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21/04/2016

by admin | Apr 21, 2016 | comments

Market update

US tsys trading lower, US 10Y 1.88 (+2.5bps), core European bonds are sharply lower, crude above $44.00 with the CRB index at five month highs. Ten year futures lower on heavy volume (447K vs 275k) holding in briefly in Asian session on buying from Asian real money & commercial banks according to MNI. JGB 20Y auction saw strongest demand since Nov, at an avg yield of 0.265 and a b/c 3.55. 10Y gilt yields ~9bps higher on UK public finance data as planned gilt sales expected to rise by GBP2.1bln from GBP 129.4bln for 2016/17 FY. The ECB kept rates unch as expected, the EUR still higher in front of Draghi’s press conf at 8:30EST. GOCs are lower in line with tsys after yesterday’s strong outperformance saw 10Y spd close 4bps tighter – Int’l buying yest overnite left GOCs bid all day yest, even going into the 10Y auction with the new 10Y roll slightly tighter (9.5 vs 9.8 pre auction). Ontario spds another 2-3bps tigther yest – Ont 26 87/86 (88.5), Ont 46 98.5/97.5. In corps, new Royal 3Y covered the focus yest , upsized to $2bln from $1bln initial guidance spd 77bps, yet still 2bps tighter in secondary trading.

News headlines

Commodities’ Five-Month High Weighs on Bonds; Europe Stocks Slip (Bloomberg) A gauge of commodities headed for a five-month high, spurred by gains from metals to soy beans, and weighing on government bonds as the European Central Bank kept interest rates unchanged at its latest policy meeting. Steel reinforcement bars jumped to a 19-month high in Shanghai, buoyed by an improving Chinese property market, supporting the Australian dollar. Brent crude held near $46 a barrel after data showed U.S. production slipped and Iraq said talks to freeze output may occur next month. Commodity gains boosted the outlook for inflation, sending German bund yields to a four-week high. Sweden’s krona rose after the Riksbank expanded bond buying less than some investors expected. The Stoxx Europe 600 Index slid.
ECB Keeps Up Unprecedented Stimulus as Draghi Assesses Impact (Bloomberg) The European Central Bank left its interest rates at record lows and kept the size of its bond-buying program unchanged as President Mario Draghi waits to see how fresh stimulus measures announced last month affect the economy. The 25-member Governing Council, which met in Frankfurt on Thursday, left the benchmark rate at zero, the deposit rate at minus 0.4 percent and asset purchases at 80 billion euros ($90 billion) a month. Economists in a Bloomberg survey had predicted no change in rates. Draghi will explain the decision in a press conference at 2:30 p.m. local time.
Swedish cbank holds rates as expected, extends QE programme (Reuters) Sweden’s central bank held its benchmark rate unchanged at -0.50 percent as expected on Thursday and said it would expand its asset purchase programme. “The Executive Board has decided to purchase government bonds for a further SEK 45 billion during the second half of 2016,” the central bank said in a statement. “This will reduce the risk of the krona appreciating faster than in the forecast and of a break in the upturn in inflation.”
Oil higher as IEA expects biggest non-OPEC output fall in 25 years (Reuters) Crude prices firmed on Thursday after the International Energy Agency (IEA) said 2016 would see the biggest fall in non-OPEC production in a generation, helping to rebalance a market dogged by oversupply. IEA chief Fatih Birol said low oil prices had cut investment by about 40 percent in the past two years, with sharp falls in the United States, Canada, Latin America and Russia.
Volkswagen shares surge as U.S. Dieselgate deal looms (Reuters) Volkswagen (VOWG_p.DE) shares jumped more than 6 percent early on Thursday on expectations that the carmaker was close to reaching a deal to buy back 500,000 diesel cars in the United States in a step toward resolving an emissions rigging scandal.
Silver `Spike’ Seen Extending Best Start in Five Years: Chart (Bloomberg) Silver, up 24 percent in the best start to a year since 2011, is still gaining steam, according to one technical indicator. The metal surged for a second straight session above the upper limit of its Bollinger band, which has itself been climbing since April 11, signaling a “spike is coming,” according to Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis. Silver has rallied on signs of industrial demand for the metal and bets that policy makers will be slow to raise U.S. interest rates.
Japan, Not Germany, Leads World in Negative-Yield Bonds: Chart (Bloomberg) Europe’s central bank took the unorthodox step of cutting interest rates below zero in 2014. Japan followed suit earlier this year, and has become home to more negative-yielding debt than anywhere else, leading Germany, France, the Netherlands and Belgium.

