Commentaires

US tsys trading lower on relatively heavy volume in TY1 futs (378k) after stronger payrolls with European equities lower, the Nikkei down 3.5% and the USD index lower for a fifth day. Tsys fell ealier with the 10Y reaching above 1.8% but later bounced on weak Tankan survey – the Japanese manufacturing fell to the lwest levels since June 2013 adding pressure for further BOJ stimulus. GOCs recovering in post payroll bounce, with the long end of the GOC curve well bid on lower oil prices.

News headlines

• Stocks Start Quarter in Doldrums as Oil Falls; Bonds Pare Drop (Bloomberg) Global stocks fell the most in more than three weeks as a new quarter got under way, with Japanese equities leading losses and the yen strengthening. Treasuries pared declines before U.S. payrolls data. Europe’s equity benchmark was set to erase all of its gains for March in a single day, and Japan’s Topix had its worst day in seven weeks after the Tankan business survey slumped. Crude oil slid after Saudi Arabia’s deputy crown prince said the kingdom will only freeze its oil output if Iran and other major producers do so. Copper rose after a gauge of Chinese manufacturing unexpectedly expanded, while shares in Shanghai were little changed.
• China Factory Gauge Unexpectedly Jumps as Stimulus Kicks In (Bloomberg) China’s official factory gauge showed improving conditions for the first time in eight months, suggesting the government’s fiscal and monetary stimulus is kicking in. The manufacturing purchasing managers index rose to 50.2 in March, compared with a median estimate of 49.4 in a Bloomberg News survey of economists. The measure matches its highest level since November 2014. The non-manufacturing PMI rose to 53.8 from 52.7 in February. Metals rose after the report.
• Japanese gloom ensures slow start to quarter for world stocks (Reuters) Gloomy Japanese manufacturing data on Friday ensured a downbeat start to the second quarter, driving stocks and oil lower and supporting safe-haven assets like gold and the Japanese yen. Still bruised from a turbulent first quarter, investors took their cue from the Japanese data rather than more encouraging figures from China’s manufacturers, before the pivotal U.S. payrolls report later in the day. Japan’s Nikkei .N225 sank 3.5 percent in its steepest daily fall since mid-February, dragging down shares across Asia. That set the bearish tone for Europe, where the main indices were all down more than 1 percent in early trading.
• Saudi Arabia Will Only Freeze Oil Production If Iran Joins (Bloomberg) Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market. The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.
• Prices Sag in Warning to ECB Even as Manufacturing Picks Up (Bloomberg) Prices for factory goods in the euro area dropped the most since 2009 in March, in a sign that weak inflationary pressures may be cutting into companies’ ability to charge more even as manufacturing expands. Markit Economics said its Purchasing Managers Index, which gauges manufacturing activity and comes alongside the price figures, increased to 51.6 from 51.2 in February. That keeps it just above the 50 level that separates expansion from contraction. While the reading is higher than the initial estimate of 51.4, it still caps the weakest quarter in a year.
• South Korea exports tumble for 15th straight month (Market Watch) South Korea’s exports fell in March for the 15th consecutive month due to sluggish global demand, but the decline was smaller for the second month in a row, according to the Ministry of Trade, Industries and Energy. Exports dropped 8.2% from a year earlier to $42.98 billion in March, following the previous month’s 12.2% drop, showed preliminary data released Friday by the ministry. The March reading beat market expectations for a 9.9% decline.
• Japan big manufacturers’ mood down in Q1 – BOJ tankan (Reuters) Confidence at big Japanese manufacturers worsened in the three months to March and is seen falling further ahead, a closely watched central bank survey showed on Friday. The headline index for big manufacturers’ sentiment stood at plus 6 in March, down from plus 12 seen three months ago, the Bank of Japan’s quarterly « tankan » survey showed. That compared with the median estimate of plus 8 in a Reuters poll of economists.
• BlackBerry Ltd loss smaller than expected, but revenue falls short (Financial Post) BlackBerry Ltd. on Friday reported a fiscal fourth-quarter loss of $238 million, after reporting a profit in the same period a year earlier. The Waterloo, Ontario-based company said it had a loss of 45 cents per share. Losses, adjusted for non-recurring costs and amortization costs, came to 3 cents per share. The results topped Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for a loss of 10 cents per share.
• Bombardier receives order for 20 business jets (Reuters) Canadian planemaker Bombardier Inc , which is seeking government aid to help finance its CSeries passenger jet program, said it received a firm order for 20 Challenger 350 aircraft. The company said on Friday the order was valued at about $534 million based on the list price, but did not disclose the name of the buyer, citing competitive reasons. (Reporting by Amrutha Gayathri in Bengaluru; Editing by Saumyadeb Chakrabarty)
• Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince (Bloomberg) Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets. Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as soon as next year, with the country currently planning to sell less than 5 percent.

