Commentaires

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

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

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

•  10:00 AM:  Pending Home Sales, m/m, est. 0.5% (prior 3.5%)

                             Pending Home Sales NSA, y/y, est. 0.8% (prior 5.1%)

•   2:00 PM:   FOMC Rate Decision, est. 0.25%-0.50% (prior 0.25%-0.50%)

Canadian Economic Data 

• There 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

Market update

US tsys trading slightly higher after Durable Goods came in weaker than expth the US 10Y 1.90 (-0.5bps), as European stocks & commodities ex crude higher, core European bonds are lower & steeper weighed by supply. The US auctions $34bln in 5Y notes at 1:00Pm after a lackluster 2Y sale yest thou interest in the short end of the curve may be tempered somewhat ahead of the Fed, yet we feel the auction should go well given how 5s have underperformed on the UST curve over the past month. The mkt still seems to be under estimating the no. of rate hikes this yr with consensus looking for at least two and futures mkts priced for barely 15 bps by year end. GOCs slightly higher with tsys post 8:30 data, BOC Gov Poloz speaking on the effectiveness of monetary policy. The tone in provis remains firm on lack of supply, higher cda yields – spds closing 1bp tighter yest, thou Ontario rumoured to be coming today with a 10Y on good interest , thou 10Y Ontarios are the most expensive on a credit basis vs Ont 5s since Jan.

News headlines

• European Stocks Rally After Earnings; Pound Jumps, Metals Slide (Bloomberg) European stocks climbed for the first time in four days as BP Plc and Standard Chartered Plc rose after the companies reported earnings. The pound strengthened against all of its major counterparts on speculation that the U.K. is less likely to leave the European Union. Banks led gains in Europe and Asian equities pared their decline. The yen rose and Treasuries ended a six-day decline before central bank meetings this week.
• Oil’s Recovery Inches Higher as ‘Fracklog’ Awaits Price Trigger (Bloomberg) Oil’s rebound from the lowest level in more than 12 years may face an abrupt halt as prices near a level that could trigger a wave of new U.S. shale production. Futures in New York have advanced more than 60 percent since the February low and closed at $43.73 a barrel Friday, the highest in five months, nearing a $45-level IG Ltd. says makes some shale plays profitable. Drilled, uncompleted wells could return 500,000 barrels a day back to the market, according to Richard Westerdale, a director at the U.S. State Department’s Bureau of Energy Resources. The inventory of wells is known as the fracklog.
• S. workforce growth may give Fed one more reason to go slow on rates (Reuters) Americans with a high school education or less are returning to the labor force in larger numbers, a trend that points to a broadening of economic growth, but could also keep wage growth subdued and stay the Federal Reserve’s hand in its hiking cycle. The Federal Reserve meets this week and is expected to leave rates on hold. One factor it watches is slack in the labor market to see how much room the economy has to grow without triggering inflation.
• Yen gains versus dollar as BOJ, Fed meetings near (Reuters) The yen rose on Tuesday, moving away from lows of several weeks against the dollar and euro as prospects of further monetary stimulus this week from the Bank of Japan remained unclear. With policy decisions from the Federal Reserve and the BOJ due within hours of each other, many investors are likely to stay on the sidelines. The Fed, which is expected to leave interest rates unchanged, will announce its decision on Wednesday while the BOJ concludes its two-day meeting on Thursday.
• South Korea’s Growth Slows as Investment, Consumption Wane (Bloomberg) South Korea’s economy slowed in the first quarter as sluggishness in exports weighed on corporate investment and consumers cut back on spending. Gross domestic product rose 0.4 percent from the previous quarter, the Bank of Korea said Tuesday, matching the increase that was forecast by analysts surveyed by Bloomberg. The economy expanded by 2.7 percent from a year earlier.
• Why Valeant Pharmaceuticals International’s new CEO may signal a shift from ‘disruptor’ to ‘plain vanilla’ (Financial Post) Less than a year ago Valeant Pharmaceuticals International Inc.’s CEO Michael Pearson represented a disruption to big pharma by coming from outside the industry, using aggressive acquisitions and strategic business tactics to grow the company to a global giant.  Now the company has hired Joseph Papa as the new CEO, a 35-year pharmaceutical industry veteran with a history of taking a balanced approach to business.
• Teck Resources Ltd reports surprise adjusted profit as costs decline (Financial Post) Teck Resources Ltd. reported much better-than-expected first quarter results as it responded to weak commodity prices with deep cost reductions. Adjusted profit came in at $18 million, or three cents a share, Vancouver-based Teck said on Tuesday. Analysts, on average, were expecting a loss of four cents.

Overnight markets

• Overview: US 10yr note futures are down -0.1329% at 129-7, S&P 500 futures are up 0.24% at 2088.25, Crude oil futures are up 1.1% at $43.11, Gold futures are down -0.53% at $1233.6, DXY is down -0.19% at 94.663.

US Economic Data

• 8:30 AM: Durable Goods Orders, March, 0.8%,  est. 1.9% (prior -3.0%)
  •      Durables Ex Transportation, March, -0.2% , est. 0.5% (prior -1.3%)
• 9:45 AM: Markit US Services PMI, April, est. 52 (prior 51.3)
  •      Markit US Composite PMI, April,  (prior 51.3)
•  10:00 AM: Conference Board Consumer Conference Index, April, est. 96 (prior 96.2)
  •      Richmond Fed Manufacturing Index, April, est. 12 (prior 22)

Canadian Economic Data 

• There 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