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17/05/2016

by admin | May 17, 2016 | comments

Market update

US tsys moving higher despite better than exp CPI (0.4% vs 0.3% largest monthly advance since 2013) & housing starts, US 10Y 1.75%. Core Euro bonds lower on higher stocks and crude – the latter traded near seven month highs on Nigeria/Cdn supply interruptions and a forecast decline in inventories (exp 3.5mln bbls) last week. UK gilts lower despite weak inflation data. The latest Brexit poll showed more in favor of remaining in the Euro than leaving, with the GBP advancing for a second day on the news. The latest JPM Treasury Client Survey showed the most net longs among both all clients & actives since April 4th. This comes a day after a CFTC COT report showing large specs reducing shorts/ adding to longs across the curve. GOCs bouncing higher with tsys after 8:30 data, provis unch. CMB launch today for pricing tomorrow – 5Y FRN (new Sep 21) & 10Y fixed. The BOC auctions $1.75 bln in reopened Dec 48s tomorrow with the roll having steepened to ~2.2 bps over the last several weeks – which looks ~3stds cheap on a 60day basis, even considering the ~10bp steepening in 10s30s over the period. For those reasons we expect the auction to go well, keeping in mind the larger size (1.75bln vs 1.4bln Nov 25th).

News headlines

Global stocks rally as Buffett bites into Apple, oil eyes $50 (Reuters) World shares rose on Tuesday as technology giant Apple Inc’s biggest rise in over two months and oil’s march higher to near $50 a barrel boosted investor demand for riskier assets at the expense of safe-haven bonds. MSCI’s index of global shares rose 0.2 percent .MIWD00000PUS, putting it on track for its second consecutive rise, something it has not managed in a month.
Oil near six-month high as outages support (Reuters) Oil traded at around $49 a barrel on Tuesday within sight of a six-month high, supported by supply outages in Nigeria, Canada and other producers that are eroding a persistent glut. Prices eased from the highs after Libyan factions agreed in principle to have one oil organization, potentially bringing higher output a step closer. Also, traders were eyeing the restart soon of some of the shut Nigerian output.
K. Inflation Unexpectedly Slows to 0.3%; Core Rate Drops (Bloomberg) U.K. inflation unexpectedly slowed in April, highlighting the struggle Bank of England policy makers face to revive price growth. The rate fell to 0.3 percent from 0.5 percent in March, driven lower by the cost of air fares and clothes, the Office for National Statistics said in London on Tuesday. Inflation hasn’t been lower since last year and the April reading was less than the 0.5 percent forecast by economists in a Bloomberg survey.
As Brexit vote looms, U.S. banks review their European commitments (Reuters) If Britain votes to leave the European Union in June, some U.S. banks could give up parts of their business in the bloc altogether. The option is an extreme scenario under consideration by some Wall Street firms if the terms of an exit, currently a matter of speculation, leave financial services companies in Britain unable under their current set-ups to do business inside the EU, according to discussions Reuters had with several U.S. banks and their lawyers.
BlackRock’s Fink Expresses Concern About China’s Rising Debt (Bloomberg) BlackRock Inc.’s Laurence D. Fink, who oversees the world’s largest money manager with $4.7 trillion of client assets, said “we all have to be worried” about China’s mounting debt amid slowing growth, even as he remains bullish on the economy in the long run. “You can’t grow at 6 percent and have your balance sheets grow faster,” Fink said in a Bloomberg Television interview with Angie Lau on the sidelines of a forum in Hong Kong on Tuesday. “In the future, I would prefer seeing the economy growing 6 percent with some form of deleveraging,” he said.
China able to keep economic growth within reasonable range: premier (Reuters) China will be able to keep its economic growth within a reasonable range, even as it faces difficulties and challenges, Premier Li Keqiang said on Tuesday. China’s overall debt levels remained under control and the government will be able to ward off systemic financial risks, Li said in a comment posted on the central government’s website.
A chart guaranteed to chill the Bank of Canada (GlobeAndMail) Emanuella Enenajor has built a chart that’s guaranteed to keep the Bank of Canada “up at night.” It’s this graphic below, which shows capital spending and production in the manufacturing sector, Canada’s great hope given what should be a boost from the weak loonie. It’s also hoped that a pickup in manufacturing could help offset the dramatic impact of the oil slump.