Overnight markets

Overview: US 10yr note futures are down -0.1084% at 129-20, S&P 500 futures are down -0.04% at 2097.25, Crude oil futures are down -0.14% at $44.12, Gold futures are up 1.18% at $1269.2, DXY is down -0.29% at 94.218.

US Economic Data

8:30 AM: Initial Claims w/w, 247k, est. 265k (prior 253k)
- Continuing Claims w/w, 2137k, est. 2173k (prior 2171k, revised 2176k)
- Philadelphia Fed Index, April, -1.6, est. 9.0 (prior 12.4)
- Chicago Fed National Activity Index, March, -0.44, est. -0.15 (prior -0.29, revised -0.38)
9:00 AM: FHFA House Price Index m/m, est. 0.4% (prior 0.5%)
10:00 AM: Leading Indicator Change m/m, est. 0.4% (prior 0.1%)

Canadian Economic Data

There is no major economic data for today

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

20/04/2016

by admin | Apr 20, 2016 | comments

Market update

US tsys opening slightly higher, flatter with longs out performing, US 10Y 1.777 (-0.5bps), avg volume in TY1 futs (280K). European equities higher led by banks. Crude 2.0% lower as Kuwaiti strike ends. Core Euro bonds higher, flatter led by UK gilts as UK jobless claims surprised to the upside, while German PPI came in below exp (-3.1% vs -2.9%). Germany sold E3.2bln 10Y bonds at 0.15%. GOCs opening higher led by 10Y before BOC auctions CAD$3bln in reopened June 2026 bonds to bring the outstanding to $10.5bln. The 10Y auction size is 500mln larger than last yr and is expected to remain so going forward as part of the DMS. 10Y yields at 1.32% are ~6bps higher vs the last 10Y auction on Jan 11th, while the 10Y fly is ~2.5stds cheap vs 5s30s. The 26/25 roll @ 9.8 looks fair compared to the 10Y roll, both have flattened over the last two months. Provis opening tighter – Ontarios well bid this week closing 3bps tighter yest on no domestic supply & higher cda yields – thou screens are getting hit this morning Ont 26s @ 89, Ont 46s @ 100.5.

