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08/04/2016

by admin | Apr 8, 2016 | comments

Market update

US tsys opening weaker on low volume in tsy futs, US 10Y 1.72 (+3bps) as European equities rise, Nikkei up for second day and crude sharply higher (3.8%). Core Euro bonds lower/ steeper, 10Y bund yield 3bps higher on ‘risk on’ and better than exp rise in German exports. JPY lower for the first time in six days, BOJ member saying rapid moves in Yen undesirable. GOCs lower as 10s are +5bps on the curve after March employment came in at 40.6K vs 10K exp – almost entirely on rise in full-time (35K) with the unemployment rate flaling to 7.1% from 7.3%. Provis better bid (0.5bps) after 8:30 data – Ont 26 98.5/98, Ont 46 109/108, QC 48 112.5/111.5.

News headlines

Stocks up as investors look to end bruising week on a high (Reuters) Stocks and bond yields rebounded on Friday but were still firmly on track to end lower over the course of a bruising and volatile week marked by the Japanese yen’s surge against the dollar. Europe’s FTSEurofirst 300 .FTEU3 was up 0.7 percent in early trading, lifted by energy shares thanks to a sharp rise in crude oil prices, but will likely notch up its fourth straight weekly decline. That would be its longest losing streak since October 2014.
Yen stalls as finance minister warns on intervention (Reuters) Gains for stock markets and a warning of possible intervention from Japan’s finance minister knocked back the yen on Friday after a week of startling gains. The yen surged at one point by as much as 2 percent against the dollar on Thursday, and Minister Taro Aso responded early on Friday by warning rapid currency moves were “undesirable,” that the yen’s were “one-sided” and that Japan would take steps as needed.
Oil prices rise on optimism over end of punishing glut (Reuters) Oil prices rose on Friday, lifted by fresh hopes over a proposed freeze in oil production and firm economic indicators from the United States and Germany that cast a positive light on growth in fuel demand. Russia’s oil production could fall in April, sources said, while the country’s energy minister expressed hopes that producer nations could agree to an output freeze at a meeting in Doha later this month. Front-month U.S. West Texas Intermediate (WTI) crude futures were trading $1.33 higher at $38.59 per barrel at 0954 GMT, more than 3 percent above their last close. International Brent futures were up $1.30 at $40.73 a barrel.
Treasuries Set for Two-Week Gain; Greenspan Warns of Global Risk (Bloomberg) Treasuries headed for their biggest two-week gain since January as the Federal Reserve warned the global economy presents heightened risks. U.S. government securities have returned 1.3 percent in the period, the biggest back-to-back weekly run since the period ended Jan. 15, based on Bloomberg World Bond Indexes. The Japanese yen has surged 11 percent this year, the most among the 16 most-traded currencies against the dollar, highlighting demand for perceived haven assets.
Yellen, alongside Fed alum, says rate hikes on track (Reuters) The U.S. economy is on a solid course with some hints of inflation so the Federal Reserve is on track for further interest rate hikes, Federal Reserve Chair Janet Yellen said on Thursday in a defense of her decision to tighten policy late last year. In a rare spectacle, Yellen spoke on a New York panel alongside her three predecessors who ran the world’s most powerful central bank. She said that, seven years after the brutal financial crisis, the U.S. labor market was now “close” to full strength, again arguing that inflation would not be held down much longer by the strong dollar and low oil prices.
China says G20 summit should be about economics, not politics (Reuters) The G20 summit to be hosted by China this year should be about economics and not political issues like territorial disputes, China’s foreign minister said on Friday, firing a warning shot ahead of the country’s biggest diplomatic event of the year. The summit, expected to be held in early September in the eastern Chinese city of Hangzhou, will gather major world leaders together like Chinese President Xi Jinping and U.S. President Barack Obama.
Cameron Accused of Hypocrisy for Stake in Father’s Offshore Fund (Bloomberg) U.K. Prime Minister David Cameron was accused of “hypocrisy” after he said he held a stake in an offshore fund set up by his late father until six years ago, an admission broadcast on national television following four days of questions over the investment. The premier gave in to intense pressure to give details of his interests in the Blairmore Holdings Inc. fund after it was mentioned in reports that emerged Sunday following the leak of millions of documents from a Panamanian law firm detailing attempts to avoid tax.
U.S. says China internet censorship a burden for businesses (Reuters) The United States has labeled China’s internet censorship a trade barrier in a report for the first time since 2013, saying worsening online restrictions are damaging the business of U.S. companies. Since Xi Jinping became China’s president that year, the U.S. had not listed China’s so-called Great Firewall as a trade impediment despite widespread outcry that the online blocks limit access to crucial information, email and search services such as those found on Google’s platform.
Bond Managers Beware! Index Funds Are Coming for Your Money, Too (Bloomberg) If you’re a bond manager, you may think index funds are the headache of your stock-picking colleagues. Think again. U.S. managers tracking indexes oversaw a record 27 percent of the money in taxable-bond mutual funds and exchange-traded funds as of Feb. 29, compared with 20 percent at the end of 2013, according to Morningstar Inc. While the proportion is smaller than the roughly 40 percent of equity-fund assets in passive products, the trend and the reasons — cost savings and a poor performance of active managers on average — are similar.
Foreign money is flowing into Canadian condominiums, raising concerns about market vulnerability (Financial Post) Fresh data on foreign ownership of condominiums in Toronto from Canada Mortgage and Housing Corp. points to an upswing in offshore money making its way into the country’s largest city. For the first time, the Crown corporation broke down offshore investment by the age of the buildings and it’s becoming increasingly clear that, as every new high-rise condominium goes up, so does the percentage of foreign owners.
Greek consumer prices fall 0.7 pct y/y in March, back in deflation (Reuters) April 8 Greece’s annual EU-harmonised inflation rate turned negative in March after a positive reading in February, statistics service data showed on Friday. The reading in March was -0.7 percent after 0.1 percent in February. Consumer prices were led lower by apparel, footwear, housing, durable goods and transportation costs. Economists polled by Reuters were expecting a zero EU-harmonised inflation rate in March.

