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26/05/2016

by admin | May 26, 2016 | comments

Market update

US tsys slightly higher & 1bp steeper, US 10Y 1.865%. Euro stocks up for a third day, Asian stocks higher, USD lower and brent/WTI both above $50 for the first time in seven months. A Chevron facility in Nigeria was attacked by militants (Rtrs) while yest EIA reported crude inventories fell 4.23mln more than exp (2mln). The JPY well bid early in the Asian session on FT story suggesting direct intervention to stem rise less likely. Core Euro bonds lower with higher stocks, risk on, Barclays month end extension for June 1st – Pan Euro Agg 0.06yrs vs 0.13yrs for US tsy index. GOCs higher in line with tsys, BOC auctions $3.9bln in 0.50% Aug 1 18s at noon with the roll vs 2s tighter 1.2/1.1 and 2Y yields ~5bps shy of their April highs (0.70%). Provi spds unch, Ont rumored as well as another Alberta & NF. Yest BMO 5Y NVCC @ 250 saw strong demand, this morning bonds are quoted 245/240, with more supply likely after bank earnings.

News headlines

Oil Hits ‘Sweet Spot’ at $50, Boosting Producers as Dollar Drops (Bloomberg) Brent surpassed $50 a barrel for the first time since November on signs a two-year surplus is coming to an end, lifting commodity companies and buoying currencies where oil is produced. A drop in U.S. stockpiles and shrinking output in Nigeria and Venezuela contributed to the gains in Brent, which is up more than 80 percent from January’s low of $27.10. The Bloomberg Commodity Index headed for the highest close in six months as metals also advanced, and miners in the Stoxx Europe 600 Index headed for their biggest three-day jump in more than a month.
Japan’s Abe points to 2008 crisis as G7 leaders debate global risk (Reuters) Group of Seven leaders voiced concern about emerging economies at a summit in Japan on Thursday as their host, Prime Minister Shinzo Abe, made a pointed comparison to the 2008 global financial crisis but not all his G7 partners appeared to agree. The G7 leaders did agree on the need for flexible spending to spur world growth but the timing and amount depended on each country, Deputy Chief Cabinet Secretary Hiroshige Seko told reporters, adding some countries saw no need for such spending.
Fed’s Bullard: tight U.S. labor market may put upward pressure on inflation (Reuters) U.S. labor markets are relatively tight and may put upward pressure on inflation, St. Louis Federal Reserve President James Bullard said on Thursday. “By nearly any metric, U.S. labor markets are at or beyond full employment,” Bullard said in an OMFIF lecture in Singapore. “In short, labor markets are relatively tight,” he said. “This may put upward pressure on inflation going forward.”
RBC profit beats expectations, but bad loans rise 19% as credit to oil firms turns sour (Financial Post) Royal Bank of Canada (RBC) said on Thursday bad loans increased by $583 million, or 19 per cent, in the second quarter from the quarter before, largely due to a rise in credit to oil firms that had turned sour. Canada’s biggest banks are seeing an increase in energy clients struggling to pay back loans following a sharp decline in the price of oil. Bank of Montreal said on Wednesday it had set aside more funds to cover losses.
Toronto-Dominion profit rises 10% on higher earnings in U.S., Canada retail banking (Financial Post) Toronto-Dominion Bank said fiscal second-quarter profit rose 10 per cent on higher earnings from its U.S. and Canadian retail operations. Net income for the period ended April 30 climbed to $2.05 billion, or $1.07 a share, from $1.86 billion, or 97 cents, a year earlier, the Toronto-based bank said Thursday in a statement. Profit excluding some items was $1.20 a share, beating the $1.17 average estimate of 13 analysts surveyed by Bloomberg.
CIBC boost dividend as profit grows despite rise in provision for bad loans (Financial Post) CIBC saw its second-quarter profit grow to $941 million, up 3.3 per cent from the same period last year despite an increase in provisions for soured loans to the oil and gas sector and writeoffs in its personal lending portfolios. The profit amounted to $2.35 per share of net income, up from $2.25 or $911 million during the second quarter of 2015. Adjusted income for the quarter ended April 30 was $962 million or $2.40 per share, compared with $924 million or $2.28 a year ago.
Bombardier Inc’s Delta sale signals ‘beginning of the end’ of Boeing-Airbus duopoly: Moody’s (Financial Post) Bombardier Inc. has finally joined the big leagues with its recent sale to Delta Air Lines Inc., signalling the “beginning of the end” of Boeing Co. and Airbus Group’s duopoly, according to Moody’s. The global bond ratings agency said it won’t be easy for Bombardier to take market share away from Boeing and Airbus, but Delta’s order for 75 CSeries jets showed it’s finally in the running in the 100-plus-seat narrowbody market.

Overnight markets

Overview: US 10yr note futures are up 0.0603% at 129-18, S&P 500 futures are up 0.1% at 2089.25, Crude oil futures are up 1.01% at $50.06, Gold futures are up 0.18% at $1228.8, DXY is down -0.13% at 95.234.

