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13/04/2016

by admin | Apr 13, 2016 | comments

Market update

Tsys slightly higher after weaker PPI/retail sales data, 10Y 1.77 (-1.2bps). Tsys lower in Asia on increase in Chinese exports, lower trade surplus. USD higher vs Yen on more calls for stimulus. Core Euro bonds higher, bund curve ~3bps flatter reversing Tues decline after Saudi oil deal news and long end supply from France (E9bln 20/50year). GOCs unch before BOC at 10:00EST- 10s firmer on the curve by ~2bps after recent widening had brought the 21030 fly to cheapest lvls since March 11th. Provis opening firmer this morn after tightening 2bps yest on higher all in yields.

News headlines

Global Stocks Extend Gains as China Trade Improves, Metals Rise (Bloomberg) The cloud that China cast over financial markets is starting to lift — and that’s a boon for stocks and commodities. After trade data pointed to stronger growth in the world’s second-biggest economy, global equities wiped out the last of this year’s losses, copper and iron ore jumped, and haven assets including the yen and gold retreated. European stocks rose for a fourth day, shares in emerging markets climbed to the highest since November, and China’s equities traded in Hong Kong gained the most worldwide, as the Asian nation’s exports surged
Oil prices fall on producer meeting doubts, stronger dollar (Reuters) Oil futures traded lower on Wednesday on concerns that a producer meeting set for Sunday in Doha to discuss freezing output will do little to trim oversupply as well as a strengthening dollar. Brent crude LCOc1 was down 41 cents at $44.28 per barrel at 1049 GMT. It hit a four-month high in the previous session before settling up $1.86. U.S. crude CLc1 declined by 56 cents to $41.61 a barrel after gaining $1.81 a day earlier.
Dollar gains, eyes on G20, Bank of Canada (Reuters) The dollar surged to a two-week high against the euro on Wednesday, as a push of oil prices above $40 a barrel and improved data out of China drew investors into riskier bets than low-yielding assets in Europe and Japan. The euro and yen have gained strongly against the dollar in recent weeks as investors sought traditional safe havens for their money on a darkening outlook for banks and economic growth, underlined again by downgraded IMF forecasts on Tuesday.
Tighter supply, tougher rules rattle key U.S. funding market (Reuters) Last month’s spike in failed trades in Wall Street’s key funding market sparked fears that it could be a sign of trouble brewing in the U.S. financial system, but the disruptions appear more likely to mark the “new normal” of the post-crisis era. Wall Street institutions, hedge funds and real estate investment trusts rely on the $5 trillion repurchase agreement market to finance their daily trades and any disruption is worrying because it could force them to cut holdings of bonds, stocks and other securities.
Bernanke Friend Who Quit Riksbank Says Lower Bound Still Far Off (Bloomberg) The former Riksbank board member who accurately predicted Sweden’s descent into negative rates says a growing consensus that policy makers are bumping up against the limits of stimulus is simply wrong. Ex-deputy governor, Lars E. O. Svensson, who used to be a Princeton University colleague of former Federal Reserve Chairman Ben Bernanke, said Sweden can easily cut rates further below zero, expand quantitative easing or even set a floor for the country’s currency if it needs to.
Exclusive: IMF says Greek debt ‘highly unsustainable’, debt relief ‘essential’ – draft memorandum (Reuters) The International Monetary Fund wants Greece’s European partners to grant Athens substantial relief on its debt which it sees remaining “highly unsustainable”, according to a draft IMF memorandum seen by Reuters. Earlier on Tuesday, Greece and inspectors from its EU/IMF lenders adjourned talks on a crucial bailout review, mainly due to a rift among the lenders over a projected fiscal gap by 2018 and over Athens’ resistance to unpopular reforms.
OPEC trims 2016 oil demand growth, says its output rises slightly (Reuters) OPEC on Wednesday predicted global demand for its crude oil will be less than previously thought in 2016 as consumption slows down, increasing the excess supply on the market this year. The monthly report from the Organization of the Petroleum Exporting Countries lowered its forecast of world oil demand growth by 50,000 barrels per day (bpd) and said further downward revisions could follow.
With Abenomics Withering, Japan Hears Calls for Fresh Action (Bloomberg) This wasn’t how it was supposed to be. When Japanese Prime Minister Shinzo Abe and his lieutenants unleashed massive monetary and fiscal stimulus in 2013, the shock therapy was meant to jump start the economy and end a decades-long battle against deflation. More than three years on, the policy dubbed ‘Abenomics’ looks in its worst shape yet, and that’s now spurring some to call for yet stronger efforts to reanimate the world’s No. 3 economy.
Coal Slump Sends Mining Giant Peabody Energy Into Bankruptcy (Bloomberg) U.S. coal giant Peabody Energy Corp. filed for bankruptcy on Wednesday, the most powerful convulsion yet in an industry that’s enduring the worst slump in decades. The company filed Chapter 11 petitions for most of its U.S. entities in U.S. Bankruptcy Court in St. Louis Wednesday, listing $10.1 billion in debt. All of Peabody’s mines and offices are continuing to operate and are expected to continue doing so for the duration of the process, according to a statement.
Valeant Pharmaceuticals International shares slip further after default notice over delay in filing financial report (Financial Post) Valeant Pharmaceuticals International says it has received a notice of default from some debt holders as a result of the delay in filing the company’s 2015 audited financial report with U.S. regulators. The notice of default starts the clock ticking on a 60-day period in which the Quebec-based drug and health-care products company has to get the filing completed. That gives Valeant until June 11 to complete the filing of its 10-K report, which its says would “cure the default in all respects.”
JPMorgan Said to Trim 5% of Jobs at Asia-Pacific Wealth Unit (Bloomberg) JPMorgan Chase & Co. cut about 5 percent of jobs at its Asia-Pacific wealth-management unit as it refocuses staff on serving clients with higher investment thresholds, a person with knowledge of the matter said. The approximately 30 job cuts, which happened this week, involved mostly relationship managers based in Hong Kong and Singapore, said the person, who asked not to be identified discussing private information.

