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04/05/2016

by admin | May 4, 2016 | comments

Market update

US tsys slightly higher after ADP came in at 156k vs 195k exp vs, US 10Y 1.80%, curve slightly flatter, on avg volume in TY futures (276K). Crude below $44, European equities lower for a fourth day, USD higher for a second day after a couple of Fed speakers yest suggested a June rate hike is a real possibility, thou softness in the ADP & other data (CITI eco surprise is at a three month low) make a near term rate hike tougher to fathom at this point. GOCs higher , spreads narrower vs tsys after the trade deficit widened to a record in March as exports fell 4.8% the lowest since Jan 14. Provi spds unch to start after yest risk off hammered spds 1.5-2.4bps.

News headlines

Stocks Fall With Emerging Markets, Dollar Climbs on Fed Caution (Bloomberg) Stocks declined around the world and emerging-market currencies fell to a one-month low after a Federal Reserve official raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Equities gauges in Europe and developing nations fell for a fourth straight day. The dollar extended Tuesday’s recovery from the weakest level in almost a year, while Russia’s ruble tumbled the most in more than a week and Malaysia’s ringgit dropped to the lowest since March. Oil traded below $44 a barrel before stockpile data scheduled for release Wednesday that’s forecast to show a fuel glut is expanding.
Dollar Rises From Year Low as Fed Speakers Challenge Rate Bets (Bloomberg) A gauge of the dollar rose from its lowest level in a year after two Federal Reserve officials said an interest-rate increase could be considered next month. The greenback has climbed against its 16 major peers since Monday’s close as Atlanta Fed President Dennis Lockhart called a June rate increase “a real option,” while San Francisco’s John Williams said he would support such a move at the next meeting provided the U.S. economy stayed on track.
Oil steadies around $45 after slide, Canada wildfire supports (Reuters) Oil steadied around $45 a barrel on Wednesday as reduced production in Canada’s oil sands region lent support, although expectations U.S. crude inventories will rise further from a record capped gains. Brent crude has fallen more than 7 percent from a 2016 high hit on Friday in response to rising output from the Organization of the Petroleum Exporting Countries <OPEC/O>, signs of economic slowdown in the United States and Asia, and a stronger dollar.
S. oil industry bankruptcy wave nears size of telecom bust (Reuters) The rout in crude prices is snowballing into one of the biggest avalanches in the history of corporate America, with 59 oil and gas companies now bankrupt after this week’s filings for creditor protection by Midstates Petroleum MPOY.PK and Ultra Petroleum UPL.NL. The number of U.S. energy bankruptcies is closing in on the staggering 68 filings seen during the depths of the telecom bust of 2002 and 2003, according to Reuters data, the law firm Haynes & Boone and bankruptcydata.com.
Fed official raises pressure on ‘too big to fail’ banks (GlobeAndMail) At first glance, Bernie Sanders, the self-described socialist running for president, would seem to have little in common with Neel Kashkari, a former Goldman Sachs banker and Republican who now leads a branch of the U.S. Federal Reserve. But the two men agree on one thing: U.S. banks remain too big to fail and it’s time to do something dramatic about it.
Spanish Economy Shows Resilience in April Despite Politics (Bloomberg) The Spanish economy showed fresh signs of resilience in April as unemployment fell more than forecast and a gauge of activity beat expectations while the nation gears up for a June election. Data on Wednesday showed the number of Spaniards without a job dropped by approximately 83,600, exceeding the 81,700 forecast in a Bloomberg News survey.
China’s Stock Suspensions Seen as Obstacle to MSCI Inclusion (Bloomberg) If anything stops MSCI Inc. from including Chinese shares to benchmark indexes in its review, it will be the overuse of trading halts. That’s according to a Bloomberg poll of strategists and fund managers, with 16 of the 23 surveyed naming stock suspensions as a main obstacle to inclusion. Capital controls, government intervention, stock beneficiary ownership and cross-border investment quotas were other common concerns ahead of MSCI’s decision in June, the survey showed.