US Economic Data

8:30 AM: Initial Jobless Claims, May 21, 268k, est. 275k (prior 278k)
- Continuing Claims, May 14, 2163k, est. 2142k (prior 2152k, revised 2153k)
- Durable Goods Orders, April, 3.4%, est. 0.5% (prior 0.8%, revised 1.9%)
- Durables Ex Transportation, April, 0.4%, est. 0.3% (prior -0.2%, revised 0.1%)
- Cap Goods Orders Nondef Ex Air, April, -0.8%, est. 0.3% (prior 0.1%, revised -0.1%)
- Cap Goods Ship Nondef Ex Air, April, 0.3%, est. 0.1% (prior 0.5%, revised -0.3%)
9:45 AM: Bloomberg Consumer Comfort Index, May 22, (prior 42.6)
10:00 AM: Pending Home Sales, m/m, April, est. 0.7% (prior 1.4%)
11:00 AM: Kansas City Fed Manufacturing Activity, May, est. -3 (prior -4)

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

25/05/2016

by admin | May 25, 2016 | comments

Market update

US tsys slightly lower, above avg volume in TY1 futures (395k), with prices flat in Asia, lower in European trading and back to unch in NA trading. S&P stock futures are ~0.40% higher, European equities higher for a second day, the Stoxx at the highest ll since April 28th. The USD index lower, crude up 1.1% above $49.00 – yesterday’s API report showed crude inventories fell 5.14 mln barrels last week, the biggest decline since Dec. Core Euro bonds higher despite higher stocks & better than exp German IFO sentiment, with duration extension trades going thru, short covering after E821mln German 30Y bond auction. Euro Peripheral bonds higher led by Greece after the Eurogroup agreed to release bailout funds to Greece The US auctions $34bln in 5Y notes at 1:00EST. Yesterday’s 2Y note auction stopped 2bps thru @0.92%, with direct (end user) participation the highest in 3yrs at 32.5% vs 13% avg. GOCs are unch before BOC decision at 10:00 with no change expected in the o/n rate, while the statement could take on a more dovish tone in view of March’s large (4.2%) decline in non-energy exports, even as the real trade balance was in surplus. Provi spreads opening firm after closing tighter yest on stocks & well received long Alberta deal (124.5, now 122.5 bid). Supply is still expected prior to next week’s cpn pmt. Altalink (A/A) is in the mkt with a 10Y fixed at ~140. Utility spreads have not been immune to the selling pressure which has impacted the BBB sector disproportionately over the last three weeks as supply has begun to be a factor after a quiet April, with Banks expected to be in the mkt shortly post earnings as well.

News headlines

Stocks Rally With Oil as Don’t Fear the Fed Is New Market Mantra (Bloomberg) Global equities rose to a two-week high amid increasing investor optimism that the world economy can withstand higher U.S. interest rates. Oil advanced and gold fell amid a retreat in the dollar. The MSCI All Country World Index climbed for a second day, European equities jumped, and futures signaled a higher opening for U.S. shares. Emerging-market stocks rose the most in six weeks, while South Korea’s won led currencies higher even as China set the yuan’s reference rate at the weakest level since 2011.
Oil nudges $50 a barrel as investors bet on shrinking overhang (Reuters) Oil rose towards $50 a barrel on Wednesday for the first time in seven months, driven by expectations that shrinking supply will help erode any overhang of unwanted crude, particularly after industry data showed a sharp fall in U.S. inventories. A series of outages around the world, such as wildfires in Canada and a spate of violence in Nigeria’s oil-producing region, has helped cut global oil supply by nearly 4 million barrels per day this month.
China Wants to Set Prices for the World’s Commodities (Bloomberg) China has put the world’s traditional financial centers on notice that it wants to develop its raw material markets as hubs for setting prices, seeking to marry the country’s commercial heft with a much greater say in determining how much commodities cost. “We’re facing a chance of a lifetime to become a global pricing center for commodities,” Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said at the Shanghai Futures Exchange’s annual conference in the city on Wednesday.
China Said to Plan Asking U.S. on Timing of Fed Rate Hike (Bloomberg) Chinese officials plan to ask their American counterparts in annual talks next month about the chance of a Federal Reserve interest-rate increase in June, according to people familiar with the matter. The Chinese delegation will try to deduce whether a June or a July rate rise is more likely, as their nation’s policy makers prepare for the potential impact on financial markets and the yuan, the people said, asking not to be named as the discussions were private.
Euro zone hails ‘breakthrough’ with Greece, IMF debt deal (Reuters) The euro zone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal that won a provisional commitment from the IMF to return to taking part in the bailout for Athens, heartening investors. After talks that lasted into the small hours of Wednesday, Eurogroup finance ministers gave a nod to releasing 10.3 billion euros ($11.5 billion) in new funds for Greece in recognition of painful fiscal reforms pushed through by Prime Minister Alexis Tsipras’s leftist-led coalition, subject to some final technical tweaks.
Bank of Montreal hikes dividend but profit dips and bad loan provisions rise (Financial Post) The Bank of Montreal’s second quarter profit fell to $973 million, down three per cent from a year ago, as it took bigger provisions for credit losses and restructuring expenses. The bank reported $999 million of net income during the same quarter last year. The earnings amounted to $1.45 per share, down from $1.49 per share a year ago.
Oilsands companies prepare to restart production as fire moves East (Financial Post) The threat posed by the wildfire that shut down 1.2 million barrels of daily oilsands production has not completely passed, but oilsands companies have begun sending crews back up to northern Alberta to prepare to restart their facilities. Teams from Suncor Energy Inc., Syncrude Canada Ltd., Athabasca Oil Corp. and ConocoPhillips Canada are either en route to, or on the ground at, oilsands projects around Fort McMurray preparing to start pumping oil once again.