Overnight markets

Overview: US 10yr note futures are down -0.0718% at 130-14, S&P 500 futures are down -0.22% at 2058.25, Crude oil futures are up 0.31% at $47.87, Gold futures are up 0.06% at $1275, DXY is up 0.05% at 94.621.

US Economic Data

8:30 AM: Housing Starts, April, 1172k, est. 1125k (prior 1089k, revised 1099k)
- Housing Starts, m/m, April, 6.6%, est. 3.3% (prior -8.8%, revised -9.4%)
- Building Permits, April, 1116k, est. 1135k (prior 1086k, revised 1077k)
- Building Permits, m/m, April, 3.6%, est. 5.5% (prior -7.7%, revised -7.7%)
- Consumer Price Index, m/m, April, 0.4%, est. 0.3% (prior 0.1%)
- CPI Ex food and Energy, m/m, April, 0.2%, est. 0.2% (prior 0.1%)
- CPI, y/y, April, 1.1%, est. 1.1% (prior 0.9%)
- CPI Ex Food and Energy, y/y, April, 2.1%, est. 2.1% (prior 2.2%)
9:15 AM: Industrial Production, m/m, April, est. 0.3% (prior -0.6%)
- Capacity Utilization, April, est. 75% (prior 74.8%)

Canadian Economic Data

8:30 AM: Manufacturing Sales, m/m, March, -0.9%, est. -1.9% (prior -3.3%, revised -4.0%)

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

16/05/2016

by admin | May 16, 2016 | comments

Market update

US tsys lower, 10Y 1.722 (+2.3bps) on below avg volume, no reaction to weaker than exp May Empire Man. Crude at six month high above 47.00 (+3.8%) on supply fears and Goldman forecast. Fed Lacker said there is a good case for raising rates in June in an article in the Wash Post.. Core Euro bonds mixed, long term bunds lower with oil, gilts slightly higher in the long end. UST yields fell to one month lows last week, capped by a 5bp rally in 10s despite better retail sales & PPI data. Retail stocks had their worst week since April 8th with earnings from Nordstrom, Macys & Kohls all disappointing. Latest CFTC COT May 10th report showed large specs reducing shorts across the curve. GOCs lower with tsys , provi spreads starting the week 1bp wider, after widening ~4bps last week on risk off and $650mln in long supply from Ont & Newf.

