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29/04/2016

by admin | Apr 29, 2016 | comments

Market update

US tsys opening weaker, curve 2bps steeper, US 10Y 1.864 (+4bps) after core PCE came in as exp for March, EI @ 0.6% also as exp. Tsys lower overnite despite weaker stocks as commodities rose – gold up for a fifth day on huge stop loss buying fueled in part by strength in the Yen which rose another 1.0% o/n. Japanese mkts closed Friday, UK out Monday so with month end today it is thought Japanese investors rebalanced portfolios, added to duration earlier this week providing less support for tsys today according to MNI. In Canada, GOCs lower led by 10s ~2bps on the curve in directional move – Feb real GDP -0.1% vs -0.2% exp. Provi spds 0.5bps tighter so far after closing 2bps wider yest.

News headlines

Dollar Sinks to 11-Month Low Boosting Commodities as Stocks Drop (Bloomberg) The dollar headed for its lowest close in almost a year as signs of slowing growth in the U.S. dimmed prospects for a Federal Reserve interest-rate increase. Stocks fell and commodities extended gains in their best month since 2010. The Bloomberg Dollar Spot Index fell for a second day, while the yen headed for its biggest weekly jump since 2008. Declines in the greenback are proving a boon for raw materials, helping lift gold and silver to 15-month highs. Crude oil has jumped 21 percent this month to more than $46 a barrel in New York. European equities trimmed their biggest monthly advance since November.
Draghi Challenge Highlighted as Inflation Rate Back Below Zero (Bloomberg) Mario Draghi’s policy challenge was highlighted once again on Friday, with the fastest economic growth in a year overshadowed by a renewed drop in consumer prices. The euro-area inflation rate fell to minus 0.2 percent in April, a worse out-turn than the 0.1 percent decline forecast by economists in a Bloomberg survey. It wasn’t all bad news for the European Central Bank president however, with the economy expanding 0.6 percent in the first quarter and unemployment declining in March to the lowest since 2011.
China’s Central Bank Raises Yuan Fixing by Most Since July 2005 (Bloomberg) China’s central bank responded to an overnight tumble in the dollar by strengthening its currency fixing the most since a peg was dismantled in July 2005. The reference rate was raised by 0.6 percent to 6.4589 per dollar. A gauge of the dollar’s strength extended its 1 percent slide on Thursday, when the Bank of Japan’s decision to unexpectedly keep monetary policy unchanged sent the yen surging. The offshore yuan weakened 0.12 percent to 6.4914 as of 5:35 p.m. in Hong Kong after gaining 0.3 percent in the last session.
Yen heads for best week since 2008 as dollar bulls sag (Reuters) The yen built further on Friday on strong gains since a shocking Bank of Japan policy meeting, moving to an 18-month high against the dollar and on course for its biggest weekly gain since the 2008 financial crisis. Poor U.S. growth numbers and the Federal Reserve’s cautious tone this week has squeezed hedge funds still backing a stronger dollar in the face of a market positioned negatively on the U.S. currency for the first time in a year.
Oil’s Slump-to-Jump at 5-Month High Outpacing Forecasts: Chart (Bloomberg) Oil prices are on track to outperform analysts forecasts for the first time in a year. Brent crude advanced above $38 a barrel earlier this month, climbing past the median forecast for the second quarter and closing at a five-month high of $48.14 on Thursday.
Forget Justin Trudeau, It’s Oil That’s Driving This Loonie Rally (Bloomberg) It’s giddy times in Canada, with newly installed Prime Minister Justin Trudeau winning rave reviews at home and abroad, the nation’s economy generating some of the best positive surprises in the world and the domestic stock market soaring again. And yet all foreign-exchange traders seem to want to know is what’s the latest price for crude oil. While Canada has made progress to lessen its dependence on the commodity, the local dollar’s correlation to oil has climbed, hovering near record-high levels touched in 2012, according to data compiled by Bloomberg.
Hackers target Goldcorp Inc, release reams of private data online including payroll and passports (Financial Post) Goldcorp Inc. has fallen victim to a data breach by anonymous hackers who posted reams of the miner’s private information online. The breach includes 14.8 gigabytes of data, according to the Daily Dot website. The leaked data includes payroll information, private budget documents, bank account specifics, employee passport scans and much else, the site said. “It’s a police matter now,” David Garofalo, Vancouver-based Goldcorp’s chief executive, said in an interview Thursday. “What I can tell you is our business is operating normally. And as a public company, we are obliged to disclose all material information and I’m confident we have.”

