Commentaires

19/05/2016

par admin | Mai 19, 2016 | commentaires

Market update

US tsys lower, yields ~1bp higher, curve slightly steeper, little reaction to marginally lower Phili Fed, slight increase in claims. Tsy 5Y underperforming for a 2nd day in follow thru to yesterday’s post hawkish FOMC minutes reaction which saw the 5s widen 2.5bps on the curve – 5s are now at cheapest levels in three months, just prior to the March 14th FOMC meeting. US 10Y 1.873 vs 1.88% at close yest, volumes way above avg in TY1 futures (427k). Tsys pressured along with core Euro bonds on (i) Japan machine orders (5.5% vs -0.9% exp), (ii) 5/10/15Y supply from France and Spain, (iii) strong UK retail sales at 1.5% vs 0.6% exp. Fed Lacker sounding fairly hawkish saying mkts had overestimated length of Fed pause, Brexit wouldn’t cause US recession etc.. GOCs lower, reacting to hawkish Fedspeak, spds 1bp tighter vs tsys. Provi spds firmer on higher cda yields & lack of supply, Ont 46 104.5/103.5, supply probable. CMB 10Y 59/58.5 (priced yest 59.5).

News headlines

Stocks Retreat to Six-Week Low as Fed Dents Bonds, Commodities (Bloomberg) Global stocks slid to a six-week low, commodities dropped and bonds slipped as markets around the world braced for the possibility that the Federal Reserve will raise interest rates as soon as next month. A gauge of the dollar’s strength held gains following its biggest jump in six months. The MSCI All Country World Index declined for a third day after the minutes of the last Fed meeting showed most of its rate-setting officials were in favor of a move in June should the U.S. economy continue to improve.
Oil drops below $48 on Fed hike speculation, fading support from outages (Reuters) Oil fell below $48 a barrel on Thursday, pressured by a stronger dollar and as a surprise increase in U.S. crude inventories served as a reminder that supply remains ample despite output problems. Supply losses in Canada and Nigeria have lent support, but cooler weather was expected to help firefighters battling Canadian wildfires. Traders said Exxon Mobil is boosting output at Nigeria’s largest crude stream. Brent crude LCOc1 was down $1.29 at $47.64 at 0951 GMT. It reached a 2016 high of $49.85 on Wednesday, only to close lower. U.S. crude CLc1 was down $1.06 at $47.13.
Bond Traders Caught Napping as Fed Talks Tough on June Meeting (Bloomberg) It took only a few days for interest-rate anxiety to flood back into the bond market. After dismissing the chance of a Federal Reserve rate increase in June, traders reversed course Wednesday when minutes from the most recent Federal Open Market Committee meeting sent yields soaring. Most officials said at the April gathering that a move in June would be warranted if economic data indicate stronger growth and inflation.
Moody’s Cuts 2016 U.S. Growth Forecast, Cites Weak Global Demand (Bloomberg) Moody’s Investors Service lowered its growth forecast for the U.S. economy this year to 2 percent from 2.3 percent to account for a weak first quarter, while anticipating underlying resilience through 2017. Moody’s said it expects the Federal Reserve to raise its benchmark interest rate “at most” twice this year, according to a statement it e-mailed. The ratings company also sees the country’s gross domestic product rising 2.3 percent in 2017.
Now or later? Euro zone, IMF at odds over when Greece should get debt relief (Reuters) The euro zone and International Monetary are struggling with Greece’s debt crisis – not with Athens this time, but with each other over when to give Greece a break on its future massive debt repayments. The euro zone has begun talks on debt relief for Greece but wants to postpone the final decision until 2018; the IMF insists Greek debt repayment is unsustainable and investors need clarity now.
Quebec pension fund Caisse’s Montreal LRT plan derails Via’s pitch for dedicated passenger tracks (Financial Post) Via Rail was in talks with Quebec’s pension fund about building a dedicated set of passenger tracks between Quebec City and Toronto, but that fell apart after the Caisse de dépôt et placement du Québec proposed a $5.5-billion commuter line for Montreal instead. Via chief executive Yves Desjardins-Siciliano said the development is a mixed blessing, as it shows that there’s investor appetite for rail projects but appears to eliminate a major contender for his own plan.
Violent Struggle Over Oil and Money Rattles Global Energy Market (Bloomberg) After years of relative peace, militants are again blowing up the pipelines that criss-cross the mangrove swamps of Nigeria’s Niger River delta, reducing oil output to the lowest in almost three decades and fueling a rally in global crude prices. The resurgent conflict in Africa’s largest economy has a long history, interweaving corruption and poverty with regional rivalries and presidential politics, but at its core is money.

Overnight markets

Overview: US 10yr note futures are up 0.0725% at 129-15, S&P 500 futures are down -0.33% at 2034.75, Crude oil futures are down -1.97% at $47.24, Gold futures are down -2.17% at $1246.7, DXY is up 0.42% at 95.481.

