Commentaires

25/04/2016

par admin | Avr 25, 2016 | commentaires

Market update

US tsys trading slightly higher & flatter with the US 10Y 1.86 (-2.1bps), avg volume in TY futures, global stocks lower, crude 1.0% lower, EUR & JPY higher. JPY higher prior to this Thursday’s BOJ meeting where the central bank is expected to increase its QE program as much as 20%. Last week’s the Yen suffered its largest weely decline since the BOJ boosted its QE program in Oct 2014. Core European bonds slightly higher as well, 10Y bund 0.226%, close to one month highs. Bunds underpinned by both heavy reinvestment flows (~90bln) and large month end extension in the Euro govt bond index – 0.11 to 0.16yrs vs 0.09 yrs in the US. New Home Sales kick off a very busy week in the US with 2Y auction today, FOMC Wed & GDP – latest CFTC COT data how specs added to steepeners last week via FV & EDfuts. In Canada, light data week by contrast with Feb GDP the key release on Fri. GOCs starting the week on the backfoot led by 10s after Friday’s 5bp cheapening post CPI/Retail Sales. Provincials slightly better bid after closing 5-7bps tighter last week.

News headlines

Global Stocks Drop With Oil as Glut Seen Persisting; Yen Rises (Bloomberg) Shares fell around the world as oil dropped on signs a global surplus of crude is likely to persist. The yen strengthened with gold, reflecting investor caution before central bank meetings this week in the U.S. and Japan. U.S. crude futures erased Friday’s gains on Saudi Arabia’s plan to complete an expansion of the Shaybah oilfield by the end of May. Energy companies, banks and miners led declines in the Stoxx Europe 600 Index, which headed for its biggest loss in a week, as industrial metals also sank. The yen was the best-performing major currency, after tumbling on Friday by the most since 2014. Italian bonds fell with Spain’s, extending a decline from last week.
Oil falls as traders cash in after three weeks of gains (Reuters) Oil prices slipped on Monday as traders took profits after three weeks of gains and as a jump in the dollar late last week was priced into fuel markets. Front-month Brent crude LCOc1 was trading at $44.80 per barrel at 1101 GMT (6:01 a.m. ET), down 31 cents from its last settlement. U.S. West Texas Intermediate (WTI) futures CLc1 were down 44 cents at $43.29 a barrel.
Yellen’s Scope for Summer Rate Hike Widens as ECB Signals a Hold (Bloomberg) Mario Draghi has opened a door. Janet Yellen has to decide whether she wants to walk through. The European Central Bank president signaled last week that policy on his side of the Atlantic is going on hold as officials wait to see how their stimulus measures play out. That pause may hand the Federal Reserve chair an opportunity to raise interest rates in coming months, by reducing the risk of a sharp rally in the dollar if the policies of the two central banks conspicuously diverged.
Over 90% of China Bond Funds Dropped Last Week Amid Default Woe (Bloomberg) More than 90 percent of Chinese bond funds’ net asset value dropped last week as spreading corporate note defaults fueled investor concerns. A market value of assets held by 718 bond funds dropped in the five days through April 22, accounting for 95.6 percent of all the fixed-income funds tracked by Shanghai-based research firm Howbuy. The average decline for the week was 1.03 percent, the biggest since the week ended Jan. 8, according to Howbuy. “The sentiment in the corporate bond market is quite weak,” said Ni Xinchen, a researcher at Howbuy. “Investors are concerned corporate defaults will spread.”
Abe Says Japan Will Create Extra Budget for Kumamoto Earthquake (Bloomberg) Japan’s Prime Minister Shinzo Abe said Sunday he will create an extra budget to address the economic damage caused by deadly earthquakes in Kumamoto earlier this month. Abe wants to pass the budget before the current parliamentary session ends on June 1, which comes ahead of an upper house election in July. The earthquakes, which killed 48 people, have dealt a blow to policy makers struggling to gather momentum for an economic recovery.
Precision Drilling Corp swings into loss as revenue plummets, five contracts cancelled (Financial Post) Precision Drilling Corp. reported a loss of $19.9 million in its latest quarter compared with a profit of $24.0 million a year ago. The oilfield services company says the loss amounted to seven cents per share for the quarter ended March 31 compared with a profit of eight cents in the same quarter last year. Revenue this quarter totalled $301.7 million down from $512.1 million in the first quarter of 2015, mainly due to lower drilling activity in the U.S., Canada and internationally.
Quebec halts injunction request against TransCanada’s Energy East pipeline (Financial Post) The province of Quebec suspended its request for an injunction against TransCanada Corp’s Energy East pipeline on Friday after the company agreed to undergo a provincial environmental assessment. The resolution removes a potential hurdle but also introduces another approval process for the 4,600 kilometre cross-Canadian pipeline, which will carry 1.1 million barrels per day of crude from Alberta’s oil sands to the country’s Atlantic coast.

Overnight markets

Overview: US 10yr note futures are down 0% at 129-15, S&P 500 futures are down -0.23% at 2081.25, Crude oil futures are up 0.3% at $43.86, Gold futures are up 0.62% at $1237.6, DXY is down -0.31% at 94.82.

