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18/04/2016

by admin | Apr 18, 2016 | comments

Market update

Tsys slightly higher, US 10Y 1.74 (-1bp), curve unch despite 4.0% move lower in crude after oil producers failed to come to agreement on prod freeze at Doha meeting. Fed Dudley making mostly positive comments on the US economy, thou reiterating still significant headwinds, uncertainties. Tsys also supported by news of Brazil Pres Rousseff being impeached as well as lack of progress on Greek talks. Core Euro bonds lower, underperforming tsys with curves in UK & Germany 2 bps 2 steeper pressured by heavy supply from Belgium this morning. In Canada, GOCs lower led by 10s ~2bp, provis a bit wider so far in the short end – alberta ~3bps wider Friday after DBRS downgrade.

News headlines

Global shares follow oil down after Doha disappointment (Reuters) A dive in oil prices sent stock markets lower on Monday after producers meeting in Qatar failed to agree on a plan to curb global supply, quashing the more optimistic tone which prevailed for much of the past week. Japan’s Nikkei index led the way, tumbling more than 3 percent after a devastating earthquake in the southwest of the country, with signs from a summit in Washington that other Group of 20 governments oppose intervention against the strength of the yen also playing a role.
China March home prices rise at fastest rate in two years, top cities boom (Reuters) China’s home prices in March gained at the fastest pace in almost two years but that growth may slow as local authorities tighten home purchase requirements in the two top performing cities on fears of a bubble forming. The southern city of Shenzhen continued to be the top performer, with home prices surging 61.6 percent from a year ago, followed by Shanghai with a 25 percent gain.
Rousseff Hangs by a Thread After Losing Impeachment Vote (Bloomberg) Dilma Rousseff’s presidency is hanging by a thread after Brazil’s lower house of Congress voted in favor of her impeachment, a decision that’s likely to cheer investors just as it threatens to bring down the curtain on 13 years of leftist rule. The opposition garnered 367 votes, 25 more than the two-thirds majority it needed to send the impeachment motion to the Senate.
Morgan Stanley First-Quarter Profit Beats Estimates on Cost Cuts (Bloomberg) Morgan Stanley reported first-quarter profit that beat Wall Street estimates as the firm cut costs and revenue from trading stocks and bonds declined less than some analysts predicted. The shares climbed. Net income fell 53 percent to $1.13 billion, or 55 cents a share, from $2.39 billion, or $1.18, a year earlier, the New York-based company said Monday in a statement. Profit surpassed the 47-cent average estimate of 22 analysts surveyed by Bloomberg.
PepsiCo Profit Tops Estimates as North American Snacks Gain (Bloomberg) PepsiCo Inc. posted first-quarter profit that beat analysts’ estimates after North American snack sales rose, helped by price increases. Earnings were 89 cents a share, excluding some items, the Purchase, New York-based company said in a statement on Monday. Analysts estimated 81 cents, according to data compiled by Bloomberg. Sales fell 2.9 percent to $11.9 billion, matching analysts’ average projection.
Saudi Arabia could sell off billions in American assets if bill passes: NYT (Bloomberg) The Saudi Arabian government has threatened to sell of hundreds of billions of dollars’ worth of American assets should the U.S. Congress pass a bill that could hold the kingdom responsible for any role in the Sept. 11, 2001 attacks, the New York Times reported on Friday. The newspaper reported that Saudi foreign minister Adel al-Jubeir told U.S. lawmakers last month that “Saudi Arabia would be forced to sell up to $750 billion in Treasury securities and other assets in the United States before they could be in danger of being frozen by American courts.”
Singapore exports tumble in March, demand in key markets remains weak (Reuters) Singapore’s exports tumbled in March as sales to China, the United States and Europe contracted in a sign the trade-dependant economy remains vulnerable as weak global demand puts its manufacturing sector to the sword. Non-oil domestic exports (NODX) slumped 15.6 percent in March from a year earlier, trade agency International Enterprise Singapore said in a statement on Monday.
DBRS downgrades Alberta’s credit following budget deficit projections to 2024 (Financial Post) A day after Alberta’s finance minister said he would make the case for holding the province’s credit ratings steady, DBRS Ltd. downgraded the province’s debt. Citing Alberta’s large expected deficit this year and in the future, DBRS downgraded the province’s issuer and long-term debt rating from triple-A to double-A (high) on Friday afternoon.
Bombardier, Embraer still in the running for major Delta order: aviation consultant (Financial Post) Bombardier Inc. is one of two manufacturers that are still in the running to sell a large number of new aircraft to Delta Air Lines Inc., according to an aviation consultant familiar with the talks. Delta is reportedly nearing a decision on what aircraft it will use to replace its aging fleet of 120 MD-80s and has narrowed it down to Bombardier’s CSeries and Embraer SA’s E-Jet, said Scott Hamilton, managing director of aviation consultancy Leeham Co.