Overnight markets

Overview: US 10yr note futures are down -0.0842% at 129-27, S&P 500 futures are down -0.35% at 2065.25, Crude oil futures are up 0.5% at $46.26, Gold futures are up 1.06% at $1279.8, DXY is down -0.49% at 93.297.

US Economic Data

8:30 AM: Employment Cost Index, 1Q, 0.6%, est. 0.6% (prior 0.6%, revised 0.5%)
- Personal Income, March, 0.4%, est. 0.3% (prior 0.2%, revised 0.1%)
- Personal Spending, 0.1%, est. 0.2% (prior 0.1%, revised 0.2%)
Core PCE Price Index, m/m, 0.1%, est. 0.1% (prior 0.1%, revised 0.2%)
9:45 AM: Chicago Purchasing Manager, April, est. 52.6 (prior 53.6)
10:00 AM: University of Michigan Sentiment Index, April, est. 90 (prior 89.7)

Canadian Economic Data

8:30 AM: Industrial Product Price, m/m, -0.6 , est. 0.5% (prior -1.1%, revised -1.0%)
- GDP, m/m, -0.1% , est. -0.2% (prior 0.6%)

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

28/04/2016

by admin | Apr 28, 2016 | comments

Market update

US tsys moving lower after Q1 GDP came in lower than exp, but core PCE stronger – US 10Y 1.86 after reaching a low 1.815 in Europe. Tsys rallying overnite in follow thru to post FOMC move yest, heavy volume in TY futs (438K). Big move in JPY/USD after BOJ surprised with no action on policy, the JPY surging 3.0%. Global stocks al lower with the Nikkei down 3.6%, Euro stox down 1.8%. Core European bonds higher & flatter led by German bunds on weak German state inflation. Belgium announced its two tranche 7 & 50Y syndicated deal with order book for 50Y E8bln for 3bln size. Supply in the US today with $28bln 7Y & $15bln 2Y FRN and month end extension for tsys 0.09 yrs vs 0.14yrs for Europe. GOCs higher in line with tsys, provis 1bp wider after closing 4bps wider yest. We would expect Ontario to issue today as interest has been building steadily esp after latest pullback in spds, also they may want to front run what is shaping up to be a heavy corp calendar in May.