Overnight markets

Overview: US 10yr note futures are up 0.1319% at 130-15, S&P 500 futures are down -0.67% at 2043.25, Crude oil futures are up 1.17% at $44.16, Gold futures are down -0.23% at $1288.8, DXY is up 0.07% at 93.005.

US Economic Data

8:15 AM: ADP Employment Change, April, 156k, est. 195k (prior 200k)
8:30 AM: Nonfarm Productivity, 1Q P, -1.0%, est. -1.3% (prior -2.2%)
9:45 AM: Markit US Service PMI, April F, est. 52.1 (prior 52.1)
- Markit US Composite PMI, April F, (prior 51.7)
10:00 AM: ISM Non-Manf. Composite, April, est. 54.8 (prior 54.5)
- Factory Orders, March, est. 0.6% (prior -1.7%)
- Durable Goods Orders, March F, est. 0.8% (prior 0.8%)
- Durable Goods Orders, March F, est. -0.1% (prior -0.2%)

Canadian Economic Data

8:30 AM Int’l Merchandise Trade, March, -3.41b, est. -1.40b (prior -1.91b)

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

03/05/2016

by admin | May 3, 2016 | comments

Market update

US tsys sharply higher led by the 5 & 7Y, with the US 10Y 1.816 (-5.7bps) on strong volume with 380K. Tsys bid thru the o/n session on lower equities &oil as well as a surprise rate cut from the RBA. China April Manuf PMI fell to 49.4, the 14th month below 50 signaling contraction. European stocks lower led by financials on earnings miss from UBS, Commerzbank with the latter down ~9% as Q1 profit fell 50% on lower interest rate margins. Fed Lockhart saying June is a ‘live meeting’, two rate hikes this year ‘certainly possible’. Latest JPM showed clients increase net shorts to the highest level since mid-March for the week ended May 2nd. GOCs opening well bid, spds 1bp tigther vs tsys, prices likely to be dictated by equities & supply which looks less likely given provi spds `1bp wider to start.

News headlines

Global stocks slide as yen, euro gains question policy potency (Reuters) The U.S. dollar slid to its lowest against major currencies in well over a year on Tuesday, a move led by the yen’s continued march higher as investors grew doubtful about central banks’ ability to boost growth through aggressive policy easing. That did not stop Australia’s central bank surprising markets by cutting interest rates to a record low of 1.75 percent, however, hitting the currency but lifting the country’s shares.
S. Index Futures Signal Stock Losses as AIG Drops on Earnings (Bloomberg) U.S. stock-index futures fell, indicating equities will resume losses after Monday’s rebound, as investors assessed earnings. American International Group Inc. fell 3.3 percent in premarket New York trading after the insurer posted a third straight unprofitable quarter on losses from hedge funds and declines in the value of other investments. Mylan NV rose 5.4 percent after the drugmaker forecast profit growth of about 16 percent this year.
Euro Set for Longest Run of Gains Since 2013 as Fed Focus Fades (Bloomberg) The euro advanced, headed for its longest winning streak against the dollar since 2013, amid signs the Federal Reserve will delay raising interest rates. Europe’s shared currency strengthened, and it earlier breached $1.16 for the first time since August, even as the European Commission Tuesday cut its inflation forecast and warned of slower-than-predicted growth across the 19-nation bloc. The dollar declined as traders lowered expectations for a rate increase by the Federal Reserve by June to 12 percent, from 21 percent on April 27, as reflected in futures.
German Bonds Advance as EU Cuts Euro-Area Inflation Outlook (Bloomberg) Germany’s government bonds climbed as the European Commission cut its inflation forecast for the euro region by more than half, bolstering speculation that the European Central Bank will increase stimulus. Euro-region sovereign securities advanced as the Brussels-based commission also warned of slower-than-predicted growth across the 19-nation bloc. Inflation in the region will average 0.2 percent this year, the commission said Tuesday. That’s down from the 0.5 percent predicted in February.
Australia cuts interest rates to turn back global deflation tide (Reuters) Australia’s central bank cut interest rates to an all-time low of 1.75 percent on Tuesday, the first easing in a year as it seeks to restrain a rising currency and stave off the creeping curse of deflation. The Reserve Bank of Australia’s (RBA) quarter-point cut sent the local dollar down more than one U.S. cent to $0.7567 as markets wagered a further move to 1.5 percent was now likely. Australia is just the latest in the Asian region to feel the chill of deflation as too many goods chase too little demand. Singapore surprised many by easing last month, and it followed India, Taiwan, Indonesia, China, Japan and New Zealand.
China April factory activity contracts again, more layoffs – Caixin PMI (Reuters) Activity at China’s factories shrank for the 14th straight month in April as demand stagnated, forcing companies to shed jobs at a faster pace, a private survey showed on Tuesday, adding to questions over whether the world’s second-largest economy is recovering. The Caixin/Markit Manufacturing Purchasing Managers’ index (PMI) fell to 49.4 last month, below market expectations of 49.9 and recoiling slightly from March’s 49.7.
Encana posts bigger-than-expected loss as production falls (GlobeAndMail) Canadian oil and gas producer Encana Corp posted a bigger-than-expected quarterly loss due to lower production amid a steep fall in oil prices. The company’s total production fell by 11 per cent to 383,400 barrels of oil equivalent per day in the first quarter ended March 31. Calgary-based Encana’s cash flow, an indicator of its ability to pay for new projects and drilling, fell 79.4 per cent to $102-million.
BCE to buy Manitoba Telecom for $3.1-billion (GlobeAndMail) BCE Inc. is continuing its years-long acquisition spree with a $3.1-billion deal to acquire Manitoba Telecom Services Inc., a move that will buy some extra growth for the dividend-focused company. The latest transaction comes at a time when the market for wireless subscribers is increasingly mature, with Canada’s main players – BCE, Rogers Communications Inc. and Telus Corp. – fighting hard to maintain existing customers.