Overnight markets

Overview: US 10yr note futures are down -0.2381% at 130-30, S&P 500 futures are up 0.82% at 2051.75, Crude oil futures are up 5.15% at $39.18, Gold futures are down -0.26% at $1234.3, DXY is up 0.05% at 94.526.

US Economic Data

Wholesale Inventories MoM variation will be released at 10:00 AM

Canadian Economic Data

Housing start number came in at a level of 204.3k, stronger than expected and down from prior month
Unemployment Rate percentage is 7.1%, much stronger than expected, and down 0.2% from prior month
Net Change in Employment number came in at a level of 40.6k, much stronger than expected and up from prior month

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

07/04/2016

by admin | Apr 7, 2016 | comments

Market update

US tsys are higher, US 10Y 1.74 (-2bps) on avg volume. Equities mixed – European stocks slightly lower, Japan higher, China down , EU peripheral bonds spds wider. Tsys rising in Europe with core Euro bonds on dovish comments from ECB officials including Draghi saying the bank wouldn’t ‘surrender’ to low inflation. ECB minutes from the March meeting showed concern over the decline in Feb core CPI while members discussed the possibility of a larger rate cut than 10bps. The euro currency is lower yet firmly above 1.1340 support. GOCs opening better bid led by 10s, but lagging the rally in tsys by ~1bp in longs. Of note (i) the Sep 21/5Y roll is under 10 (9.9/9.7) from 10.3 at auction yest with 5s10s unch and (ii) the bid to longs continues past month end – 10s30s 2 bps flatter yest aft. Provis 0.5bps weaker so far this morning, Ont 46s trading down at 109.

