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08/06/2016

by admin | Jun 8, 2016 | comments

Market update

Tsys slightly lower in another low volume o/n trade, US 10Y 1.72%. German 10Y bund yield fell to a record low 0.033% on flight to quality bid after mid-morning Bloomberg report of unsafe Chinese interception of US aircraft. Bunds succumbed to profit taking on surge in UK April Industrial Prod. Rising 2.0% vs 0.0% exp, while manuf output rose 2.3% vs -0.1% forecast. ECB corporate bond purchase prgm officialy started with buying of utilities & telecom. Tsys sideways in Asia despite better China exports, prices pressured in Europe on UK data as well as rise in crude above $51, better stocks. The US auctions $20bln in 10Y notes at 1:00PM – last month’s $23bln 10Y auction stopped 1bp thru and indirect bidder part rose to a record 73% while primary dealers were awarded a record low 14.7%. GOCs opening slightly higher led by the 8-10Y sector. Provis starting weaker, Onts trading down 0.5bps across the curve -65.5/92.5/103.5 -selling vs corp deals a factor last couples of days, yest $1.2bln NWRP 3 part long deal pushed 10s/30s ~2bps wider and weighed on Ont 46/26 roll. Ontario issuing 3Y global – $1bln US pricing this aft @ MS +31/33.

News headlines

Bonds, Commodities, Emerging Markets All Buoyed by Central Banks (Bloomberg) Bonds rose with commodities and emerging markets on speculation that central banks will persist with policies that support financial markets. The European Central Bank began buying corporate bonds to expand its monetary stimulus, helping drive average yields on investment-grade corporate debt below 1 percent. Germany’s 10-year bund yields, already at a record-low, approached zero. Emerging markets equities and currencies rose for a fifth day, boosted by Chinese trade data, while commodities gained for a sixth day, the longest run in three months, as oil climbed to a 10-month high and metals advanced. European stocks declined after their biggest gain in two weeks.
World Bank cuts global growth forecast on weak demand, commodity prices (Reuters) The World Bank slashed its 2016 global growth forecast on Wednesday to 2.4 percent from the 2.9 percent estimated in January due to stubbornly low commodity prices, sluggish demand in advanced economies, weak trade and diminishing capital flows. Commodity-exporting emerging market countries have struggled to adapt to lower prices for oil, metals, and other commodities, accounting for half of the downward revision, the multilateral lender said in its latest Global Economic Prospects report.
Oil hits eight-month high on disruptions, Chinese demand (Reuters) Oil prices jumped to their highest level in eight months on Wednesday, rising for a third consecutive session on supply disruptions in Nigeria and strong Chinese demand data. There was also a larger-than-expected drop in U.S. crude inventories on Tuesday, indicating an easing of the global supply glut. A weak dollar, which hit a five-week trough against a basket of currencies on Wednesday, also boosted prices.
Japan’s GDP Grows More Than Initial Reading in 1st Quarter (Bloomberg) Japan’s economy grew slightly more than the government initially reported for the first quarter, helped by a fractional revision in private consumption and business investment that dropped less than first thought. Gross domestic product expanded by an annualized 1.9 percent in the three months ended March 31, more than a preliminary reading of 1.7 percent, according to revised data from the Cabinet Office released on Wednesday. The median estimate of economists surveyed by Bloomberg was for a 1.9 percent increase.
China Exports Stabilize as Imports Hint at Improving Demand (Bloomberg) China’s exports stabilized in May, with a weakening currency giving some support to growth in the world’s biggest trading nation, while imports signaled improvement in domestic demand. Overseas shipments fell 4.1 percent in dollar terms from a year earlier, the customs administration said Wednesday. Imports slipped 0.4 percent — the smallest drop since late 2014 — to leave a trade surplus of $50 billion. Reflecting a weaker yuan, both exports and imports fared better when measured in local currency terms. Stocks pared losses in Shanghai.
IEA Cuts Gas Use Outlook Again as Glut Seen to End of Decade (Bloomberg) While oil markets will start re-balancing after a slump next year, an oversupply in natural gas won’t disappear until the end of the decade, the International Energy Agency said, slashing its gas demand outlook for a fourth straight year. Global consumption will expand by 1.5 percent annually from 2015 through 2021, down from last year’s forecast of 2 percent growth from 2014 through 2020 and a 2.5 gain over the prior six years, the Paris-based agency said Wednesday in its Medium-Term Gas Market Report. The slowdown will be driven by weaker use in the U.S. and Japan as the fuel struggles to compete against booming renewables and “very cheap” coal in power generation.
Brexit Contagion Is Spreading Across the EU, Pew Study Finds (Bloomberg) Opposition to the European Union is growing across the bloc, suggesting that anti-EU sentiment extends much further than traditionally skeptical Britain. As the U.K. gears up for a referendum on whether to remain in the club of nations it joined in 1973, a survey of more than 10,000 people across Europe showed that voters from Italy and Poland to Greece and Sweden have lost faith in the EU. People in France — one of the six founding countries — now see the bloc less favorably even than those in the U.K., as the euro-area debt crisis and refugee influx take their toll.