News headlines

Oil Climbs to Highest Since November as European Shares Retreat (Bloomberg) Brent crude rose to a six-month high, leading a rebound in commodities and boosting the ruble and mining companies, as supply disruptions in Nigeria added to production woes. Oil extended last week’s gains as Goldman Sachs Group Inc. increased its price forecast, saying the market had moved into a supply deficit earlier than expected. Precious metals rallied with aluminum and commodity producers climbed, while almost all of the other industry groups in the Stoxx Europe 600 Index fell. Irish bonds advanced, outperforming their euro-area peers, while the Polish zloty strengthened after favorable reports from Moody’s Investors Service. Asian stocks rose from a one-month low.
Yen weakens on Japan intervention talk before G7 meets (Reuters) The yen fell on Monday as Japan, readying to host a Group of Seven meeting, again signaled its willingness to intervene in the market, driving the currency to erase early gains made on disappointing Chinese data. Vice finance minister for international affairs Masatsugu Asakawa told the Nikkei newspaper G7 and G20 countries had discussed how to deal with disorderly currency moves, indicating it was a shared understanding that market interventions were justified if exchange rate moves were excessive.
Oil prices rise on Nigeria outages, Goldman forecast (Reuters) Oil prices jumped over 2 percent on Monday to their highest since November 2015 on growing Nigerian oil output disruptions and after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit. Brent crude futures were trading at $48.83 per barrel at 1118 GMT, up $1 or 2.05 percent. U.S. crude futures were up 98 cents, or 2.08 percent, at $47.19 a barrel.
Why China’s private sector needs a ‘high degree of attention’ (Reuters) Xia Xiaokang and Bruno Chen, who both run private-sector companies, are the sort of businessmen that Chinese leaders are increasingly concerned about as economic growth slows. Beijing is counting on the private sector to invest more in the economy and take up the slack as the government tries to engineer a shift away from largely state-run heavy industry to more entrepreneurial and services-led growth.
Platinum Seen Over Worst as Bulls Wager on Automaker Demand (Bloomberg) There’s a growing feeling in the platinum and palladium market that the worst is over. After dropping to the lowest in at least half a decade in January, prices since rallied back into a bull market as the outlook for continued low U.S. interest rates reignited the appeal of precious metals. The two commodities will climb about 20 percent through the end of next year, partly on higher demand from carmakers, according to 12 traders and analysts surveyed by Bloomberg.
Berkshire Took Apple Stake Worth About $1 Billion in 1st Quarter (Bloomberg) Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake in Apple Inc., betting that the technology company will rebound after a slump driven by a slowdown in iPhone sales. Berkshire held 9.81 million Apple shares as of March 31, according to a regulatory filing Monday from the billionaire’s Omaha, Nebraska-based company. The holding was valued at $1.07 billion at the end of the first quarter.
Wall Street’s Bond Forecasters Splinter as Fed Credibility Wanes (Bloomberg) To Thomas Costerg, the big question for bond investors isn’t whether the Federal Reserve will raise U.S. interest rates this year. It’s how long before the central bank is forced to cut them. As a senior economist at Standard Chartered Bank, Costerg says the risk of a recession will cause the Fed to backtrack on its move to end seven years of near-zero rates. That will underpin demand for Treasuries and push benchmark 10-year yields to 1.6 percent, one of the lowest forecasts in Bloomberg’s latest survey.

Overnight markets

Overview: US 10yr note futures are down -0.1909% at 130-23, S&P 500 futures are up 0.01% at 2043.75, Crude oil futures are up 2.06% at $47.16, Gold futures are up 1.27% at $1288.8, DXY is down -0.17% at 94.445.

US Economic Data

8:30 AM: Empire Manufacturing, May, -9.02, est. 6.50 (prior 9.56)
10: 00 AM: NAHB Housing Market Index, May, est. 59 (prior 58)

Canadian Economic Data

9:00 AM: Existing Home Sales, m/m, April, (prior 1.5%)

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

13/05/2016

by admin | May 13, 2016 | comments

Market update

US tsys higher, yields ~2bps lower, 10Y 1.727 (-2.3bps) on good volume in TY1 futures as European stocks decline, gold higher, USD index new highs, crude 1.1% lower @ 46.20. Tsys rose thru overnite session supported by weak stocks & crude. Asian stocks fell, Nikkei down 1.4%. Core Euro bonds higher& flatter led by 3bp rally in long UK gilts. German April CPI came in at 0.3% unrevised while a measure of ECB excess liquidity rose slightly to E833bln. GOCs higher in line with tsys, provi spds unch after closing yest 2bps tighter despite issuance from Newf & BCMFA. Crombie Reit (BBBL) announced a $418mln transaction to acquire a portfolio of properties from Sobeys.

