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09/05/2016

by admin | May 9, 2016 | comments

Market update

Tsys trading higher , US 10Y 1.77 (-1bp), curve unch. Euro stocks higher, oil back to unch after reaching to $46 in early trade. Light data calendar so mkt will focus on Tsys & corp supply. Core Euro bonds mixed, German 10Y bund maintaining gains despite better than exp Factory orders as well as heavy sov supply this week – ~E22bln from the Netherlands, Germany, Austria, Italy & Ireland. The US auctions $62bln in 3, 10 & 30Y bonds this week – Japanese FX intervention and the return from Golden week should be supportive. US corp supply could reach $50bln including HY deal from Dell & possibly Apple. US IG Credit index set new YTD tights early last week before drifting wider (BUSC <index>). GOCs higher in line with tsys to start the week, 10Y 1.355%. GOCs rallied across the curve last week, led by the 8Y sector (CTD ), yields 12-20 bps lower on the week thou Friday’s weaker employment data was met with profit taking. Ont spds slightly tighter (0.5bps) – Ont 26s/46s trading up this morn @ 91 & 102, spds widened ~5bps last week , Alta/Ont 46 @20bps 1.5bps wider on the week.

News headlines

European Stock Gains Defy China Data That Hurt Metals; Oil Rises (Bloomberg) European stocks rallied from a one-month low, shaking off a drag from Chinese trade data that pushed Shanghai shares lower along with industrial metals. Oil gained, buoyed by Canadian wildfires that are curbing production. Apart from mining companies, all of the 19 industry groups on the Stoxx Europe 600 Index advanced. Copper fell to its lowest in almost a month after imports into China slipped from a record, while iron ore tumbled following an increase in stockpiles at Chinese ports. Oil climbed above $45 a barrel in New York and gold retreated as a gauge of dollar strength rose for a fifth day. Corporate bond sales in euros may be “unusually busy” this week after some companies held off on offerings due to earnings blackouts and national holidays, according to Deutsche Bank AG.
Yen falls after Tokyo warning (Reuters) The dollar hit a 10-day high against the yen on Monday after Japan’s finance minister said outright that Tokyo was ready to intervene in the currency market if yen moves are volatile enough to hurt trade and the economy. In a mixed day for stock markets, the yen’s falls helped generate some limited gains for the Nikkei, while a strong batch of industrial orders numbers out of Germany helped European shares recover from their worst week since mid-February.
German Factory Orders Rebounded in March as Exports Gained (Bloomberg) German factory orders picked up in March as strong global trade helped offset a lull in domestic demand. Orders, adjusted for seasonal swings and inflation, advanced 1.9 percent from the prior month, when they fell a revised 0.8 percent, data from the Economy Ministry in Berlin showed on Monday. The reading, which is typically volatile, was the strongest since June last year and compares with economists’ forecast for a 0.6 percent increase. Orders climbed 1.7 percent from a year earlier.
China stocks plunge again as hopes for economic recovery fade (Reuters) China stocks fell sharply again on Monday, reaching eight-month lows, as investors saw hopes for a strong economic recovery fade and worried about fresh regulatory curbs on speculation. Following the market’s nearly 3 percent slump on Friday, China’s blue-chip CSI300 index .CSI300 fell 2.1 percent, to 3,065.62, while the Shanghai Composite Index .SSEC lost 2.8 percent, to 2,832.11 points. China April trade data, released on Sunday, doused investor hopes of a sustainable economic recovery, with both exports and imports falling more than expected.
Bank of Japan minutes reveal sharp split over negative rates (MarketWatch) Some Bank of Japan officials expressed worries over signs of “adverse effects” of negative interest rates at their March policy meeting, underlining a sharp split among central bankers over the policy measure. Some of the BOJ’s nine policy board members said the step to impose a charge on some deposits held by commercial banks had added to “anxiety among financial institutions and depositors” and made the central bank’s policy “difficult to understand,” according to the March 14-15 meeting minutes released Monday.
Even China’s Party Mouthpiece Is Warning About Debt (Bloomberg) China’s leading Communist Party mouthpiece acknowledged the risks of a build-up of debt that is worrying the world and said the nation needed to face up to its nonperforming loans. High leverage is the “original sin” that leads to risks in the foreign-exchange market, stocks, bonds, real estate and bank credit, the People’s Daily said in a full-page interview with an unnamed “authoritative person” starting on page one and filling the second page on Monday.
Dollar Jump Catches Traders Short in One More Currency Calamity (Bloomberg) Just when investors thought they’d finally made a good call in the currency market, the dollar’s advance messed it up. The U.S. currency on Friday capped its best week all year versus its major peers, shortly after hedge funds finally switched to betting on dollar declines, known as going short. That’s not the only wrong move foreign-exchange managers have made this year — an index tracking their returns shows they’ve failed to turn a profit in 2016.

Overnight markets

Overview: US 10yr note futures are up 0.1676% at 130-24, S&P 500 futures are up 0.04% at 2053.5, Crude oil futures are up 0.22% at $44.76, Gold futures are down -1.45% at $1275.2, DXY is up 0.07% at 93.952.