News headlines

Stock Rally Sputters as Oil Falls, China Shares Sink; Bonds Gain (Bloomberg) The global stocks rally stumbled as Chinese equities dropped by the most since February and oil sank toward $40 a barrel, while demand for haven assets lifted sovereign bonds. The Stoxx Europe 600 Index failed to extend a three-month high and the Shanghai Composite Index fell more than 2 percent as the People’s Bank of China signaled a reduced appetite for monetary easing. Crude oil also weighed on equities after Kuwait workers said they would end a strike and Japanese government bond yields fell to records. BHP Billiton Ltd. and Rio Tinto Group paced miners higher after BHP cut its iron ore production forecast for its Australian operations, spurring gains in the material’s price.
Oil falls on end to Kuwaiti strike, supply outlook (Reuters) Oil prices fell on Wednesday as investor focus returned to worries about oversupply after Kuwaiti workers ended a three-day strike that had halved the nation’s crude output. Industry data showed U.S. crude stockpiles rose last week, reinforcing concerns about the global surplus. Brent futures LCOc1 were down 77 cents at $43.26 a barrel at 1046 GMT (5:46 a.m. ET).
China’s Stocks Tumble Most in Seven Weeks to Break Trading Calm (Bloomberg) China’s stocks sank the most in almost two months, pushing a gauge of volatility up from its lowest level this year as turnover surged. The Shanghai Composite Index dropped as much as 4.5 percent, the biggest loss since Feb. 29, before paring declines to 2.3 percent at the close. Industrial and technology companies led losses, while 13 stocks fell for each that rose. The Hang Seng China Enterprises Index retreated from a three-month high in Hong Kong.
Argentina Bond Sale Just Too Good to Pass Up, Defaults Be Damned (Bloomberg) The most surprising thing about Argentina’s record bond sale isn’t that it issued $16.5 billion of debt while still in default. It’s that the country could have sold even more. The bonds rallied in early trading, signaling strong investor demand and a turnaround in sentiment after Argentina’s $95 billion default in 2001 set off more than a decade of litigation and isolation from global capital markets. Finance Minister Alfonso Prat-Gay couldn’t help gloating a bit, telling reporters that with orders from more than 600 investors he could have easily issued double the amount.
Bank of Canada’s Stephen Poloz says economic ‘adjustment’ still work in progress (Financial Post) For the governor of the Bank of Canada, the collapse of the global energy market and its impact on growth provides a cautionary tale that has yet to end. “The global economy retains the capacity to disappoint further,” Stephen Poloz warned Tuesday, less than a week after the central bank decided to maintain its key lending rate at a near-historic low. “The complex adjustment to lower terms of trade will restrain Canada’s growth over much of our forecast horizon.”
EU charges Google with abusing market dominance of Android (Reuters) The European Union charged Google on Wednesday with abusing the dominant position of its Android mobile operating system, opening a second front against the U.S. technology giant that could lead to large fines. European Union antitrust regulators said that by requiring mobile phone manufacturers to pre-install Google Search and the Google Chrome browser, the U.S. company was denying consumers a wider choice of mobile apps and stifling innovation.
Brexit Vote a `Risky Bet,’ U.S. Ex-Treasury Secretaries Say (Bloomberg) Leaving the European Union would be a “risky bet” for the U.K. and the country should not “turn inward,” according to eight former U.S. Treasury secretaries going back to the era of President Richard Nixon. The intervention in a letter to the Times newspaper in London published Wednesday came two days before U.S. President Barack Obama is set to add his voice to those warning Britons of the danger of backing a so-called Brexit. Prime Minister David Cameron is hoping that the swell of voices from overseas will sway undecided voters before the June 23 referendum.
Mitsubishi Motors says it manipulated fuel economy tests, shares tumble (Reuters) Mitsubishi Motors Corp (7211.T) said it falsified fuel economy test data to make emissions levels look more favorable, and its shares slumped more than 15 percent, wiping $1.2 billion from its market value on Wednesday. Tetsuro Aikawa, president of Japan’s sixth-largest automaker by market value, bowed in apology at a news conference in Tokyo for what is the biggest scandal at Mitsubishi Motors since a defect cover-up over a decade ago.

Overnight markets

Overview: US 10yr note futures are down -0.024% at 130-11, S&P 500 futures are up 0.12% at 2096.25, Crude oil futures are down -2.22% at $40.17, Gold futures are down -0.18% at $1252.1, DXY is up 0.06% at 94.028.

US Economic Data

8:30 AM: Wholesale Trade Sales, m/m, February, -2,2%, est. -0.4% (prior 0.0%, revised 0.2%)
10:00 AM: Existing Home Sales, March, est. 5.28m (prior 5.08m)
- Existing Home Sales m/m, March, est. 3.9% (prior -7.1%)

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

19/04/2016

by admin | Apr 19, 2016 | comments

Market update

US tsys slightly lower, rebounding curve flatter led by the 5Y with the US 10Y 1.791 (+2bps), higher than avg volume in TY1 futs. Core Euro bonds lower, German 10Y yield @0.177 at three week high. German investor confidence rose for a second month in April to 11.2 from 4.3 vs 8.0 exp. Global stocks higher with the Nikkei up 3.6% and Europe up 1.6%. Crude continuing to move higher post Doha meeting – oil strike in Kuwait has reduced output to 1.1mln bpd from 2.8mln, thou Russia said it is considering raising prod this yr. Boston Fed pres Rosengren said the mkt was underpricing the pace of rate hikes this yr and that the Fed was closer to reaching its inflation goals. Argentina launched its two part $6.75bln 10Y & $2.75bln 30Y bond issue. In Canada, GOCs higher with tsys – yest the 10Y fly hit the cheapest level since early March – we expect some hedging in advance of a building corp pipeline – also Ont & NB possible today. Provis opening tighter with spds at new tights for the year – Ont 46 105/104 (-1bp) , Ont 26 92.5/92.