Overnight markets

Overview: US 10yr note futures are down -0.0598% at 130-18, S&P 500 futures are down -0.42% at 2066.25, Crude oil futures are down -4.19% at $38.67, Gold futures are up 0.48% at $1240.5, DXY is down -0.1% at 94.606.

US Economic Data

There is no major economic data for today

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

15/04/2016

by admin | Apr 15, 2016 | comments

Market update

Tsys higher, curve flatter , low volume on TY1 futs, US 10Y 1.77 (-2bps) at the lower end of 2bp o/n range trade, muted reaction so far to stronger Empire Man index. Tsys bid in Europe on weakness in equities, crude, with the USD lower vs EUR & JPY. Crude off 2.2% @ 40.58 before this weekend’s meeting of oil ministers in Doha where an output freeze is to be discussed, news that Iran will not attend the meeting. Core Euro bonds higher, curves flatter amid fall in oil prices and heavy redemptions in Europe (~E36bln). Aussie bond yields up for 5th day with strong jobs report &better than exp China investment and lending data. GOCs opening higher , outperforming tsys with tens well bid ~4bps narrower on the curve. Provi spds at six month lows, the Ont 10/30 credit curve continues to steepen, spds were in another 1.5-2bps yest with no supply. Alberta budget – $10.4bln for this yr & $8.4bln next yr is consistent with expectations – Alberta/Ont 46 roll 13.5/12.5 (+1bp).