US Economic Data

10:00 AM: New Home Sales, est. 520k (prior 512k)
- New Home Sales m/m, est. 1.6% (prior 2,0%)
10:30 AM: Dallas Fed Manufacturing Activity April, est. -10.0 (prior -13.6)

Canadian Economic Data

There is no major economic news 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

22/04/2016

par admin | Avr 22, 2016 | commentaires

Market update

US tsys slightly lower, curve flatter, US 10Y 1.877 (+1.1bps), avg volume in TY futures overnite, trading in a narrow 6 tick range. European equities lower led by 7% decline in Daimler on news of emissions probe. Nikkei rose for a fourth day to at an 11 week high on speculation the BOJ may increase the size of its asset purchase program next week, while it is also contemplation negative rate loan support for banks. Core European bonds higher on lower stocks, also heavy redemptions/coupon pmts next week (~E90bln) as well as month end extension – 0.14yrs Euro tsy index (US tsy index 0.09 yrs). GOCs lower led by 5s after CPI/ Retail Sales came in above exp for Feb, 2s5s ~2bps flatter on the news, spds ~2bps wider vs tsys. Provis opening unch after closing tighter again yest 2-3bps, Ont 46 97/96, Ont 26 86/85.

News headlines

Stocks Retreat With Commodities as Yen Drops on BOJ Speculation (Bloomberg) Stocks fell and commodities retreated as investors wound back enthusiasm that had sent gauges of both to this year’s highs earlier in the week. The yen dropped as the Bank of Japan weighed the possibility of offering negative-rate loans to banks. Carmakers led declines in Europe as emission probes loomed over Daimler AG and PSA Group, while Asian equities slid from a four-month high. Raw materials fell as steel futures slumped in China after exchanges announced measures to cool speculation and Goldman Sachs Group Inc. cut price outlooks metals and crops. Japan’s currency weakened versus all 31 major peers and banks led the Topix higher.
BOJ Officials Are Said to Eye Possible Negative Rate on Loans (Bloomberg) Having adopted a negative interest rate on some excess reserves to penalize financial institutions for leaving money idle, the Bank of Japan may consider helping them lend by offering a negative rate on some loans, according to people familiar with talks at the BOJ. Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the people, who asked not to be named as the matter is private. The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero percent interest, would be the most likely vehicle for this option, they said.
Euro zone business growth slows despite discounting -PMI (Reuters) Further price cutting failed to prevent a slowdown in euro zone business growth this month, a survey showed, likely disappointing the European Central Bank which wants inflation to rise. The ECB’s swathes of cheap loans and interest rate cuts, alongside a top-up to its monthly bond purchases, appear to have had little effect on inflation or private sector growth. Markit’s Composite Flash Purchasing Managers’ Index (PMI) for the euro zone, based on surveys of thousands of companies and seen as a good guide to growth, dipped to 53.0 from March’s 53.1, matching a 13-month low in February.
Brazil Stocks’ Biggest Driver Isn’t Impeachment Hype After All (Bloomberg) Lately, in Brazil markets, investors can be split into two camps: those who pick stocks based on the political turmoil and those who think that’s crazy. Turns out they’re sort of both right though one more so than the other. While the correlation between the Ibovespa and the impeachment of President Dilma Rousseff has been gaining strength this year, nothing drives the benchmark’s stock moves quite like oil and other commodities, data compiled by Bloomberg show.
No deal between Greece and lenders on Friday: officials (Reuters) There will be no deal between Greece and its lenders on Friday that would unlock loans and enable vital debt relief talks, despite some progress on the reforms Athens must implement in exchange, euro zone and IMF officials said on Friday. « Don’t expect any deals today, » the chairman of euro zone finance ministers Jeroen Dijsselbloem told reporters, noting however, he was « hearing good news from Athens » on headway made in negotiations on a Greek reform package.
Record VIX Bets Keep Surging as Wall Street Divines Mixed Signal (Bloomberg) One thing’s certain about the market for equity volatility — it’s jumping. Why that’s happening is a source of debate on Wall Street. Going long market turbulence has surged in popularity in the last nine weeks, with investors sending an unprecedented $3.2 billion into securities that reap gains from wider price swings. That pushed shares outstanding on exchange-traded notes tied to the Chicago Board Options Exchange Volatility Index to a record and has wagers on volatility near the highest level since 2014.
Federal-provincial deficits: $126-billion and a ‘long time healing’ (GlobeandMail) For anyone who lost track of where Canada stands after government budget season, it’s $126-billion. That represents combined federal-provincial deficits from fiscal year 2015-16 to 2018-19, the bulk of it resting on Ottawa’s shoulders. This isn’t to argue against government stimulus amid an oil shock that has hit three provinces hard, but rather just to show the “fairly striking” sum compared to last year, calculated by Warren Lovely, the chief of public sector research and strategy at National Bank of Canada.

Overnight markets

Overview: US 10yr note futures are down -0.0723% at 129-17, S&P 500 futures are down -0.01% at 2082.5, Crude oil futures are up 1.2% at $43.7, Gold futures are down -0.29% at $1246.7, DXY is up 0.33% at 94.907.

US Economic Data

9:45 AM: Markit US Manufacturing PMI, est. 52 (prior 51.5)

Canadian Economic Data

8:30 AM: CPI y/y, 1.3%, est. 1.2%, (prior 1.4%)
- Core CPI m/m, 0.7%, est. 0.4% (prior 0.5%)
- Core CPI y/y, 2.1%, est. 1.7% (prior 1.9%)
- Retail Sales m/m, 0.4%, est. -0.8% (prior 2.1%, revised 2.0%)
- Retail Sales Ex Auto m/m, 0.2%, est. -0.7% (prior 1.2%, revised 1.3%)

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

21/04/2016

par admin | Avr 21, 2016 | commentaires

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