Commentaires

15/04/2016

par admin | Avr 15, 2016 | commentaires

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

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

14/04/2016

par admin | Avr 14, 2016 | commentaires

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

New Housing Price Index MoM growth was 0.2%, beating the analyst estimate

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

13/04/2016

par admin | Avr 13, 2016 | commentaires

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