US Economic Data

There is no major economic data for today

Canadian Economic Data

8:15 AM: Housing Starts, April, 191.5k, est. 193k, (prior 204.3k, revised 202.4k)

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

06/05/2016

by admin | May 6, 2016 | comments

Market update

Tsys mixed, curve flatter with 10Y ~2bps lower after payrolls came in weaker than exp for April (160k vs 200k), 10Y 1.72 (-2bps) thou avg hourly earn were in line @ 0.3% m/m. Tsy yields falling thru the o/n session in follow thru to yest rally as China stocks 3.0% lower, the CRB index falling to the lowest in a week. The Nikkei fell 0.25%, Japan April Service PMI fell to 49.3 vs 50 in March with the composite PMI at a two-year low. Sharp fell 8.5% as losses expected to nearly double this FY to 300bln. GOCs higher after Cdn empl fell 2.1k last month after a 40.6k increase in Apr, the unem rate at 7.1% vs 7.2%. Provis trading down since payrols , Ont 26s @91.5, spds have held in fairly well this week considering the rally in cdas, ~2bps wider vs 20bp rally in 10Y GOCs – lack of doenstic supply & upcoming June extension likely a factor keeping spreads in.

News headlines

Stocks Drop as Markets Revisit 2016 Doldrums Before Payroll Data (Bloomberg) The worst week for financial markets since the turmoil at the start of the year showed little sign of improvement as pessimism over global-growth prospects set the stage for U.S. jobs data. The MSCI All-Country World Index extended its biggest weekly decline since February as corporate earnings failed to reassure investors. Emerging markets headed for the worst week in four months with Turkey, Poland and South Africa providing focal points for selling. U.S. crude oil sank, set for its first weekly drop in more than a month and industrial metals were poised for their biggest weekly loss since 2013. Bonds and the dollar have been the main beneficiaries, with a gauge of the U.S. currency headed for its best week this year, while German bunds advanced.
Oil falls as investors cash in on month-long gains (GlobeandMail) Oil prices fell on Friday as investors cashed in on a 20-per cent rise over the past month, outweighing the impact of crude production cuts in Canada where a huge wildfire has disrupted oil sands operations. Oil prices were down around one per cent in early European trading, with global benchmark Brent prices set for their first weekly loss in five weeks. “Currently prices are falling even with only few bearish fundamentals,” said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
Fitch downgrades Brazil, Meirelles calls for credible targets (Reuters) Fitch Ratings downgraded Brazil’s sovereign debt further into junk territory on Thursday, citing a deeper-than-expected economic contraction and changing fiscal targets that have undermined credibility. Fitch downgraded Brazil to BB from BB+ with a negative outlook a week before a Senate vote that is expected to lead to the ouster of unpopular leftist President Dilma Rousseff.
Italy prosecutor probes Deutsche Bank for possible market manipulation – source (Reuters) Deutsche Bank (DBKGn.DE) is under investigation in Italy for suspected market manipulation relating to the sale of Italian government bonds in 2011, an investigative source said on Friday. A prosecutor in southern Italy is investigating the German bank’s sale of 7 billion euros (6 billion pounds) worth of Italian state debt as Italy approached a debt crisis that eventually brought down the government of former Prime Minister Silvio Berlusconi.
China regulator studying impact of overseas-listed firms relisting in China (Reuters) China’s securities regulator said it is analyzing the potential impact of overseas-listed Chinese companies coming home to relist on mainland exchanges, potentially bad news for tech firms trying to come home and cash in on high valuations. The valuation gap between the domestic and overseas market and speculation on shell companies should be paid attention to, Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), said at a weekly briefing on Friday, according to remarks posted on CSRC’s official Weibo microblog.
TransCanada gets final permits for Coastal GasLink pipeline to Kitimat (GlobeandMail) TransCanada Corp. says it has secured the final permits needed to start construction and operation of its proposed Coastal GasLink pipeline. The company said Thursday that the B.C. Oil and Gas Commission issued the last two of 10 permits needed and it now is awaiting a final investment decision from LNG Canada before starting construction.
‘Paralyzing Volatility’ Means Trouble for Wall Street Giants (Bloomberg) There’s plenty of volatility, but what happened to the volume? From stocks to currencies and bonds, the upswing in turbulence to start the year is chasing all but the bravest traders from financial markets. Despite the recent rebound in U.S. equities, volume in the S&P 500 Index is down 23 percent. Speculative bets on the direction of currencies have also dropped to the lowest in two years, while average daily trading among dealers in U.S. Treasuries is close to a seven-year low.

Overnight markets

Overview: US 10yr note futures are up 0.0717% at 130-27, S&P 500 futures are down -0.46% at 2034.5, Crude oil futures are down -1.31% at $43.74, Gold futures are up 1.85% at $1295.8, DXY is down -0.23% at 93.567.