News headlines

S&P 500 Futures Fall as Yen Climbs With Gold on Growth Concern (Bloomberg) U.S. equity futures fell with European stocks and the yen strengthened to a 17-month high amid concern over the outlook for global economic growth. Futures signaled the Standard & Poor’s 500 Index will fall after rallying the most in almost a month and European stocks declined, reversing earlier gains. Gold rose after minutes of a Federal Reserve meeting reaffirmed U.S. policy makers aren’t rushing to raise interest rates.
Oil steady as Iraqi exports up, offsetting U.S. inventories drop (Reuters) Oil steadied at around $40 per barrel on Thursday as a surprise fall in U.S. inventories the previous day was offset by an increase in exports from Iraq, underlining global oversupply. Brent futures LCOc1 were at $39.60 at 1009 GMT (0609 EDT), down 15 cents from the last close. U.S. crude futures CLc1 were at $37.59 per barrel, down 16 cents from their last close.
Yen Strengthens Toward 108 as Traders Deaf to Japan’s Jawboning (Bloomberg) The yen surged toward 108 per dollar to the strongest level in 1 1/2 years as the Bank of Japan’s apparent reluctance to intervene kept investors buying. Expressions of concern from Japanese officials failed to convince markets that yen sales or other measures to curb the gains were imminent, and the currency rose at least 0.9 percent against all 16 of its major peers. It advanced even as a Ministry of Finance official said recent moves have been one-sided and that the authorities will take what action is necessary.
China’s FX reserves post surprise rise in March on more stable yuan (Reuters) China’s foreign exchange reserves surprisingly rose in March, the first monthly gain since November, as cooling expectations of U.S. interest rate hikes eased pressure on the yuan. Chinese authorities have taken a raft of measures to curb outflows sparked by concerns over the slowing economy and U.S. interest rate rises, and intervened in the currency market to support the yuan CNY=CFXS. China’s foreign exchange reserves – the world’s largest – climbed $10.26 billion in March to $3.21 trillion, central bank data showed on Thursday. The reserves beat a Reuters poll forecast of a drop to $3.18 trillion from $3.20 trillion in February, but are still down sharply from a peak of $3.99 trillion in June 2014.
`Risk-On’ Rally Loses Luster When Viewed Against Haven Markets (Bloomberg) From stocks to developing-nation currencies, riskier assets around the world have been flashing the all-clear signal for over a month. But for investors in the world’s safest securities, nothing has changed, and that may spell trouble. Some of the world’s great haven destinations have proven resilient amid a rally that’s sent global equities surging more than 11 percent from their February lows. That’s a change from the start of the year, when there was a simple relationship between stocks and developed-economy government debt: When one went down, the other went up.
TransCanada says Keystone pipeline restart will take longer than expected (TheGlobeAndMail) The widening price differential for Western Canadian crude due to a small leak and shutdown on TransCanada Corp.’s Keystone line is a sign of the vulnerability and limitations of Canada’s market access for oil, says RBC analyst Michael Tran. On Wednesday, TransCanada said it will take longer than originally thought to get the Keystone pipeline – which delivers crude from Alberta to Oklahoma, and to Illinois – running again after it was shut down over the weekend due to what the company describes as a small leak in South Dakota.
Valeant gets extra breathing room from lenders to file annual report (TheGlobeAnd Mail) Lenders have approved troubled Valeant Pharmaceuticals International Inc.’s request for an extension to its deadline for filing its already delayed annual report. The Laval, Que.-based drug giant said on Thursday that creditors holding more than 50 per cent of the company’s loans in principal amount voted yes to a waiver and amendment to its credit facility. This provides breathing room as Valeant deals with several issues, including managing about $31-billion (U.S.) of debt.
Brexit impact would partly depend on WTO negotiations: WTO chief (Reuters) The impact of a British vote to leave the European Union would depend in part on Britain’s negotiations with members of the World Trade Organization, the global trade body’s chief Roberto Azevedo told a news conference on Thursday. “Leaving the EU will have an important trade component, clearly,” Azevedo said.
Venezuela decrees Fridays a holiday to ease energy crisis (Reuters) Venezuela’s President Nicolas Maduro has decreed that all Fridays for the next two months will be holidays, in a bid to save energy in the blackout-hit OPEC country. “We’ll have long weekends,” Maduro said in an hours-long appearance on state television on Wednesday night, announcing the measure as part of a 60-day plan to fight a power crunch.
S. readies bank rule on shell companies amid ‘Panama Papers’ fury (Reuters) The U.S. Treasury Department intends to soon issue a long-delayed rule forcing banks to seek the identities of people behind shell-company account holders, after the “Panama Papers” leak provoked a global uproar over the hiding of wealth via offshore banking devices. A department spokesman said on Wednesday the rule would “soon” be turned over to the White House for review and issuance, but did not confirm any timetable for the initiative, which has taken years.