Overnight markets

Overview: US 10yr note futures are down 0% at 130-18, S&P 500 futures are up 0.46% at 2065.25, Crude oil futures are down -1.4% at $41.58, Gold futures are down -1.07% at $1247.4, DXY is up 0.59% at 94.512.

US Economic Data

Retail Sales Advance MoM growth -0.3%, weaker than expected and down from prior month
Retail Sales Ex Auto MoM growth 0.2%, weaker than expected and down from prior month
Retail Sales Ex Auto and Gas MoM growth was 0.1%, weaker than expected and down from prior month
PPI Final Demand MoM variation was -0.1%, weaker than expected and down from prior month
PPI Ex Food and Energy MoM variation was -0.1%, weaker than expected and down form prior month
PPI Final Demand YoY variation was -0.1%, weaker than expected and down from prior month
PPI Ex Food and Energy YoY growth was 1.0%, weaker than expected and down form prior month
Federal Reserve will release Beige Book at 2:00 PM

Canadian Economic Data

Bank of Canada Rate Decision will be released at 10:00 AM
BOC Releases Monetary Policy report at 10:00 AM

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

12/04/2016

by admin | Apr 12, 2016 | comments

Market update

US tsys trading lower, curve steeper on avg volume in TY futs, US 10Y 1.755 (+3bps). DXY index lower except vs vs Yen on more talk from Jap officials warning of Yen overvaluation. Equities mixed – Nikkei higher, European stocks higher on financials on speculation of Italian bank rescue fund. Core euro bonds lower, steeper , 10Y bunds lower for a 3rd day – 1Y bund down ~$1.00 after reaching new high yest 164.60 in European trading. Bunds also pressured from European sov supply from Neth, France & Ger. GOCs lower, spds slightly wider vs tsys – crude higher again $40.80. Provis unch after closing 1bp tighter yest – BC/Alberta under pressure Alb/Ont46 12/11 from 11/10 on Fri.