US Economic Data

8:30 AM: Change in Nonfarm Payrolls, April, 160k, est. 200k (prior 215k)
- Unemployment Rate, April, 5.0%, est. 4.9% (prior 5.0%)
- Average Hourly Earnings, m/m, 0.3%, est. 0.3% (prior 0.3%, revised 0.2%)

Canadian Economic Data

8:30 AM : Net Change in Employment, April, -2.1k, est. 1k (prior 40.6k)
- Unemployment Rate, April, 7.1%, est. 7.2% (prior 7.1%)
10:00 AM : Ivey Purchasing Managers Index (s.a), April, est. 52.3 (prior 50.1)

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

05/05/2016

by admin | May 5, 2016 | comments

Market update

US tsys lower, US 10Y 1.796 (2bps), off the lows after Initial Claims rose to a five week high, avg volume in TY futures (275K) overnite. Commodities higher, crude up 3.0% at 45.15 as Alberta wildfire said to lower production by 1MM bbl/day. European equities slightly higher, core Euro bonds also higher led by 10Y UK gilts on weak Markit/CIPS Services PMI, light volumes given holiday in Europe 7 Japan, EU peripheral spds mixed – Portugal wider Greek yields lower as Eurozone fin ministers prepare to meet next Monday to discuss bailout terms. GOCs unch, slightly better offered vs tsys, steepening bias remains in tact, 5/30 12 bps steeper since Apr 26th. yest 2Y auction went well S18/2Y roll slighly flteer today provi spds unch after closing 1bp wider yest (~4bps on the week) . Manitoba long issue yest @132 (Ont + 16) mediocre reception MP46/Ont46 17/16. Ontario rumoured again today, so are BC & Q.

News headlines

European Stocks Rebound as Oil Extends Gain; Turkish Bonds Fall (Bloomberg) European stocks rose for the first time in a week and U.S. equity-index futures advanced, bolstered by a second day of gains in crude. Turkish equities and bonds tumbled amid a political showdown between the president and prime minister. Two shares advanced for every one that declined on the Stoxx Europe 600 Index, and Standard & Poor’s 500 Index futures signaled the gauge will rise from a three-week low. Crude rallied after U.S. output fell the most in eight months and as wildfires disrupted production in Canada. Turkey’s 10-year bond yields climbed to a one-month high amid speculation Prime Minister Ahmet Davutoglu will step down after losing a power struggle with President Recep Tayyip Erdogan.
Oil rallies as Canada fire and Libya violence threaten supply (Reuters) A huge wildfire near Canada’s oil sands region and escalating tensions in Libya stoked concern among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday. Brent crude futures LCOc1 rose $1.11 on the day to $45.73 a barrel by 1105 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 gained $1.36 to $45.14.
China April services sector expansion slows, employment rebounds: Caixin PMI (Reuters) Activity in China’s service sector expanded again in April, though the gains were slightly less robust than in March, a private survey showed on Thursday, as firms resumed adding staff after a rare decline the previous month. The Caixin/Markit services purchasing managers’ index (PMI) for April dropped to 51.8 from 52.2 in March, as new business increased at the fastest pace since January while business expectations remained unchanged.
Look Out, Loonie, Canada May Have Just Peaked (Bloomberg) It looks like Canada’s surprisingly strong run of economic data is ending, if TD Securities is right, and that means one of the fiercest rallies on record for the Canadian dollar is poised to end as well. We may have passed “a point of peak optimism” on the Canadian economy, senior foreign-exchange strategist Mazen Issa wrote, after the release Wednesday of trade data for March in which America’s neighbor to the north recorded its biggest monthly deficit on record.
Brexit Uncertainty Drags U.K. Economy to Near Stagnation (Bloomberg) U.K. companies are feeling the strain from the upcoming European Union referendum, with a gauge of services falling to its lowest level in more than three years in April. Markit Economics said its services Purchasing Managers Index dropped to 52.3 from 53.7. While that’s above the 50 level that divides expansion from contraction, it’s the weakest since February 2013 and below the 53.5 median forecast of economists.
Manulife Financial Corp beats expectations with 45% jump in earnings on Asian sales (FinancialPost) Manulife Financial Corp, Canada’s biggest life insurer, reported a 45 per cent jump in first-quarter earnings, boosted by strong insurance sales in Asia and gains from interest rate movements. Net income attributable to shareholders rose to $1.05 billion, or 51 cents per share, in the quarter ended March 31, from $723 million, or 36 cents per share, a year ago.
Tesla Accelerates Plans to Produce 500,000 Vehicles Annually (Bloomberg) Elon Musk, determined to turn his electric-car company into a great maker of things, said that he keeps a sleeping bag in a conference room adjacent to Tesla Motors Inc.’s production line in Fremont, California. He beseeched the best manufacturing people in the world to join the company, which is preparing to launch a Model 3 sedan that is designed for ease of manufacturing with fewer “bells and whistles” than the Model X sport utility vehicle. The SUV was recalled soon after deliveries began.

Overnight markets

Overview: US 10yr note futures are up 0.024% at 130-15, S&P 500 futures are up 0.28% at 2052.75, Crude oil futures are up 4.77% at $45.87, Gold futures are up 0.88% at $1285.6, DXY is up 0.38% at 93.529.

US Economic Data