Commentaires

07/04/2016

par admin | Avr 7, 2016 | commentaires

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

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

06/04/2016

par admin | Avr 6, 2016 | commentaires

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

S. Fed Releases Minutes from March 15-16 FOMC Meeting at 2:00 PM

Canadian Economic Data

Ivey Purchasing Managers Index SA will be released at 10:00 AM

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

05/04/2016

par admin | Avr 5, 2016 | commentaires

US tsys are sharply higher on weaker European/Asian stocks, S&P futures are -15pts, lower crude, US 10Y 1.723 (-4bps). Japanese yen rose to a 17 month high while the Nikkei fell 2.5% – the sixth straight decline. Core Euro bonds also sharply higher led by 10Y UK gilts, yields at one month lows with the 10Y bund yield below 0.10% for the first time since April 2015. Bunds well bid after weak Feb factory orders, Eurozone service PMI. The latest JPM Tsy Client Survey showed the most net longs since Nov 1st at 23%. GOCs higher led by the 10Y which is 4bps better on the curve in a directional move with 10Y yields. Provis opening wider, Ont 46 108/07 (106.5),Ont 26 96/95 (94.5), QC 48s 110/109.5.

News headlines

Yen Rises With Bunds as Economic Concerns Mount; Stocks Decline (Bloomberg) The yen jumped to a 17-month high and government bonds climbed as increasing concern that global economic growth is faltering stoked demand for haven assets. Stocks fell around the world, along with emerging-market currencies. Japan’s yen rose against all 16 of its major peers, while yields on 10-year German bonds dropped to the lowest in a year. All 30 stocks in Germany’s DAX Index fell after an unexpected drop in factory orders
Norway Frees Wealth Fund to Add $17 Billion in Real Estate (Bloomberg) Norway proposed letting its sovereign wealth fund raise real estate holdings by about $17 billion, while rejecting a call to expand into infrastructure projects. The upper limit on real estate investments for the $850 billion fund, the world’s biggest, should be raised to 7 percent from 5 percent, the Finance Ministry said on Tuesday. The real estate assets will also be separated from the overall portfolio and “be included in the existing framework for deviations,” according to the ministry.
Euro Area Growth Stays ‘Sluggish’ as Markit Index Revised Lower (Bloomberg) The euro-area economy grew slower than initially anticipated at the end of the first quarter, according to Markit Economics, which revised down a key index of activity. Markit said its composite Purchasing Managers Index rose to 53.1 in March from 53 in February. While that’s above the 50 level that divides expansion from contraction, it’s below the initial reading of 53.7 published March 22.
Fed’s Evans says market more pessimistic on U.S. rate hikes (Reuters) Financial markets are more pessimistic than the U.S. central bank in their pricing of U.S. interest rate hikes, Chicago Fed President Charles Evans said on Tuesday. « Market expectations are pricing in a 20 percent likelihood of things deteriorating from here, » said Evans during an investor conference in the Asian financial hub, citing recent surveys. « I don’t have that outlook. In general, financial market expectations are more pessimistic than ours. »
Saudi Arabia to sign $21.5 billion energy, development deals with Egypt: sources (Reuters) Saudi Arabia is expected to sign a $20 billion deal to finance Egypt’s petroleum needs for the next five years and a $1.5 billion deal to develop its Sinai region, two Egyptian government sources told Reuters on Tuesday. The agreements are tabled to be signed on Thursday during a visit to Cairo by Saudi Arabia’s King Salman, a rare foreign trip.
IMF chief ramps up call for global action as growth risks increase (Reuters) The global economy’s already modest prospects will decline further unless authorities take stronger action to boost growth, the head of the IMF warned on Tuesday, saying the Fund would cut its headline forecasts next week. Christine Lagarde said China’s shift to an economic model based more on domestic demand, stubbornly low commodity prices and tighter funding conditions in some countries had all clouded the outlook.
Oil Holds Near Month-Low as U.S. Supplies Seen Expanding Glut (Bloomberg) Oil held near the lowest in a month before U.S. government data forecast to show an increase in crude stockpiles to the highest level in more than eight decades. Futures fell as much as 1.3 percent in New York after dropping 6.9 percent in the previous two sessions. Inventories in the U.S., the world’s biggest oil user, climbed by 2.85 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. That will be an eighth weekly advance.
Hong Kong shares fall despite mainland gains, energy stocks tumble (Reuters) Hong Kong’s main stock index posted its biggest loss in nearly six weeks on Tuesday, touching a one-month low, as the energy sector tumbled against a backdrop of slumping crude oil prices and mixed messages on the outlook for U.S. monetary policy. The Hang Seng Index had its worst day since Feb. 25, dropping 1.6 percent to 20,177.00. The China Enterprises Index lost 1.9 percent, to 8,679.04 points.
CMHC pushing for comprehensive national strategy this year to ‘reduce housing need’ (Financial Post) Canada’s housing agency will begin a push for a national housing strategy to support affordable housing. “This year, CMHC will work with other federal colleagues to undertake broad-based consultations on a national housing strategy,” Evan Siddall, chief executive officer of Canada Mortgage & Housing Corp., the country’s national housing agency, said in the text of a speech in Whitehorse, Yukon
Air Canada will firm up Bombardier Inc CSeries order within ‘weeks,’ CEO says (Financial Post) Air Canada will firm up its CSeries order within “weeks,” but some level of government funding will still be necessary to help Bombardier Inc. succeed, the airline’s chief executive said Monday. “It’s coming together pretty quickly now,” Air Canada CEO Calin Rovinescu told reporters when asked how soon the airline will turn its letter of intent into a firm order.

Overnight markets

Overview: US 10yr note futures are up 0.3353% at 130-29, S&P 500 futures are down -0.84% at 2040.25, Crude oil futures are down -0.81% at $35.41, Gold futures are up 1.53% at $1237.9, DXY is up 0.19% at 94.694.

US Economic Data