Overnight markets

Overview: US 10yr note futures are up 0.1674% at 130-29, S&P 500 futures are down -0.49% at 2050.25, Crude oil futures are down -0.72% at $37.48, Gold futures are up 1.38% at $1240.7, DXY is up 0.04% at 94.466.

US Economic Data

Initial Jobless Claims number came in at a level of 267k, weaker than expected and down from the previous period
Continuing Claims number came in at a level of 2191k, higher than expected and up from the previous period

Canadian Economic Data

Building Permits MoM growth was 15.5%, much stronger than expected and up from the previous period

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

06/04/2016

by admin | Apr 6, 2016 | comments

US tsys lower, curve steeper, US 10Y 1.745 (+2.5bps), on very low volume in tsy futs (196k). USD higher, reversing yesterday’s decline, WTI up $1.00, Euro stocks higher and S&P futs up 0.20%. Tsys trading in a narrow range o/n pressured by stocks and oil, moving lower in Europe as long EGBs underperformed amid talk of large bund curve steepener (MNI) – bund curve ~4bps steeper. Light data calendar in the US with minutes of Mar 16 FOMC at 2:00 which may provide more clarity after Yellen’s dovish comments in NYC last week. GOCs opening lower in line with tsys, focus on 5Y auction at noon – new Sep 21 with the roll @10.3, which seems very cheap considering the Mar21-Jun 22 @18bps (straight line interp) this would value Sep 21s closer to 7.2 – so auction should go well even thou roll hasn’t traded much this week. Provis opening unch after 2.5bps widening yest – supply less of a possibility today with BOC. In corps Fortis BC issuing 10s & 30s @132.6/174 -both traded ~2bps tighter. Both tranches were rather skinny concession wise in our opin 2,3bps or 40 over onts – yet fills we heard were 5%. On our side we continue to see interest in high beta BBB pipes, energy as well as NVCC.