News headlines

Global stocks, dollar and oil cool ahead of Doha meeting (Reuters) Reassuring Chinese GDP data helped stocks, commodity markets and the dollar consolidate strong weekly gains on Friday, as focus turned to a meeting of top oil producers about a potential output freeze. Moves in most markets were small in Europe as investors eased back after a 2.5 percent weekly rally in world shares .MIWD00000PUS, a upward turn in the dollar and an 11 percent surge in oil prices this month. Data from China drew approval as it showed the country’s giant economy grew at 6.7 percent in the first quarter year-on-year, bolstering the view its slowdown may be bottoming out.
Oil Falls Before Doha as Global Markets Brace for Weekend Risk (Bloomberg) Oil fell for a third day before major suppliers meet in Doha to discuss an output freeze, boosting bonds and sending European stocks lower, with investors wary of potential disappointment from the talks. U.S. crude trimmed its second weekly advance and shares in Europe fell for the first time in six days. German bonds pared their first weekly drop in more than a month. New Zealand’s dollar and South Korea’s won led gains in Asian currencies as a flood of Chinese data added to evidence that the world’s second-largest economy is stabilizing.
Chinese economy shows signs of debt-fueled recovery (Reuters) China posted its slowest economic growth since 2009 but a surge of new debt appears to be fueling a recovery in factory activity, investment and household spending in the world’s second largest economy. That’s good news in the near-term, economists say, but many worry it marks a return to the old playbook used during the financial crisis, when Beijing hand-cranked its economy out of a slowdown through massive stimulus, rather than structural reform
IMF Says Greek Debt Numbers Don’t Add Up as EU Defends Its Plan (Bloomberg) The International Monetary Fund raised doubts about Greece’s ability to keep up repayments under a plan being negotiated with its European creditors, who insisted they’ve already provided plenty of debt relief. “Currently, as envisaged, the debt is not sustainable and what is required is a debt operation,” IMF Managing Director Christine Lagarde said Thursday in Washington, where finance ministers and central bankers are attending the fund’s spring meetings.
Valeant Working With Banks to Review Options: Reuters (Bloomberg) Valeant Pharmaceuticals International Inc. is working with investment banks to review options after receiving interest in a number of its businesses, Reuters reported Thursday. The drugmaker has previously said that it might dispose of certain “non-core” assets as it seeks to pay down some of its $32 billion in debt and return to stable footing after a disastrous eight-month run that has seen its stock lose almost 90 percent of its value.
Top Brazil Court Allows Impeachment Vote to Proceed Sunday (Bloomberg) Brazil’s Supreme Court overturned a government motion and allowed voting on impeachment to continue as scheduled on Sunday, delivering a blow to Dilma Rousseff as she struggles to keep her presidency. In a special session Thursday night, the court shot down arguments made earlier in the day by Attorney General Jose Eduardo Cardozo that the impeachment process was flawed and the administration hadn’t received the right to a proper defense
How 315 Billion Petrodollars Evaporated (Bloomberg) The world’s top oil exporters are burning through their petrodollar assets at an accelerating pace, increasing the pressure to reach a deal to freeze production to bolster prices. The 18 nations set to gather in Doha on Sunday to discuss a production freeze have spent $315 billion of their foreign-exchange reserves — about a fifth of their total — since the oil slump started in November 2014, according to data compiled by Bloomberg. In the last three months of 2015, reserves fell nearly $54 billion, the largest quarterly drop since the crisis started.
Alberta opts for deficits, Newfoundland chooses harsh tax hikes amid oil woes (GlobeandMail) The stinging impact of a year of persistently low oil prices has left economic wreckage across Canada, with the distress particularly acute in Alberta and Newfoundland and Labrador. With unemployment rates shooting up and both economies in distress, the two provinces unveiled dramatically different approaches to dealing with their deficits on Thursday. Alberta’s New Democrats took a hard turn against the province’s fiscally conservative past, adopting a plan that will lead to record debt. Newfoundland and Labrador has instead embraced austerity, tax hikes and layoffs.

Overnight markets

Overview: US 10yr note futures are up 0.0719% at 130-15, S&P 500 futures are down -0.13% at 2073.75, Crude oil futures are down -2.65% at $40.4, Gold futures are up 0.44% at $1231.9, DXY is down -0.06% at 94.845.

US Economic Data

Empire State Manufacturing Survey number came in at a level of 9.56, much stronger than estimate by the analysts.
Industrial Production MoM variation will be released at 9:15 AM
Capacity Utilisation will be released at 9:15 AM
University of Michigan Consumer Sentiment Index will be released at 10:00 AM

Canadian Economic Data

Manufacturing Sales MoM variation was -3.3%, much weaker than expected by the analysts.

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

14/04/2016

by admin | Apr 14, 2016 | comments

Market update

Tsys lower, curve steeper, US 10Y 1.79 (+3bps) –as initial claims fell to the lowest since 1973 even as core CPI weaker (0.9 vs 1.0). Tsys under pressure since mid-morning as European equities rise, core euro bonds lower & steeper pressured by more long govt supply – this time Irish 10y @ 0.817% record low auction yield. The US auctions $12bln in reopened 30Y bonds at 1PM after successful 10Y yest (2bps thru WI). Redemption flows in Europe this month are large – E121.6bln according to IFR with E34bln being payed out tomorrow alone, so net issuance for the week negative ~E22bln. Australian employment beat estimates – 26K vs 17K with the unemployment rate falling from 5.8% from 5.7% – the lowest in thirty months. Based on OIS mkts are still pricing ~50% chance of a rate cut by Sept – trend employment has slowed from last yr while the part rate has declined since last nov. GOCs lower, 10s ~4bps wider in directional move with the 10Y close to 1.30% resis. Provis unch, Ont & NB rumoured supply, with Alberta budget later today – long Alberta/Ont roll 12.5/11.5 +2bps since last week.