Overnight markets

Overview: US 10yr note futures are down -0.0477% at 130-29, S&P 500 futures are up 0.18% at 2114, Crude oil futures are up 1.51% at $51.12, Gold futures are up 0.85% at $1257.6, DXY is down -0.27% at 93.577.

US Economic Data

10:00 AM : JOLTS Job Openings, April, est. 5675 (prior 5757)

Canadian Economic Data

8:15 AM: Housing Starts, May, 188.6k, est. 189.0k (prior 191.5k, revised 191.4k)
8:30 AM: Building Permits, m/m, April, -0.3%, est. 1.5% (prior -7.0%, revised -6.3%)

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

07/06/2016

by admin | Jun 7, 2016 | comments

Market update

Tsys opening slightly higher, US 10Y 1.73% (-1bp), below avg volume in TY1 futures. Core Euro bonds mixed, with short end yields higher, longs 1-2bps lower led by German 30Y bunds. Crude 1.1% higher above $50 – crude inventories forecast to have fallen by another 3mln barrels for the week ended June 3rd. S&P futs higher after rising to new The Netherlands sold E4.812bln of new 5Y bonds at -0.233% with an order book of ~E12bln (MNI). The UK sold GBP1.5bln Dec 46 gilts at record low 2.09%, thou with a large 1.5bp tail – long gilt/bund spd ~3bps wider. GOCs are unch, off the lows as stock futures pare gains, provi spds 1bp wider – Ont 46 103/102, Ont 26 92/91. Some selling late yest vs Sinai Health deal (Aa2) ($200mln 40Y @ 164). CPPIB Capital (Aaa/AAA) lauched $1.25bln 3Y at 55 or 23bps over CMBs.