News headlines

Yen Jumps on BOJ Shock, Bonds Rally After Fed as Stocks Decline (Bloomberg) Even when they do nothing, central banks have the power to surprise and bewilder. The yen surged the most since August’s market meltdown and equities wilted after the Bank of Japan refrained from adding to its monetary stimulus. Bonds jumped around the world and gold rallied as the Federal Reserve signaled no hurry to raise interest rates. Inaction from the Reserve Bank of New Zealand triggered the kiwi’s biggest gain in a month.
Markets Get the Worst Kind of Kuroda Surprise as BOJ Stands Pat (Bloomberg) Haruhiko Kuroda hasn’t lost his power to jolt markets: but now he’s moving them by doing nothing. The yen soared the most in eight months and stocks sank in Tokyo on Thursday as the Bank of Japan Governor held off from adding to the central bank’s bond-buying program or its budget for exchange-traded equity funds. The move confounded economists, a slight majority of whom had expected extra easing, and investors, who’d pushed the Topix index higher and the yen toward a one-month low in the hours before the decision.
Bombardier Inc wins $5.6-billion Delta order in key boost to CSeries program (Financial Post) Delta Air Lines Inc. agreed to buy at least 75 CSeries narrow-body jets from Bombardier Inc., giving the Canadian manufacturer the marquee U.S. customer it has been seeking for months. Deliveries of the first jets will begin in 2018, Montreal-based Bombardier said Thursday in a statement. Based on published list prices, the order would be valued at about $5.6 billion, the company said, though carriers typically negotiate discounts. Delta also has options for an additional 50 planes.
New Zealand central bank keeps cash rate unchanged, retains easing bias (Reuters) New Zealand’s central bank kept its benchmark interest rate unchanged on Thursday at 2.25 percent but reiterated further easing may be needed given weak inflation. “Monetary policy will continue to be accommodative. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range,” said Governor Graeme Wheeler in a statement.
Greece’s lenders say working on policy package to close bailout review (Reuters) Greece’s official lenders said on Thursday that important progress has been made in talks with Athens on a bailout review that can pave the way for debt sustainability discusssions
What CMHC says about every major housing market in Canada (GlobeAndMail) CMHC’s quarterly study on what’s hot and what’s not highlights how many residential real estate markets are more hot than not. As The Globe and Mail’s Tamsin McMahon reports, Canada Mortgage and Housing Corp. flagged 10 markets for various measures and, for the first time, warned that Vancouver was looking frothy. That’s no surprise to many observers who have oft warned of overvaluation in Canada’s two hottest markets, Vancouver and Toronto.
Analysts Are Loving Facebook’s Latest Earnings Report (Bloomberg) Facebook Inc. just knocked the ball out of the park at a time when other technology companies are reporting less than stellar quarters. Both sales and profits beat Wall Street’s expectations as companies opt to focus more advertising dollars on Facebook’s mobile app. Meanwhile, analysts are optimistic on newer platforms and initiatives such as Instagram and video. While shares had been trading in-line with the S&P 500 so far this year, they are poised for a 10 percent rise at the open of trading in New York.

Overnight markets

Overview: US 10yr note futures are down -0.0241% at 129-24, S&P 500 futures are down -0.62% at 2077.75, Crude oil futures are up 0.29% at $45.46, Gold futures are up 0.6% at $1257.9, DXY is down -0.53% at 93.891.

US Economic Data

8:30 AM: Initial Jobless Claims, April 23, 257k, est. 259k (prior 247k)
- Continuing Claims, April 16, 2130k, est. 2136k (prior 2137k)
- GDP Annualized, q/q, 0.5%, est. 0.7% (prior 1.4%)
- Personal Consumption, 1Q A, 1.9% , est. 1.7% (prior 2.4%)
- GDP Price Index, 1Q A, 0.7%, est. 0.5% (prior 0.9%)
- Core PCE, q/q, 1Q A, 2.1%, est. 1.9% (prior 1.3%)

11 :00 AM: Kansas City Fed Manufacturing Activity (prior -6)

Canadian Economic Data

There 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

27/04/2016

by admin | Apr 27, 2016 | comments

Market update

US tsys higher, curve steeper, US 10Y 1.92 (-1.5bps) on avg volume in TY futures. Big story overnite was huge miss in Aussie CPI with the headline down 0.2% vs 0.2% exp and the y/y rate falling to 1.3% from 1.7% yet most of the decline was attributed to the lower cost for tradable goods which is more a function of strength in the AUD, as non-tradable goods were steady at 0.4%. Core European bonds mixed, bund curve 2bps steeper longs underperforming, bunds supported by rally in Aussie bonds as well as strong German 30Y auction – bid/cover 1.6 vs 1.2 in March. FOMC decision at 2:00PM – should be a non-event yet the statement should reveal whether risks to growth have diminished since the March meeting. GOCs opening slightly higher, spds ~1-2bps wider vs tsys in 10s&longs. No data in Cda today so focus on Fed and issuance. Ontario still expected to issue, didn’t come yest and spreads rallied another 1.5bps in longs. Given the narrowing in the GOC 10Y roll and outperformance of Ont 26s it makes sense to us to take profit and switch into CMBs which have lagged the rally in provis a solid 10-15 bps just since March.

