0.1% (prior 0.6%)
• 11:00AM: Kansas City Fed Manufacturing Activity, June, est. -5 (prior -5)

 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