News headlines

Stocks Rally With Emerging Markets on Yellen; Pound Advances (Bloomberg) Stocks rallied with emerging markets as investors added to bets that U.S. interest rates will stay lower for longer, keeping growth on track. The MSCI All Country World Index headed for its strongest close since April after Federal Reserve Chair Janet Yellen signaled that officials won’t derail the economy with a premature rate hike. Emerging-market stocks and currencies advanced for a fourth day. The South Korean won surged the most in six years, and the currencies of Australia and India rose after the nations’ central banks kept interest rates unchanged. The pound rose as a poll showed the campaign to keep Britain in the European Union ahead. The Bloomberg Commodity Index halted a four-day gain that had pushed it to a bull market.
China forex reserves fall to $3.19 trillion, lowest since Dec 2011 (Reuters) China’s foreign exchange reserves in May fell to $3.19 trillion, central bank data showed on Tuesday, the lowest since December 2011, likely due to the impact of a stronger dollar. Economists polled by Reuters had predicted foreign exchange reserves would fall to $3.20 trillion from $3.22 trillion at the end of April
Euro-Area Economy Grows Faster as Consumption Gathers Pace (Bloomberg) The euro-area economy grew faster than previously estimated at the start of the year, driven by investment and a pickup in consumer spending. Gross domestic product rose 0.6 percent in the first quarter, the European Union’s statistics office in Luxembourg, said on Tuesday. That’s the rate Eurostat initially reported on April 29 before revising growth down to 0.5 percent on May 13. After growing at the fastest pace in a year, the European Central Bank predicts the 19-nation economy will slow in the second quarter, with inflation rates likely to remain very low or even negative.
Yellen Insists Fed Increase En Route as Focus Moves to September (Bloomberg) June is out. July might be too soon. The Federal Reserve’s next interest-rate increase is coming, but even September isn’t a sure bet. That’s the message investors and economists are taking from Chair Janet Yellen’s remarks Monday. Her comments were the last the public will hear from a Fed official before the central bank’s policy-setting meeting next week. In her remarks, Yellen was clear that she’s fairly sure the economy will improve enough to warrant another interest-rate increase. She also has lingering uncertainties that may take several months to resolve.
China, U.S. agree to push for IMF reforms for emerging economies: vice premier (Reuters) China and the United States agreed to push forward reforms at the International Monetary Fund (IMF) to increase quotas for emerging economies, China’s vice premier Wang Yang said on Tuesday. The United States also will fully consider the impact that normalizing monetary policy will have on international markets, he added, at the end of high-level talks between China and the United States in Beijing.
Australian dollar jumps 1 percent after shift in tone from RBA (Reuters) The Australian dollar gained more than 1 percent against its U.S. counterpart on Tuesday after the Reserve Bank of Australia kept interest rates on hold and appeared to raise the bar on further monetary easing. The Aussie AUD=D4 climbed to $0.7454, its highest since May 6, and rose 1 percent against the yen and the euro. The RBA kept the cash rate at a record low 1.75 percent at its monthly review, after cutting last month for the first time in a year.
Valeant Pharmaceuticals International Inc stock dives after profit misses estimates, forecast cut (Financial Post) Valeant Pharmaceuticals International Inc. cut its 2016 profit forecast as new Chief Executive Officer Joseph Papa starts his attempt to turn around the embattled drugmaker. The shares plummeted in early trading. Earnings will be US$6.60 to US$7 a share, excluding some items, the company said in a statement Tuesday. In March, under former CEO Michael Pearson, Valeant anticipated US$8.50 to US$9.50. Analysts were predicting earnings of US$8.49, the average of estimates compiled by Bloomberg. In the first quarter, earnings of US$1.27 missed analysts’ predictions by 10 cents

Overnight markets

Overview: US 10yr note futures are up 0.0358% at 130-30, S&P 500 futures are up 0.12% at 2110.75, Crude oil futures are up 1.05% at $50.21, Gold futures are down -0.63% at $1239.6, DXY is up 0.03% at 93.934.

US Economic Data

8:30 AM: Nonfarm Productivity, 1Q F, -0.6%, est. -0.6% (prior -1.0%)
- Unit Labor Costs, 1Q F, 4.5%, est. 4.0% (prior 4.1%
10:00 AM: IBD/TIPP Economic Optimism Index, June, est. 48.2 (prior 48.7)
15:00 AM: Consumer Credit, April, est. $ 18.0b (prior $ 29.674b)

Canadian Economic Data

10:00 AM : Ivey Purchasing Managers Index, May, est. 51.0 (prior 53.1)

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

06/06/2016

by admin | Jun 6, 2016 | comments

Market update

Tsys opening lower/flatter, some p/t after Friday’s 8-11 bp rally, US 10Y 1.725 (+2.2bps). German govt bonds slightly lower, UK gilt curve steeper, GBP at three-week low after TNS UK poll showed majority wanting to leave the EU. EU periph spds wider, 10Y Italy +5bps after Brexit polls. Yellen speaks at 2:00PM and it will be interesting to see if she still views a rate hike as appropriate “in the coming months” in the wake of Friday’s incredibly weak non-farm print. Commodities higher, WTI up over 1% close to $50. GOCs lower in line with tsys, provi spds unch after widening 2.5bps Fri. Still 10Y Ont spds actually ended the week 1bp lower despite 15bp rally in GOCs & decent supply.