 Overnight markets 

• Overview: US 10yr note futures are up 0.024% at 130-14, S&P 500 futures are down -0.69% at 2037.25, Crude oil futures are down -3.16% at $37.13, Gold futures are down -1.31% at $1219.4, DXY is up 0.11% at 94.69.

US Economic Data 

• Change in Nonfarm Payrolls was 215k, stronger than expected and down from prior month
• Change in Manufacturing Payrolls was -29k weaker than expected and down from prior month
• Unemployment Rate was 5%, weaker than expected and up from prior month
• Markit US Manufacturing PMI will be released at 9:45 AM
• ISM Manufacturing will be released at 10:00 AM
• ISM Prices Paid will be released at 10:00 AM
• Construction spending MoM change will be released at 10:00 AM
• University of Michigan Sentiment will be released at 10:00 AM 

Canadian Economic Data

• RBC Canadian Manufacturing PMI will be released at 9:30 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

US tsys trading higher, curve slightly flatter US 10Y 1.817 (-1bp). Volume in TY futs below avg. Overnite S&P lowered the outlook for China to negative from stable to ‘reflect our expectation that the economic and financial risks …are increasing’. Yet China stocks closed higher, while Japanese equities fell. Core Euro bonds higher led by 10Y gilts despite upward revision to Q4 UK GDP thou the increase came about primarily from higher government spending. But euro bonds supported by weakness in equities with the stoxx down 1.0% towards key support at 3000. GOCs under pressure after Jan real GDP came in 0.6% vs 0.3% exp. Provis opening unch after closing firmer yest, QC & Ont supply still possible after yest Q26 deal which is a full 1.5bps better bid (100/99 vs 101.5).