News headlines

Stocks Rise Around World as Commodities Advance; Bonds, Yen Drop (Bloomberg) Stocks rose with commodities, while the yen slipped and government bonds fell as crude oil’s advance above $40 a barrel boosted economic optimism. The MSCI All-Country World Index advanced for a third-straight day and Russia’s ruble joined the Australian dollar among the best-performing currencies. Metals prices jumped, helping push the Bloomberg Commodity Index to the highest this month. The yen fell versus all its major peers and German bund yields climbed the most in a month as demand for haven assets ebbed. Faster inflation boosted the pound and Sweden’s krona.
Bond Traders Show Skepticism of Goldman’s Forecast for Fed Hikes (Bloomberg) Bond traders are betting the odds of a Federal Reserve interest-rate increase this year are less than a coin toss, clashing with Goldman Sachs Group Inc.’s call for three moves. Futures contracts indicate there’s about a 48 percent chance the Fed will follow its December rate increase with one more in 2016. The figure has plunged from more than 90 percent at the end of 2015 as Fed Chair Janet Yellen and other officials warned that heightened risks in the global economy are reason for the U.S. central bank to delay tightening policy.
UK inflation rises to 0.5% on early Easter travel costs (TheGuardian) Inflation jumped to 0.5% in the year to March after a rise in the cost of air fares over Easter and more expensive spring and summer clothing ranges hitting stores. The higher cost of booking a hotel and restaurant table also pushed inflation beyond the 0.3% seen in February, according to official figures. The higher cost of booking a hotel and restaurant table also pushed inflation beyond the 0.3% seen in February, according to official figures.
China No Longer Epicenter of Volatility to Brokers’ Dismay (Bloomberg) China’s investors are finally getting a chance to catch their breath. After turmoil in the past year rattled global money managers and undermined confidence in the Communist Party’s grip on the nation’s financial markets, gauges of volatility in the benchmark equity index and the yuan have fallen to the lowest levels since at least November. While increasing stability can be seen as a victory for the authorities, and a relief for international investors now fixated on turbulence in Japanese markets and the upcoming U.S. earnings season, muted price swings aren’t translating into better trading conditions for local brokers amid suspected intervention by state-backed funds.
China says tax reform will boost economy, structural changes (Reuters) China’s value-added tax reforms will help support the economy and speed up structural adjustments, Vice Finance Minister Shi Yaobin said on Tuesday, playing down concerns such reforms could fan property speculation. China will replace a business tax with a value-added tax in its construction, real estate, financial and consumer services sectors, effective from May 1, and the government hopes to cut taxes by more than 500 billion yuan ($77.32 billion) in 2016.
Russia 2016 budget gap may hit 4 percent GDP if oil at current prices (Reuters) Russian Finance Minister Anton Siluanov said on Tuesday that the budget deficit could reach 4 percent of gross domestic product this year if oil prices stayed at current levels. “The task we are setting for ourselves is to have a budget deficit at 3 percent of GDP under (an oil price of) $40 (per barrel),” he told an economic conference. “If the oil price is as it’s shaping up now – $32-33 – accordingly, it (budget deficit) will be up to 4 percent of GDP,” Siluanov said.
Gloomy start to results season hits shares (Reuters) A downbeat first batch of corporate results prodded European stock markets lower on Tuesday while oil prices held above $40 ahead of a meeting of major producers to discuss freezing output. The mood among investors in Europe and the United States has been subdued in the run-up to the second quarter earnings season, and sales numbers from France-based luxury goods producer LVMH were poor, helping push European markets 0.3 percent lower in early trade.
Goldman Sachs to pay $5 billion in U.S. Justice Department mortgage bond pact (Reuters) Goldman Sachs Group Inc (GS.N) has agreed to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis, the U.S. Department of Justice said on Monday. The settlement, which Goldman disclosed in January, stems from the firm’s conduct in packaging, securitization, marketing and sale of residential mortgage-backed securities between 2005 and 2007, the Justice Department said.
Scotiabank boosts target on National Bank as capital position concerns diminish (Financial Post) Scotiabank has raised its target on National Bank shares to $44 from $42 because of diminished concern over the bank’s capital position. In a note to clients Monday, analyst Sumit Malhotra said “favourable macro movements” so far in fiscal 2016 should help Canada’s National Bank, which has consistently operated with capital ratios at the low end of the Big Six. In particular, the report said a combination of narrowing provincial bond spreads and a six per cent surge in the Canadian dollar should help the bank post a key CET1 ratio approaching 10 per cent in the second quarter.
S. small business confidence hits new two-year low (Reuters) U.S. small business confidence fell to a fresh two-year low in March amid persistent worries about sales and profits, the latest indication that economic growth braked sharply in the first quarter. The National Federation of Independent Business (NFIB) said on Tuesday its small business optimism index dipped 0.3 point to a reading of 92.6 last month, the lowest since February 2014.
Oil bust leaves energy industry, real-estate sector locked in battle over empty oilfield worker camps (Financial Post) A no trespassing sign collects dust next to an empty, chained-off parking lot for an equally empty work camp in the heart of North Dakota oil country. The sign and limp chain haven’t kept curious locals from trying to get a closer look at the Black Gold camp – a few brave ones have confessed on condition of anonymity to looking in the windows and scurrying through the vacant halls.
Wells Fargo Misjudged the Risks of Energy Financing (Bloomberg) At its annual investor conference in San Francisco in May 2014, with oil trading at $102 a barrel, Wells Fargo & Co. boasted that in just two years it had almost doubled its energy exposure and seized the title of Wall Street’s top oil and gas banker. The timing couldn’t have been worse. Crude prices peaked a month later and have since plummeted to $40. Wells Fargo has downgraded 38 percent of its energy loans and set aside $1.2 billion to cover potential losses, according to company filings. The loans are coming under increasing scrutiny from regulators and investors, even though they make up only 2 percent of the bank’s portfolio.

