Commentaires

18/03/2016

par admin | Mar 18, 2016 | commentaires

Market update

Tsys opening slightly higher, giving up most of the early gains from the Tokyo session, US 10Y 1.89 (-1bp). Core Euro bonds higher, flatter yey fading as crude (40.88 +1.6%), Euro stocks rise (40.88 +1.6%). The USD index recovering somewhat (0.25%) after a fed induced 2.0% slide over the last two days. EUR lower on comments from ECB Praet that the ECB could continue to cut the deposit rate if necessary. Strong buying of tsys from Asian comm banks and yen funded buying of two year notes in 2s & longs according to MNI. Ten year JGBs surged after the BOJ’s ‘rinban’ (security purchase) operation, with the 10Y yield ~8bps lower at -0.1% or below the official BOJ deposit rate. Yields on JGBs have tumbled since Jan29th negative rate announcement and the 2s30s curve has flattened 40bps to the narrowest in at least 13yrs. Light calendar today with only Michigan Sentiment but several Fed speakers including NY Fed Pres Dudley at 9:00am. Another heavy week of corporate issuance in the US with ~$30bln priced, yet spds continue to grind tighter – 40 bps since Feb 20th high of 221 based on BB US IG index. GOCs lower after Jan retail sales rose 2.1% vs 0.6% exp, rebounding from Dec 2.1% decline (rev from -2.2%). Ex-autos particularly strong 1.2% vs 0.4%. CPI lower than exp 0.2% vs 0.4% exp. Quebec budget yest confirmed balanced budget for this FY and for the next 5 yrs, borrowings will drop to $14bln this FY from $15.5bln net of prefinancings.

News headlines

Japan 10-Year Yield Drops to Record, Below Negative Deposit Rate (Bloomberg) Investors at home and abroad can’t get enough 10-year Japanese government bonds, driving the yield to an unprecedented minus 0.135 percent. Yields sank across the curve Friday after the Bank of Japan’s operation to buy long-term debt met the lowest investor participation on record, spurring what Bank of America Merrill Lynch strategist Shuichi Ohsaki called “panic buying.” The yield on the benchmark 2026 notes sank as much as 8 1/2 basis points Friday to below the minus 0.1 percent deposit rate introduced by the central bank last month, while that on 20-year securities tumbled more than 10 basis points to an unprecedented 0.29 percent.
Oil hits 2016 high above $42 on production and demand outlook (Reuters) Oil rose above $42 a barrel on Friday, hitting its highest this year and extending a rally into a fourth week on expectations of a production freeze by major exporters, stronger seasonal demand and dollar weakness. Brent crude’s front-month contract LCOc1 was up 59 cents at $42.13 a barrel by 1113 GMT, having touched a 2016 high of $42.31. U.S. crude CLc1 gained 64 cents to $40.84 a barrel after rising as high as $40.93. The benchmark had jumped by 4.5 percent to close the previous session at $40.20.
Merkel Dodges Draghi Call for Clarity With Bank Union Swerve (Bloomberg) European Central Bank President Mario Draghi pushed European Union leaders for clarity on the future of the euro on Thursday. But Germany still chose to skirt a critical area of disagreement with its partners. During a closed-door session in Brussels, Draghi told EU leaders that the most important thing they could do would be to set out a clear path forward for the monetary union, according to two officials familiar with deliberations.
Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts (Bloomberg) Just as fast as U.S. stocks tumbled in what was the worst-ever start to a year, they have staged one of the biggest turnarounds in history — and yet all anyone seems to focus on are the negatives. An advance of 0.9 percent in the 119-year-old Dow Jones Industrial Average Thursday wiped out a year-to-date decline that swelled to as much as 10 percent in February, making investors whole 11 weeks into a year that was shaping up to be a disaster. It’s the fastest that a retreat of 10 percent or more has ever been reversed this early in a year, data compiled by Bloomberg show.
Justin Trudeau’s Message to Wall Street: I Am Not My Father (Bloomberg) Canada Prime Minister Justin Trudeau sought to reassure Wall Street investors he’ll remain cautious on spending as he prepares to push the nation deeper into deficit, distancing himself from another deficit-spending leader: his father Pierre. Trudeau says his new Liberal government isn’t looking to flood the economy with money now beyond what was promised in last year’s election campaign, saying he needs to be responsible and keep the budget gap under control.
BofA Joins JPMorgan, Capital One in Expanding Share Buybacks (Bloomberg) Bank of America Corp. said its board approved the repurchase of as much as $800 million in shares, joining JPMorgan Chase & Co. and Capital One Financial Corp. this year in returning more capital to shareholders. Bank of America’s repurchases are in addition to the $4 billion announced a year ago, the Charlotte, North Carolina-based company said Friday in a regulatory filing. The latest buyback is to offset share dilution that would otherwise result from incentive-compensation awards, according to the filing.
TransCanada Corp to overhaul its business in US$13B acquisition of Columbia Pipeline Group (FinancialPost) TransCanada Corp. proved rumours of its interest in Columbia Pipeline Group true on Thursday when it announced a US$13-billion deal to buy the Texas-based natural gas pipeline firm.
Valeant Pharmaceuticals International Inc creditors prepare to slam company with tougher demands in face of possible default: sources (FinancialPost) Creditors of Valeant Pharmaceuticals International, which has been in violation of lender agreements since Wednesday, are beginning to demand new terms that could further pressure the drugmaker’s business model, according to three people familiar with the matter.
More Hedge Funds Shuttered Than Opened During 2015 Turmoil (Bloomberg) Hedge-fund shutdowns outnumbered startups last year for the first time since 2009, according to data firm Hedge Fund Research, as the global industry contracted amid market volatility. In the last quarter, 305 funds closed compared with 257 a year earlier, taking the total for the year to 979. Startups totaled 968, the Chicago-based company said in a report on Thursday. In 2009, hedge-fund closures totaled 1,023 and 784 opened.
The U.S. Is Exporting Its Oil Everywhere (Bloomberg) Three months since the U.S. lifted a 40-year ban on oil exports, American crude is flowing to virtually every corner of the market and reshaping the world’s energy map. Overseas sales, which started on Dec. 31 with a small cargo aboard the Theo T tanker, have been picking up speed. Oil companies including Exxon Mobil Corp and China Petroleum and Chemical Corp have joined independent traders such as Vitol Group and Trafigura Pte in exporting American crude.