Overnight markets

Overview: US 10yr note futures are up 0.4457% at 130-9, S&P 500 futures are down -0.61% at 2061.5, Crude oil futures are down -1.16% at $44.26, Gold futures are up 0.36% at $1300.5, DXY is down -0.19% at 92.451.

US Economic Data

9:45 AM : ISM New York, April, (prior 50.4)
10:00AM : IBD/TIPP Economic Optimism Index, May, est. 46.5, (prior 46.3)
Wards Domestic Vehicle Sales, April, est. 13.40m (prior 12.97m)
Wards Total Vehicle Sales, April, est. 17.40m (prior 16.46m)

Canadian Economic Data

There is no major economic data for today.

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

02/05/2016

by admin | May 2, 2016 | comments

Market update

US tsys opening higher, curve flatter on very low volume, US 10Y 1/815 (-1.3bps). Nikkei down another 3.1%, JGB yields fell 4bps to-0.13%, while the Yen rose to the highest since Oct 14. Japan mfg PMI came in at 48.2 in April, new orders lower for the 4th consecutive month. Core Euro bonds higher, curves flatter, EUR above 1.15 for the first time since August. Italian bank stocks lower led by banks after poorly received IPO from Banca di Vicenza, with one of its main sponsors Unicredit down 7.1%. In Canada GOCs higher in line with tsys, provis opening unch from Friday. BCE announced it would buy Manitoba telecom for $40/share a 22% premium over its closing price.