Overnight markets

Overview: US 10yr note futures are down -0.1789% at 130-26, S&P 500 futures are up 0.15% at 2037.5, Crude oil futures are up 0.97% at $40.75, Gold futures are up 0.44% at $1263.5, DXY is up 0.05% at 94.

US Economic Data

NFIB Small Business Optimism number came in at a level of 92.6, weaker than expected.
Import Price Index MoM growth was 0.2%, weaker than expected and up from prior month.
Monthly Budget Statement will be released at 2:00 PM.

Canadian Economic Data

There is no major economic data release 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

11/04/2016

by admin | Apr 11, 2016 | comments

Market update

US tsys lower, steeper on low volume, US 10Y 1.742 (+2bps). USD mixed – falling to new seventeen month low vs the Yen, US equity futures up slightly while European equities higher led by financials (~2.0%) on news of possible Italian bank rescue fund. Core Euro bonds lower led by 10Y gilts. German bunds lower, 3bps steeper on news of possible rescue fund being set up to help Italian banks. GOCs trading lower led by 2.5bps under perf by 10s on the curve, on top of the 5bp cheapening on Friday in post empl flattening. Provis unch , Quebec 10Y global in the works according to IFR.

News headlines

European Stocks Rise Led by Italian Banks; Emerging Markets Gain (Bloomberg) European equities rose as Italian banks climbed before a meeting to discuss cleaning up the financial system. Emerging markets advanced after signs of a pick-up in Chinese industrial demand, while the Swiss franc weakened with government bonds. The Stoxx Europe 600 Index extended Friday’s gains, putting it on course for the biggest back-to-back advance since March, and futures on U.S. stock indexes were also higher.
Oil price dips on prospects for producers’ meeting (Reuters) Oil prices slipped on Monday over worries that the result of next Sunday’s meeting of producers in Qatar aimed at freezing current output levels would fail to improve the current supply-demand balance. Brent crude futures, the global benchmark, were down 27 cents at $41.67 a barrel at 0810 GMT, retreating from a three-week high reached on Friday. Oil prices rallied more than 6 percent last week after data showed U.S. energy firms had cut oil rigs for a third straight week to the lowest since November 2009.
Negative Interest Rates Benefit the Global Economy, Says IMF Chief Christine Lagarde (WSJ) Subzero interest rates in Europe and Japan are “net positives” for the global economy, International Monetary Fund chief Christine Lagarde said Tuesday, though she warned that the side effects of unorthodox central-bank policies should be closely monitored. Speaking ahead of the IMF’s Spring meetings in Washington, D.C., next week, Ms. Lagarde praised recent policy moves by the European Central Bank and the U.S. Federal Reserve, and called on governments to play their part by introducing growth-friendly reforms.
Italy Production Declines, Adding To Doubts on Pace of Recovery (Bloomberg) Italian industrial production fell in February, reflecting concerns about the pace of recovery that prompted the government to cut this year’s growth outlook. Output declined 0.6 percent from January, which registered a 1.7 percent revised jump, national statistics bureau Istat said in a report issued Monday in Rome. The median of 15 estimates in a Bloomberg survey called for a 0.9 percent drop in the February. On an annual, work-day-adjusted basis, production increased 1.2 percent, Istat said.
Carney’s `Brexit’ Headache Worsens With Rate Outlook Schism (Bloomberg) Mark Carney could face a challenge in just over two months, regardless of whether Britons choose to stay in or quit the European Union. While the Bank of England governor has signaled a slow tightening path, and investors see no rate increase for years, a vote to stay in the EU on June 23 potentially creates a whole new backdrop. With ‘Brexit’ risk removed, markets could pull in bets for a hike, generating a new communication hurdle for the Monetary Policy Committee, which holds its monthly meeting this week.