News headlines

Treasuries Rise, Dollar Drops Before Fed; Apple Weighs on Stocks (Bloomberg) Treasuries rose, sending 10-year yields lower for the first time in eight days, and the dollar weakened, as markets signaled caution before the Federal Reserve’s latest interest rate decision. Nasdaq 100 Index futures slumped as Apple Inc. tumbled after posting its first quarterly-revenue drop in more than a decade. Benchmark 10-year note yields retreated from the highest level in a month. Asian shares fell with U.S. equity index futures as Apple’s earnings added to the gloom around the current reporting season for technology companies.
Fed set to keep rates unchanged, may nod to ebbing risks (Reuters) The U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday as it continues to monitor the impact from weakening global growth but may seek to signal to markets it is determined to resume policy tightening this year. The Fed has held its overnight lending rate for banks at a target range of between 0.25 and 0.50 percent since it lifted the benchmark interest rate for the first time in a decade from near zero last December.
UK economy slows as global slowdown and Brexit uncertainty weighs (Reuters) Britain’s economy slowed at the start of this year, buffeted by a slowing global economy and uncertainty ahead of this year’s referendum on European membership, as it relied solely on the services sector to drive growth. First-quarter gross domestic product grew by 0.4 percent, down from 0.6 percent in the three months to December 2015 and in line with economists’ forecasts of a 0.4 percent expansion, the Office for National Statistics said on Wednesday.
Australia takes disinflationary turn, could force rate cut next week (Reuters) Australia is suddenly at risk of succumbing to the bane of global deflation that could unmoor future price expectations and force reluctant policy makers to cut interest rates deeper into record territory. The country’s benign inflation outlook was upended on Wednesday when data showed consumer prices surprisingly fell in the first quarter, pulled by the tumbling cost of oil. Key measures of underlying inflation also slowed to their lowest since the series began in 2002.
S. Oil Rises Above $45 a Barrel for First Time Since November (Bloomberg) Oil climbed above $45 a barrel in New York for the first time since November after U.S. industry data showed a decline in crude stockpiles. West Texas Intermediate futures climbed as much as 2.5 percent, extending a gain of 3.3 percent Tuesday. Inventories dropped by 1.07 million barrels last week, the industry-funded American Petroleum Institute was said to report. The World Bank boosted its forecast for oil prices this year, projecting that refinery demand will pick up and U.S. output cuts will steepen in the second half of 2016.
Deutsche Bank Struggles to Shake Winter Blues in Credit Markets (Bloomberg) For all of John Cryan’s efforts to reassure investors that Deutsche Bank AG is “rock solid,” credit markets are still signaling plenty of concern. The cost of insuring against losses on Deutsche Bank’s debt is 68 percent higher than the average for 12 of its biggest peers. While that’s less than it was in February, the gap shows investors are still singling out the bank after worries emerged earlier in the year that declining profitability will erode its ability to keep paying coupons on its riskiest bonds.
‘Barrick is back,’ chairman declares, as restructuring moves pay off with strong results (Financial Post) Tuesday’s annual meeting had to feel like a pleasant change of pace for Barrick Gold Corp.’s directors and senior management: For the first time in years, there was no crisis to avert. At last year’s meeting, shareholders were outraged over chairman John Thornton’s compensation. The year before that, there was frustration and confusion over the company’s failed attempt to merge with Newmont Mining Corp. And in 2013, there was yet another controversy over Thornton’s pay.

Overnight markets

Overview: US 10yr note futures are up 0.1814% at 129-13, S&P 500 futures are down -0.28% at 2082.75, Crude oil futures are up 2.09% at $44.96, Gold futures are up 0.66% at $1251.6, DXY is down -0.21% at 94.375.

US Economic Data