News headlines

Stocks Give Up Week’s Gains as Commodities Fall; Yen, Bonds Rise (Bloomberg) The world’s financial markets just can’t shake off a sense of gloom. The MSCI All-Country World Index gave up all its gains for the week on Friday and emerging-market equities headed for a fourth-straight weekly loss as flagging corporate earnings eroded investor confidence. Oil retreated from a six-month high and iron ore fell to a two-month low. Even Germany’s strongest growth in two years wasn’t sufficient to boost the euro, while Treasuries rose with the yen on haven demand and the dollar strengthened against 14 of its 16 major peers.
Nerves dominate before U.S. retail numbers (Reuters) The dollar was set for a second week of gains on Friday while stock markets fell ahead of a handful of major U.S. and Chinese data releases which may do little to settle growing nerves over the outlook for the world’s two biggest economies. A poor performance on Wall Street on Thursday, driven by another big drop in Apple shares, seeped into Asian and European markets, down around half a percent across the board.
Euro-Area Growth Revised Down Slightly Despite Germany (Bloomberg) The euro-area economy grew slightly less than initially estimated in the first quarter, though momentum was still the fastest in a year. Led by a better-than-forecast performance by Germany, its largest economy, the euro region expanded 0.5 percent in the three months through March. That compares with an initial estimate of 0.6 percent. From a year ago, it grew 1.5 percent.
Oil falls as dollar strengthens but traders eye Nigerian outages (Reuters) Oil prices ended a three-day bull run on Friday, falling as a strong dollar weighed and investors cashed in on recent gains, though losses were cushioned by outages in Nigeria that have slashed output there to the lowest in 22 years. The dollar .DXY hit a two-week high against a basket of currencies, lifted by expectations the U.S. Federal Reserve will raise rates again before any other major central bank.
OPEC’s Stable Market Outlook Gives Few Drivers for Policy Change (Bloomberg) OPEC kept forecasts for global oil supply and demand unchanged in its last monthly assessment before members meet to review the market. The 13 nations of the Organization of Petroleum Exporting Countries pumped 32.44 million barrels a day in April, slightly less than will be required in the the third quarter. Production rose as gains in Iran and Iraq compensated for losses in Nigeria and Kuwait. Investment by the global oil industry through 2018 will slump to less than half the amount spent from 2012 to 2014 following the collapse in prices, OPEC said.
Hong Kong’s first-quarter GDP contracts on weak exports, spending (Reuters) Hong Kong’s economy shrank in the first quarter from the final quarter of 2015, hit by falling exports and weak consumer spending, with the risk that momentum will slow further. On the doorstep of the world’s second-largest economy, Hong Kong has been buffeted by China’s slowdown. A slump in visitors from the mainland, weak retail sales and falling asset prices have combined to put the economy on the verge of recession.
Warning of downward spiral, IMF sees no economic upside to Brexit (Reuters) International Monetary Fund chief Christine Lagarde said on Friday there were no economic positives to Britain leaving the European Union and that the impact would range from “pretty bad to very, very bad”. Her blunt warning came as the IMF said the country risks falling into a spiral of weaker economic growth, lower house prices and diminished foreign investment if voters opt to leave the European Union after the referendum next month.

Overnight markets

Overview: US 10yr note futures are up 0.0479% at 130-21, S&P 500 futures are down -0.09% at 2057, Crude oil futures are down -0.96% at $46.25, Gold futures are down -0.35% at $1266.7, DXY is up 0.48% at 94.604.

US Economic Data

8:30 AM: Retail Sales Advance, m/m, April, 1.3%,est. 0.8% (prior -0.3%)
- Retail Sales Ex Auto, m/m, April, 0.8% ,est. 0.5% (prior 0.2%)
- PPI Final Demand, m/m, April, 0.2%,est. 0.3% (prior -0.1%)
- PPI Final Demand Ex Food and Energy, m/m, April, 0.1%, est. 0.1% (prior -0.1%)
10:00 AM: Business Inventories, March, est. 0.2% (prior -0.1%)
- University of Michigan Consumer Sentiment, May P, est. 89.5 (prior 89.0)

Canadian Economic Data