News headlines

Asian Energy Stocks Rise With Crude Oil as Japanese Shares Slip (Reuters) Asian energy stocks advanced as crude oil futures rallied, while a stronger yen weighed on Japanese shares. The MSCI Asia Pacific Index was little changed at 124.44 as of 4:01 p.m. in Hong Kong, having swung between losses of 0.5 percent and gains of 0.3 percent. Japan’s Nikkei 225 Stock Average fell for a seventh day, its longest such streak since Prime Minister Shinzo Abe took power in 2012, after the yen surged to its highest level against the dollar in 1 1/2 years. After a rally in risk assets since mid-February, investors are turning cautious, with International Monetary Fund chief Christine Lagarde highlighting greater risks to global growth.
Oil futures rise on hopes for output freeze (Reuters) Crude oil futures rose on Wednesday as hopes for an agreement among exporters to freeze output underpinned the market, although persistent global oversupply and Iran’s plans to boost production put a cap on gains. Oil futures recovered from one-month lows to end the previous session up after Kuwait said there were “positive indications an agreement will be reached” on output during a producer meeting scheduled for April 17 in Qatar.
Yen holds strong after Japan PM’s currency comments (Reuters) The dollar hovered near a 17-month low against the yen on Wednesday after taking a fresh knock overnight on comments by Japan’s prime minister that suggested Tokyo was cautious about reining in the yen’s rise. Expectations that minutes of its last meeting will show some U.S. Federal Reserve officials more in favour of raising interest rates than chair Janet Yellen helped the dollar into positive territory against the euro.
China data to show exports, bank lending rising in March (Reuters) China’s exports likely returned to growth for the first time in nine months in March while the pace of bank lending may have picked up, adding to signs that the world’s second-largest economy may be stabilizing. Chinese leaders have pledged to make monetary policy more flexible this year even as it leans more on increased fiscal spending and tax cuts to support economic growth and cushion the pain from structural reforms.
German industry output raises growth hopes for first quarter (Reuters) German economic growth looked set to accelerate in the first quarter of 2016 after official figures released on Wednesday showed industrial output fell less than expected in February. Following the sector’s jump in January, the surprisingly small dip gave analysts some relief after data on Tuesday showed industrial orders unexpectedly dropped in February due to weaker foreign demand, particularly from euro zone countries.
Global Bond Yield Plunges to Record-Low 1.3% in Warning Sign (Bloomberg) Global bond yields fell to a record, a warning sign for the worldwide economy. The yield on the Bank of America Corp. Global Broad Market Index plunged to 1.3 percent, the lowest in almost 20 years of data. Bonds in the gauge have returned 3.6 percent in 2016, while the MSCI All Country World Index of shares has slumped 1.5 percent, including reinvested dividends. Treasuries declined, with 10-year yields climbing for the first time in three days, before minutes of the Federal Reserve’s March meeting are published.
Pfizer Confirms Termination of Proposed $160 Billion Allergan Merger (Bloomberg) Pfizer Inc. and Allergan Plc agreed to terminate their $160 billion merger, an abrupt end to the largest-ever health-care acquisition as officials in Washington crack down on corporate inversions. The U.S. Treasury Department’s proposed new rules to deter inversions drove the decision, the companies said Wednesday in a statement. New York-based Pfizer will pay Allergan $150 million in reimbursement for expenses associated with the transaction.
Sobeys’ price cuts on 8,500 items in Quebec could trigger grocery war with Loblaw, Metro (FinancialPost) Sobeys’ decision to slash prices on 8,500 grocery items this week in Quebec stands to trigger a price war with other grocery retailers. The retailer’s decision to drop prices by five per cent to seven per cent at its IGA stores in the province by Thursday “will require a response” from rivals Loblaw and Metro Inc., said analyst Keith Howlett at Desjardins Securities. “Both will have to decide whether or not to alter their weighting of everyday regular shelf prices versus promotional discounts” in the province.
Glencore sells agri unit stake for $2.5 billion to Canadian pension fund (Reuters) Commodity miner and trader Glencore (GLEN.L) has agreed to sell 40 percent of its agricultural unit to Canada’s state pension fund for $2.5 billion, the company’s latest step to cut debt and soothe investor concerns about the impact of weak commodity prices. The sale values the agricultural unit as a whole at close to the initially expected $10 billion, including $0.6 billion in debt and $2.5 billion in inventories, and comes after Glencore said last month it was stepping up its debt reduction plan by unloading more assets.
Ottawa looks to reach deal with provinces on infrastructure spending (GlobeAndMail) Ottawa is looking to hammer out infrastructure agreements with the provinces as soon as possible that will set the rules for how budget cash will flow to projects across the country. The negotiations are aimed at sorting out the power struggle between provinces and municipalities over how to spend the new federal windfall. Big-city mayors have made it clear they would like few strings attached and have urged Ottawa not to allow the provinces to delay construction with extra layers of approval. At the same time, cities are trying to secure money for their priority projects from provincial governments, which are constitutionally responsible for municipalities.

Overnight markets

Overview: US 10yr note futures are down -0.0239% at 130-26, S&P 500 futures are up 0.05% at 2039.75, Crude oil futures are up 2.01% at $36.61, Gold futures are down -0.82% at $1219.5, DXY is up 0.34% at 94.953.

US Economic Data