News headlines

Global Stocks Rally on Crude, Earnings as Emerging Markets Jump (Bloomberg) Global stocks climbed to a four-month high and emerging markets rallied as oil rose above $40 a barrel and corporate results beat analyst estimates. European equities were poised for their highest close since January as financial reports boosted companies including Danone and L’Oreal SA. South Korea’s won gained as the central bank refrained from loosening monetary policy and South Africa’s rand jumped, while the dollar and yen weakened. A labor strike in Kuwait boosted the price of crude, which had dropped in early trading on Monday after major producers failed to reach agreement on a proposed output freeze. Silver surged to its strongest level since June, credit markets strengthened and government bonds in Europe and the U.S. declined.
Oil rises as Kuwaiti oil workers strike cuts output for third day (Reuters) Oil rose around two percent on Tuesday as a strike by oil workers in Kuwait nearly halved crude production from the OPEC member, overshadowing bearish sentiment following Sunday’s failure by producers to agree to freeze output levels. Thousands of Kuwaiti oil workers downed tools for a third day on Tuesday to protest against planned public sector pay reform, cutting crude output to 1.5 million barrels per day (bpd), according to an oil spokesman cited by news agency KUNA.
Silver Heads for a Bull Market as Prices Rally to 10-Month High (Bloomberg) Silver is poised to enter a bull market after prices jumped to a 10-month high and as investors pile into precious metals, with top forecasters’ staying positive on gold. Silver advanced as much as 3.5 percent to the highest level since June and traded up 3 percent at $16.7065 an ounce by 7:36 a.m. in New York. A close at that level would mark the start of a bull market. Investors have been pouring cash into silver, known as the devil’s metal because of its often wild price swings. Assets in exchange-traded funds are approaching a record and last month total holdings increased 5.3 percent, the biggest jump since 2010, according to data compiled by Bloomberg.
German Investor Optimism Rises to 2016 High as China Risk Abates (Reuters) German investor confidence climbed for a second month, rising to the highest level this year, as concerns over China’s economy eased and the European Central Bank ramped up euro-area stimulus. The ZEW Center for European Economic Research said on Tuesday that its index of investor and analyst expectations, which aims to predict economic developments six months ahead, advanced to 11.2 in April from 4.3 in the previous month. Economists in a Bloomberg survey predicted an increase to 8.0.
Goldman Sachs First-Quarter Profit Drops 60% as Revenue Plunges (Bloomberg) Goldman Sachs Group Inc., the worst performer in the Dow Jones Industrial Average this year, reported a 60 percent drop in profit as first-quarter revenue fell to the lowest since Chief Executive Officer Lloyd Blankfein took the top post in 2006. Net income fell to $1.14 billion, or $2.68 a share, from $2.84 billion, or $5.94, a year earlier, the New York-based company said Tuesday in a statement. Goldman Sachs’s revenue fell 40 percent to $6.34 billion.
Bank of Korea Cuts Growth Forecast, Holds Rate at Record Low (Bloomberg) The Bank of Korea lowered its forecasts for economic growth and inflation, leaving the door open to cut borrowing costs further after holding its key interest rate unchanged at a record low on Tuesday. The decision to keep the seven-day repurchase rate at 1.5 percent was forecast by 17 of 20 economists in a Bloomberg survey. Governor Lee Ju Yeol said that while this rate is accommodative, there is still room to lower it. It hasn’t moved since June last year.
China Sovereign Fund to Seek Control of $8 Billion Yum Unit (Bloomberg) China wants to get control of the most popular fast-food chain in the country. A consortium backed by sovereign fund China Investment Corp. has expressed interest in buying a majority stake in Yum! Brands Inc.’s China business, which runs more than 7,100 KFC and Pizza Hut eateries across the nation, people with knowledge of the matter said. The investor group, which also includes KKR & Co. and Baring Private Equity Asia, is conducting due diligence on the unit, according to the people, who asked not to be identified as the information is private. A deal could value Yum! China at $7 billion to $8 billion, the people said.

Overnight markets.

Overview: US 10yr note futures are down -0.1437% at 130-10, S&P 500 futures are up 0.44% at 2096, Crude oil futures are up 1.06% at $40.2, Gold futures are up 0.95% at $1246.7, DXY is down -0.24% at 94.267.

US Economic Data

Housing Starts came in at a level of 1089k, weaker than analyst’s estimate
Housing Starts MoM variation was -8.8%, missing the analysts estimate
Building Permits number came in at a level of 1086k, weaker than expected by the analysts
Building Permits MoM variation MoM was -7.7%, missing the analysts estimate

Canadian Economic Data