News headlines

Yen Holds Near 18-Month High as Gold Jumps; Euro, Bonds Advance (Bloomberg) With many markets across the world closed, investors pared back higher-risk holdings, keeping the Japanese yen near its strongest level in 18 months. Gold advanced with sovereign bonds, oil declined and European equities held onto their biggest loss in two months. Japan led a selloff in Asian equities, with the Topix index sliding for a fifth day as trading resumed after a break on Friday. The yen held its steepest back-to-back gains since the global financial crisis and the Stoxx Europe 600 Index reached a two-week low. Oil retreated, following a 20 percent surge in April, as near-record Iraqi output added to anxiety over a global glut. U.S. Treasuries advanced and Japan’s 20-year bond yield sank to a record.
Gold Rallies Above $1,300 as Investors Like Low Interest Rates (Bloomberg) Gold advanced above $1,300 an ounce for the first time since January 2015 on speculation central banks in the U.S. to Europe will maintain low interest rates, spurring demand for the metal. Gold futures for June delivery climbed as much as 1.1 percent to $1,304.30 an ounce on the Comex in New York, the highest level since Jan. 22, 2015, and were at $1,301 at 7:06 a.m. The precious metal has climbed 23 percent this year.
Puerto Rico Will Default on Government Development Bank Debt (Bloomberg) Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that U.S. state and local entities use to access financing. Governor Alejandro Garcia Padilla invoked a debt moratorium law approved last month, saying during a televised address Sunday that the commonwealth needs to focus on providing essential services.
Negative Yields No Bar to Best Bond Market Conditions Since 2009 (Bloomberg) In a world awash with debt, it’s hard to imagine that there may not be enough to go around. Yet that’s exactly what JPMorgan Chase & Co. says is happening. The world’s biggest bond underwriter predicts record-low global yields ahead, based on forecasts of $1.86 trillion of net worldwide issuance this year versus $1.74 trillion of estimated net purchases. While those figures signal that supply will outstrip demand for the fifth straight year, the key for the bank is that the gap — the amount of excess issuance — is set to shrink the most since 2009.
Euro-Area Manufacturing Growing at `Anemic’ Pace, Markit Says (Bloomberg) Euro-area manufacturing growth was little changed last month as stronger readings in Germany, Italy and Spain were offset by contraction in France. Markit Economics in London said its monthly Purchasing Managers Index points to “anemic” factory growth in the region. The gauge rose to 51.7 from 51.6 in March, above the 50 level that divides expansion from contraction and a provisional reading of 51.5. The economy of the 19-nation euro area is in what European Central Bank President Mario Draghi says is a “moderate” recovery. Data last week showed expansion accelerated to 0.6 percent in the first quarter, the fastest in a year. The manufacturing report showed that price declines eased in April.
AIG raises $1.25 billion by selling Chinese insurer PICC P&C shares: IFR (Reuters) American International Group (AIG.N) has raised HK$9.68 billion ($1.25 billion) by selling a large chunk of its stake in China’s PICC Property and Casualty Co Ltd (PICC P&C) (2328.HK) in a block deal, IFR reported on Sunday. AIG sold about 740 million shares at HK$13.08 each, or near the bottom end of a marketing range, IFR said, citing sources close to the deal. Most of the shares were bought by institutional investors, it added.
Ultra Petroleum files for bankruptcy (Reuters) May 2 Oil and natural gas producer Ultra Petroleum Corp, a major victim of depressed oil and gas prices, filed for Chapter 11 bankruptcy on Friday in Houston. The Texas-based company, which has operations in Wyoming, Utah and Pennsylvania, listed assets in the range of $1 billion to $10 billion, and liabilities of $1 billion to $10 billion, according to a court filing.
Big bargains entice Warren Buffett fans on Berkshire weekend (Reuters) Warren Buffett, the CEO of Berkshire Hathaway Inc, is known for his keen eye for a bargain. And there were plenty on offer for shareholders attending Berkshire’s annual meeting over the weekend, where goods from some 50 Berkshire businesses were on show, often at big discounts.

Overnight markets

Overview: US 10yr note futures are down -0.0721% at 129-31, S&P 500 futures are up 0.25% at 2064.25, Crude oil futures are down -0.44% at $45.72, Gold futures are up 0.82% at $1301.1, DXY is down -0.31% at 92.796.

US Economic Data

9:45 AM : Markit Us Manufacturing PMI. April F, est. 50.8 (prior 50.8)
10:00 AM : ISM Manufacturing, April, est. 51.4 (prior 51.8)
- ISM Prices Paid, April, est. 52.0 (prior 51.5)
- ISM New Orders, April, (prior 58.3)
10:00 AM : Construction Spending, m/m, est. 0.5% (prior -0.5%)

Canadian Economic Data