News headlines

Commodities Rise With Emerging Markets on Fed View; Pound Drops (Bloomberg) Miners and energy companies rallied with commodities after U.S. jobs data crushed speculation the Federal Reserve would raise interest rates this month. The pound slumped following polls that showed Britons favor exiting the European Union. Materials producers were the biggest gainers in both Europe and Asia as the Bloomberg Commodity Index headed for the highest close since October, with Brent crude above $50 a barrel and zinc extending its longest rally since 2013. Indonesia’s rupiah and Malaysia’s ringgit were the best performers among 31 major currencies after Friday’s U.S. payrolls report caused the Bloomberg Dollar Spot Index to tumble. The pound sank to a three-week low and Brexit concern also infected Spanish and Italian bonds and U.K. homebuilders, while boosting the Swiss franc.
Yellen faces fine balance on Fed rate hike after job growth tumbles (Reuters) Federal Reserve Chair Janet Yellen will likely keep the door open to an interest rate hike within the next few months when she speaks on Monday, while striking a balanced tone about recently disappointing jobs growth and mixed signals in the U.S. economy. Yellen’s speech to the World Affairs Council of Philadelphia at 12:30 p.m. ET (1630 GMT) will address the economy and monetary policy, and is the last public comment by U.S. central bankers before their June 14-15 meeting.
Oil Advances as Abu Dhabi Sees $60 Crude on Shrinking Surplus (Bloomberg) Oil advanced as Abu Dhabi forecast prices could climb as high as $60 a barrel amid a glut that’s dwindling more quickly than projected. Futures rose as much as 1.3 percent in New York. The global surplus is down to 1.2 million to 1.5 million barrels a day and has contracted faster than expected, Ali Majed Al Mansoori, chairman of the Abu Dhabi Department of Economic Development, said in a Bloomberg Television interview.
German Factory Orders Declined in April on Weak Export Demand (Bloomberg) German factory orders declined in April as demand for investment goods from outside the 19-nation currency region slumped. Orders, adjusted for seasonal swings and inflation, fell 2 percent from the prior month, when they rose a revised 2.6 percent, data from the Economy Ministry in Berlin showed on Monday. The reading, which is typically volatile, compares with economists’ forecast for a drop of 0.5 percent. Orders slid 0.5 percent from a year earlier.
China’s Debt Load Is (Much) Higher Than Previously Thought, Goldman Says (Bloomberg) Count total social financing (TSF) as another Chinese statistic of increasingly dubious value, according to analysts at Goldman Sachs Group Inc. With many investors grappling to understand the degree to which China’s economic growth has been fueled by debt, efforts to get a grip on measures of new credit creation have gained fresh urgency. To date many have relied on the TSF invented by the Chinese authorities in 2011 as a way of capturing a larger slice of the country’s shadow banking activity, but Goldman analysts led by MK Tang cast fresh doubt on the measure’s ability to gauge credit creation in a note published on Wednesday.
Britain’s EU Out campaign takes 4-5 percentage point lead: YouGov and ICM polls (Reuters) The campaign for Britain to leave the European Union has taken a 4-5 percentage point lead ahead of a June 23 referendum, according to online polls by ICM and YouGov, sending sterling toward three-week lows against the U.S. dollar. The swing toward “Out” with less than three weeks to go comes as both sides step up their campaigning to try to win over the large number of still undecided voters with warnings over the economy and immigration.
CPP should be expanded, but probably not for the reasons you think (Financial Post) June will be a critical month for public pensions with the finance ministers meeting to discuss expansion of the Canada Pension Plan. The battle lines have been drawn and a bigger CPP is either one of the biggest mistakes the country can make or a godsend that will rescue the middle class from a bleak existence in retirement. To gain some perspective on which of these competing visions is more plausible, it is useful to look back at the birth of the CPP in the mid-1960s.

Overnight markets

Overview: US 10yr note futures are down -0.1312% at 130-26, S&P 500 futures are up 0.25% at 2103, Crude oil futures are up 2.12% at $49.65, Gold futures are up 0.26% at $1246.1, DXY is up 0.08% at 94.105.

US Economic Data