News headlines

Dollar Rally Hits Commodities as Europe Halts Global Stock Gains (Bloomberg) The dollar strengthened, weighing on commodities, and Singapore’s currency declined as the city state unexpectedly loosened monetary policy. European stocks bucked a five-day rally in global equities. The greenback rose against most major peers and base metals denominated in the U.S. currency fell to compensate for the appreciation. Crude reversed losses as Qatar said there was a “positive feeling” before major producers meet in Doha on April 17 to discuss freezing output.
IEA Sees Oil Oversupply Almost Gone in Second Half on Shale Drop (Bloomberg) Global oil markets will “move close to balance” in the second half of the year as lower prices take their toll on production outside OPEC, the International Energy Agency said. The world surplus will diminish to 200,000 barrels a day in the last six months of the year from 1.5 million in the first half, the agency said in a report on Thursday. Production outside the Organization of Petroleum Exporting Countries will decline by the most since 1992 as the U.S. shale oil boom falters.
IEA expects limited impact from oil output freeze at Doha (Reuters) A deal to freeze oil production by OPEC and non-OPEC producers will have a limited impact on global supply and markets are unlikely to rebalance before 2017, the International Energy Agency (IEA) said on Thursday. The IEA, which oversees the energy policies of industrialized nations, said even though the decline in U.S. output was gathering pace and Iran was not adding as many barrels as expected, the world would still produce more oil than it consumes throughout 2016.
Energy XXI Files for Bankruptcy After $5 Billion Expansion (Bloomberg) Energy XXI Ltd., a U.S. oil and gas explorer, filed for bankruptcy protection after spending $5 billion on acquisitions in the years leading up to the crude slump. The company entered Chapter 11 in Houston after reaching a restructuring agreement with noteholders, it said Thursday in a statement. “Energy XXI will eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and position the company for long-term success,” it said.
BofA Profit Misses Estimates on Dealmaking Slump, Energy Loans (Bloomberg) Bank of America Corp. posted a first-quarter profit that missed analysts’ estimates as trading and underwriting revenue dropped and energy loans soured. The stock fell in early trading in New York. Net income at the second-biggest U.S. bank fell 13 percent to $2.68 billion, or 21 cents a share, from $3.1 billion, or 25 cents, a year earlier, according to a statement Thursday from the Charlotte, North Carolina-based firm. Adjusted earnings per share were 20 cents, 1 cent less than the average estimate of analysts surveyed by Bloomberg.
Bank of England leaves policy on hold amid ‘Brexit’ uncertainty (MarketWatch) The Bank of England on Thursday kept its key interest rate at a record low of 0.5% and made no changes to its 375-billion-pound ($529.99 billion) asset purchase program. The vote was unanimous. Policy makers were widely expected to leave rates where they’ve been since March 2009 ahead of the U.K.’s EU referendum on June 23 on whether to stay in or leave the union . Polls are currently neck-to-neck, sparking jitters in the U.K. financial markets.
Stephen Poloz defends the central bank’s independence from Finance Department (Financial Post) After delivering a mostly positive outlook on the Canadian economy, and keeping its trendsetting lending rate on hold — as was well-telegraphed — the Bank of Canada found itself unexpectedly on the defensive Wednesday over its policy independence from the federal government. “The Bank of Canada ‘had’ to raise its 2016 growth forecast, since the governor’s boss, Minister Morneau, is out touting the benefits of fiscal stimulus, and December/January GDP surprised on the upside,” said Avery Shenfeld, chief economist at CIBC Capital Markets.

Overnight markets

Overview: US 10yr note futures are down -0.2153% at 130-11, S&P 500 futures are up 0.08% at 2077.75, Crude oil futures are up 0.57% at $42, Gold futures are down -0.99% at $1236, DXY is up 0.04% at 94.783.

US Economic Data

Initial Jobless Claims was at a level of 253k, stronger than expected by the analysts
Continuing Claims was at a level of 2171k, beating the analyst expectation
CPI MoM growth was 0.1%, missing the analyst estimate by 0.1%
CPI Ex Food and Energy MoM growth was 0.1%, 10 basis points weaker than the analyst expectation
CPI YoY growth was 0.1%, missing the analyst expectation by 0.1%

Canadian Economic Data