US Economic Data

8:30 AM: Chicago Fed Nat Activity Index, April, 0.10, est. -0.20 (prior -0.44, revised -0.55)
- Initial Jobless Claims, May 14, 278k, est. 275k (prior 294k)
- Continuing Claims, May 7, 2152k, est. 2158k (prior 2161k, revised 2165k)
- Philadelphia Fed Business Outlook, May, -1.8, est. 3.0 (prior -1.6)
9:45 AM: Bloomberg Consumer Comfort Index, May 15, (prior 41.7)
10:00 AM: Leading Index, April, est. 0.4% (prior 0.2%)

Canadian Economic Data

8:30 AM: Wholesale Trade Sales, m/m, March, -1.0%, est. -0.5% (prior -2.2%, revised -2.3%)

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

18/05/2016

par admin | Mai 18, 2016 | commentaires

Market update

Tsys lower, yields 1bp higher across the cure, US 10Y 1.784%. Core European bonds underperforming led by UK gilts, with 10Y gilt ~3bps on better than expected employment growth, tsys pressured by weaker bunds, gilts in Europe. The tsy cpn curve narrowed yest to the flattest lvl since 2007 on hawkish Fedspeak and higher readings on CPI/PPI. The minutes from the April 27 FOMC meeting are scheduled for release at 2:00PM. Global stocks weaker, Euro stoxx down slightly, S&P futures moving lower after Target warned on Q2 earnings, the stock down ~9.0% pre mkt. In the US IG mkt $28bln in new issuance priced yest including $20bln 6 part Dell (Baa3/BBB-) deal which saw huge demand (~80bln order book). Spreads much tighter from IPT, and bonds still broke ~10-15 bps tighter – the 5Y 302/ priced at 312.5. In Canada, GOCs unch , provi spds unch , supply less likely with GOC 30Y auction & CMB 5Y FRN & 10Y fixed this morning. New CMB Sep 26 expected in the area of 60 bps over 10s, the WI trading tighter 59.5/58.5 this morning. Good demand seen for the issue (were sold out). In corps yest busy day with Cominar 7Y @ 325 looked 10-15bps cheap and broke 3 bps tighter. GOC 30Y auction at noon – 1.75bln in reopened Dec 48s with the roll 0.2bps tighter this morn 2.1/1.9 – weve seen some of the extension demand on our view the roll looked quite cheap (3 stds on 60-day basis).

News headlines

Dollar Strengthens as Emerging Markets Slide on Fed; Gold Drops (Bloomberg) Financial markets are reawakening to the risk that the U.S. expedites interest-rate increases, and that’s buoying the dollar while denting emerging markets and commodities. The dollar climbed to a seven-week high and Treasuries fell, pushing two-year yields to highest since April, after Atlanta Federal Reserve President Dennis Lockhart and San Francisco’s John Williams said Tuesday two rate hikes may be warranted this year.
K. Labor Market Cools as Growth Slows, Brexit Vote Looms (Bloomberg) The U.K. jobs market showed signs of cooling in the first quarter as Britain prepares for an increasingly bitter referendum on its European Union membership. The number of people in work rose by 44,000, less than a quarter of the gain seen at the end of 2015, the Office for National Statistics in London said on Wednesday. Unemployment fell 2,000, leaving the jobless rate at a decade-low 5.1 percent, as forecast by economists. The employment rate edged up to 74.2 percent.
Japan Dodges Recession Thanks to Consumers, Public Spending (Bloomberg) Japan’s economy dodged a recession last quarter as gains in government and consumer spending compensated for a slide in business investment. Gross domestic product expanded by an annualized 1.7 percent in the three months ended March 31, exceeding all forecasts in a Bloomberg survey of economists, a Cabinet Office report showed on Wednesday. The October-to-December quarter was revised to a 1.7 percent contraction, worse than the previous estimate of a 1.1 percent drop.
China April home prices accelerate, recovery spreads to smaller cities (Reuters) China’s home prices posted their fastest growth in two years in April, with gains in regional centers indicating a broader recovery in the country’s housing market beyond the major cities. However, while Shanghai and Shenzhen remained the country’s two hottest housing markets, there are signs recent tightening measures are beginning to temper demand in those cities.
Oil Stocks ‘Outrun Fundamentals’ With 300% Gains in Three Months (Bloomberg) As oil flirts with $50 a barrel, investors are trading drilling stocks as if crude were selling for $80, and that’s the kind of optimism that leads to corrections. Legendary short-seller James Chanos said last week that he’s considering wagering against explorers because they’ve gotten ahead of themselves. In the last three months, Denbury Resources Inc., SM Energy Co. and California Resources Corp. have all quadrupled in value as the price of oil rose by just 52 percent.
China will maintain tax rebate policy for steel exports (Reuters) China will maintain its tax rebate policy for steel exports as part of its efforts to help the sector tackle its longstanding overcapacity problems, the country’s finance ministry said on Wednesday. Chinese steelmakers have relied on the overseas market to soak up excess production in the sector, prompting growing anti-dumping complaints from foreign competitors. The Ministry of Finance said in an announcement on its website that it would also maintain a low rate of value-added tax on coal in order to support the sector’s restructuring efforts.
Iran’s May oil exports set to surge nearly 60 percent from a year ago: source (Reuters) Iran’s oil exports are set to surge in May, climbing nearly 60 percent from a year ago, with European shipments recovering to about half of pre-sanction levels, according to a source with knowledge of the country’s crude lifting plans. This shows Tehran is regaining market share at a faster pace than analysts had projected as it battles with Saudi Arabia for customers by cutting its prices. April loadings at 2.3 million barrels per day (bpd) were around 15 percent higher than the International Energy Agency estimated earlier this month.

Overnight markets

Overview: US 10yr note futures are down -0.1558% at 130-7, S&P 500 futures are down -0.29% at 2037.5, Crude oil futures are down -0.19% at $48.22, Gold futures are down -0.33% at $1272.7, DXY is up 0.26% at 94.795.

US Economic Data

7:00 AM: MBA Mortgage Applications, May 13, -1.6% (prior 0.4%)
2:00 PM: FOMC April Meeting Minutes will be released
Factory Orders Revisions

Canadian Economic Data

8:30 AM: Int’l Securities Transactions, 17.17 B (prior $15.94 B)

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

17/05/2016

par admin | Mai 17, 2016 | commentaires

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%)