Overnight markets

Overview: US 10yr note futures are down -0.1206% at 129-13, S&P 500 futures are up 0.35% at 2082.25, Crude oil futures are up 1.28% at $49.24, Gold futures are down -0.59% at $1224.9, DXY is down -0.04% at 95.534.

US Economic Data

9:00 AM: FHFA House Price Index, m/m, March, est. 0.50% (prior 0.40%)
9:45 AM: Markit US Services PMI, May, est. 53.0 (prior 52.8)
- Markit US Composite PMI, (prior 52.4)

Canadian Economic Data

10:00 AM: Bank of Canada Rate Decision, May, est. 0.50% (prior 0.50%)

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

24/05/2016

by admin | May 24, 2016 | comments

Market update

US tsys slightly lower, US 10Y 1.844 (+1bp), curve flatter, avg volume in TY1 futs (270k). More hawkish Fedspeak, this time from Fed Harker who stated he could ‘easily see two or three rate hikes this year’. Core Euro bonds higher, bund curve flatter despite better than exp ZEW. The US auction $26bln in 2Y notes at 1:00 with 2Y yields the highest since mid-March and with the highest auction yield (0.925) since Dec. Spec positioning is fairly short the 2Y (based on latest COT report -121k contracts) yet with the Fed sounding hawkish the short pos could head higher; primary dealers are the longest the 2-3Y sector since Nov 2015. GOCs lower in line with tsys, provis 0.5bps wider, long Alberta deal still expected, Alb/Ont 46 19bid.

News headlines

Asian stocks near 11-week lows, dollar bounces on Fed rate view (Reuters) Asian shares stumbled to near 2-1/2-month lows on Tuesday and the U.S. dollar pared some of its recent losses as investors worried about the likelihood of a U.S. interest rate increase in coming weeks. MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 0.5 percent, taking its losses to more than 7 percent so far this month and nearing its lowest levels since March 9.
Oil falls for fifth day as focus returns to growing exports (Reuters) Oil fell for a fifth consecutive day on Tuesday on rising production from major exporters, and as the dollar strengthened. Brent futures LCOc1 had declined 25 cents to $48.10 a barrel by 1051 GMT, after closing down 37 cents in the previous session.
Dollar Rally Gathers Pace, Commodities Drop on Fed; Pound Jumps (Bloomberg) The dollar rallied and crude oil fell with gold as speculation mounted that the Federal Reserve will raise interest rates as early as next month. The pound jumped and European stocks gained. The U.S. currency touched its strongest level in eight weeks against the euro, while Australia’s dollar and the Malaysia’s ringgit were among the biggest losers, as the prospect of higher interest rates boosted demand for the greenback.
Valeant Pharmaceuticals Inc to lower debt by more than $1.5 billion this year by selling non-core assets, new CEO tells investors (Financial Post) Valeant Pharmaceuticals Inc plans to lower its debt by at least $1.5 billion this year, Chief Executive Joseph Papa said on Monday during his first large meeting with investors since taking the top job three weeks ago. Valeant has about $30 billion in debt and has had to appease creditors, who had the option of forcing early payment of some loans and bonds after Valeant missed deadlines for filing financial records with regulators and triggering default notices.
Thousands of oilsands workers are losing pay while Fort McMurray fires shut sites (Financial Post) While wages are continuing for many employees of oilsands companies forced off the job by Fort McMurray wildfires, thousands of tradespeople hired by contractors are off the payroll. “It’s certainly an economic hardship. People have bills to pay, people make plans around when they expect the work will take place,” Warren Fraleigh, executive director of the Building Trades of Alberta, said Friday.
The Hedge Fund That Couldn’t Stay Open Long Enough for a Big Payday (Bloomberg) Toby Dodson waited six months for his bet against a fragile Portuguese bank to pay off. But before the reckoning, word came down from his hedge fund bosses at Achievement Asset Management in Chicago: get ready to clear out your desk and unwind your trades, we’re shutting down. They’d lost too much on U.S. energy companies and so became one of the 979 firms to announce their closure last year.

Overnight markets

Overview: US 10yr note futures are down -0.0723% at 129-21, S&P 500 futures are up 0.55% at 2056.5, Crude oil futures are up 0.71% at $48.42, Gold futures are down -1.02% at $1238.7, DXY is up 0.25% at 95.468.

US Economic Data

10:00 AM: Richmond Fed Manufacturing Index, May, est. 8 (prior 14)
- New Home Sales, April, est. 523k (prior 511k)
- New Home Sales, m/m, est. 2.3% (prior -1.5%)

Canadian Economic Data