Fed’s Inflation Push Finally Has Bond Traders Wanting to Believe (Bloomberg) When it comes to inflation, bond traders are finally starting to listen to the Federal Reserve. After trying, and failing, to convince investors the steep drop-off in inflation in the past year was just a short-term blip, the Fed is now winning them over. Since mid-February, the outlook for consumer-price gains has soared from post-crisis lows as oil rebounds and Chair Janet Yellen signals a willingness to let the U.S. economy run hot before raising interest rates again. By one measure, market expectations rose last month by the most since 2011.
Tokyo warns again on yen strength (Reuters) Some cautious gains for European stock markets hauled the yen down off a 17-month high against the dollar on Monday after Japanese officials warned again that they could intervene against the currency’s “one-sided” rally. Chief Cabinet Secretary Yoshihide Suga said the Group of 20’s agreement to avoid competitive devaluations did not mean Japan cannot intervene against currency moves, repeating language which has flagged intervention in the past.
S. shale oil firms feel credit squeeze as banks grow cautious (Reuters) Nearly two years into an epic oil rout, U.S. shale drillers that have upended global energy markets are finally feeling a credit squeeze as banks make their biggest cuts yet to their loans. Every six months, oil and gas producers and their banks negotiate how much credit they should be given based on the value of their reserves in the ground. In previous reviews, banks were willing to offer borrowers some leeway, encouraged by producers’ hedges against falling prices and their ability to keep cutting costs in step with crude’s slide that began in mid-2014.
Tsipras demonizes IMF to rally troops for bailout sacrifices (Reuters) In Athens, walls have ears. The leaking of a conference call of International Monetary Fund officials on Greece’s latest bailout review has further undermined mutual trust in fraught debt talks, embarrassed the European Commission and infuriated the IMF and Germany. At stake are the IMF’s reputation as a stern enforcer of financial rescue programs meant to make indebted states viable and the European Union’s determination to hold the euro zone together and avert another damaging Greek crisis.
Wells Fargo admits deception in $1.2 billion U.S. mortgage accord (Reuters) Wells Fargo & Co (WFC.N) admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a record $1.2 billion settlement of a U.S. Department of Justice lawsuit. The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court. It also resolves claims against Kurt Lofrano, a former Wells Fargo vice president.
S. banks’ dismal first quarter may spell trouble for 2016 (Reuters) It is only April, but some on Wall Street are already predicting a rotten 2016 for U.S. banks. Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week. Concerns about economic growth in China, the impact of persistently low oil prices on the energy sector, and near-zero interest rates are weighing on capital markets activity as well as loan growth.
Bill Gross sees one or two Fed rate hikes in 2016: Barron’s (Reuters) Bond manager Bill Gross predicts that the U.S. Federal Reserve will raise interest rates once or twice in 2016, according to an interview in Barron’s. Gross, who is the manager of the Janus Global Unconstrained Bond Fund (JUCAX.O), told Barron’s that he does not expect U.S. Treasury yields, which are currently around 1.7 percent, to change dramatically this year.

Overnight markets

Overview: US 10yr note futures are down -0.0954% at 130-29, S&P 500 futures are up 0.43% at 2049.5, Crude oil futures are up 0.81% at $40.04, Gold futures are up 0.85% at $1254.4, DXY is down -0.26% at 93.993.

US Economic Data