News headlines

• Roller-coaster first quarter ends with shares, dollar under pressure (Reuters) World stocks fell for the first time in four days on Thursday, the final day of a roller-coaster first quarter that has hammered the dollar and the pound but has proven the best in decades for gold and bonds. European markets had a groggy morning with shares FTEU3 down 1 percent, the dollar hovering near a seven-week low versus the euro EUR= and oil LCOc1 volatile again after an extremely wild V-shaped ride so far this year.
• Oil prices slide as U.S. crude stocks hit record (Reuters) Oil futures fell on Thursday, with U.S. crude hitting its lowest price in more than two weeks as the country’s crude stocks reached yet another record high, renewing concerns about global oversupply. The increase in U.S. inventories came despite seasonal refinery utilisation hitting an 11-year high, while a rise in the dollar .DXY put further pressure on oil prices.
• China Rating Outlook Cut to Negative From Stable by S&P (Bloomberg) Standard & Poor’s has cut the outlook for China’s credit rating to negative from stable, saying the nation’s economic rebalancing is likely to proceed more slowly than the ratings firm had expected. The nation’s credit rating is AA- with a negative outlook, S&P said in a statement, which also affirmed the long-term and A-1+ short-term sovereign credit ratings.
• K. Economy Shows More Momentum; Current-Account Gap Widens (Bloomberg) The British economy ended 2015 with more momentum than previously estimated. Gross domestic product rose 0.6 percent in the fourth quarter instead of the 0.5 percent reported last month, the Office for National Statistics in London said on Thursday. There were upward revisions to services, industrial output and construction. GDP rose 0.4 percent in the third quarter.
• Euro zone inflation stays negative in March but ‘core’ prices rise (Reuters) The fall in euro area inflation slowed this month while core figures, which strip out volatile food and energy prices, accelerated, mildly positive news for the European Central Bank as it struggles to revive anaemic price growth. Annualised inflation picked up to -0.1 percent from -0.2 percent, in line with expectations, as rising food and services prices offset another big fall in energy costs, data from Eurostat showed.
• Wage Surge in Hot U.S. Labor Markets Sending Hopeful Sign to Fed (Bloomberg) With Minneapolis-St. Paul’s health-care industry booming, scientist Erin Nelson fielded more than 20 unsolicited calls in the past year asking her to consider switching jobs. She took one in September at a 40 percent raise. “Pay is becoming much more competitive,” said Nelson, 35, who designs research projects for medical-device companies. “It is a nice feeling to have job security, that there are jobs out there.”
• Bank of Canada warns economy’s recovery from oil shock will take more than two years (Financial Post) Canada will take more than two years to adjust fully to the drop in oil prices, a senior Bank of Canada official said on Wednesday, signaling no quick end to a shock that has roiled the economy. Deputy Governor Lynn Patterson said a simulation run by the bank suggested it would be several years before the economy found a new balance. The plunge in crude prices pushed the oil-exporting nation into a mild recession last year, prompting policymakers to cut interest rates twice, although the bank is expected to remain on hold next month.
• ‘Fragile five’: These OPEC producers are on the verge of collapse if oil prices don’t stabilize soon (Financial Post) The global oil price rout has left many oil producers reeling across the world. From Canada to Norway, Saudi Arabia to Russia, none of the world’s largest oil exporters have been spared from oil prices that declined 45 per cent last year alone. While some of the biggest producers will stumble along, five oil-producing economies are on the verge of collapse if oil prices do not stabilize soon, according to RBC Capital Markets.
• Argentine Senate approves deal to end debt dispute, re-enter markets (Reuters) Argentina’s Senate gave the green light to a landmark deal to repay creditors holding defaulted debt in the early hours of Thursday, marking the end of a 14-year legal battle that had made the country a global financial pariah. The deal, which had already been approved by the lower house of Congress, is the cornerstone of new President Mauricio Macri’s plan for revitalizing an economy hobbled by low investment, high inflation and precarious central bank reserves.
• Cara Operations Ltd, owner of Swiss Chalet, buys St-Hubert BBQ chicken chain for $537 million (Financial Post) Canada’s Cara Operations Ltd, owner of the Swiss Chalet casual dining chain and Harvey’s burger outlets, said on Thursday it would buy St-Hubert BBQ, one of Quebec’s largest casual dining chains, for $537 million. Toronto-based Cara, Canada’s largest operator of full-service restaurants, went public a year ago and had indicated it was looking to expand through acquisitions. Analysts had flagged privately held St-Hubert as one of the most likely targets for Cara, which is controlled by dealmaker Prem Watsa’s Fairfax Financial Holdings Ltd.

Overnight markets 

• Overview: US 10yr note futures are up 0.024% at 130-2, S&P 500 futures are up 0.02% at 2055.75, Crude oil futures are up 0.52% at $38.52, Gold futures are up 0.57% at $1235.6, DXY is down -0.41% at 94.452.

 US Economic Data 

• Initial Jobless Claims number came in at a level of 276k, stronger than expected and up 9k from prior month
• Continuing Claims number was at a level of 2173k, weaker than expected and down from prior month
• Chicago Purchasing Manager will be released at 9:45 AM   

Canadian Economic Data 

• GDP MoM growth was 0.6%, stronger than expected and up from prior month
• GDP YoY growth was 1.5%, 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