Overnight markets

Overview: US 10yr note futures are up 0.1331% at 129-9, S&P 500 futures are up 0.31% at 2036.5, Crude oil futures are up 2.04% at $41.02, Gold futures are down -1.17% at $1250.2, DXY is up 0.16% at 94.916.

US Economic Data

University of Michigan Sentiment will be released at 10:00 AM

Canadian Economic Data

Retail Sales MoM growth was 2.1%, stronger than expected by the analysts and up from prior month
Retail Sales Ex Auto MoM growth was 1.2%, better than the estimate and up from prior month
CPI NSA MoM growth was 0.2%, weaker than expected by the analysts and at the same level than prior month
CPI YoY growth was 1.9%, worse than the estimate and down form prior year
CPI Core MoM growth was 0.5%, as expected by the analysts and up from prior month
CPI Core YoY growth was 1.9%, weaker than the estimate and down form prior year

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

17/03/2016

par admin | Mar 17, 2016 | commentaires

Market update

Tsys higher, following thru on yest Fed inspired rally, US 10Y 1.88 (-3bps) & cpn curve unch. Prices off the highs after better than exp Phili Fed index (12.4 vs -1.5) marked by improvements in both new orders and shipments. Yest the Fed chose to downplay the rise in core inflation, recovery in commodity prices, focusing instead on international developments. The ‘dot plots’ continue to be readjusted downwards with each successive meeting. After yesterday’s bull steepening mkts are pricing in ~65% odds of one rate hike by Dec. GOCs higher, spds unch vs tsys, curve 1bp steeper with longs underperforming, 10s30s 4bps wider since yest aft. Provis well bid, long Onts 107.5/107, QC48/Ont46 3/2.8 continues to ratchet tighter. Quebec budget this aft, rumours of MP and possible l.t. muni issue.

News headlines

Oil rallies towards $41, near 2016 high, on producer meeting (Reuters) Oil rose towards $41 a barrel on Thursday, trading close to a 2016 high, bolstered by a plan among some of the world’s biggest producers to meet next month to discuss supporting the market. OPEC and non-OPEC producers including the top two exporters, Saudi Arabia and Russia, will hold talks on April 17 in Qatar over a plan to freeze output, increasing the likelihood of the first global supply deal in 15 years.
Norway Cuts Rate and Signals More Easing Ahead Amid Oil Plunge (Bloomberg) Norway’s central bank cut its benchmark interest rate to a record low and signaled it’s prepared to ease policy further to ward off a recession in western Europe’s biggest crude oil producer. The overnight deposit rate was lowered by 25 basis points to 0.50 percent, the Oslo-based central bank said on Thursday. The decision was predicted by 18 of 20 economists surveyed by Bloomberg. The bank predicted that its rate will bottom at 0.2 percent in the first quarter next year.
Swiss Keep Franc Intervention Threat Alive as Rates Left on Hold (Bloomberg) Switzerland’s central bank held interest rates at a record low and repeated its pledge to intervene in currency markets, a threat President Thomas Jordan has used to keep the franc from strengthening. Describing the nation’s currency as “significantly overvalued,” the Swiss National Bank kept its deposit rate at minus 0.75 percent on Thursday, as expected by all economists in a Bloomberg survey. It cut both its growth and inflation forecast for 2016 and now sees prices dropping 0.8 percent this year.
Bank of England keeps rates steady, says sterling hit by EU vote (Reuters) Bank of England policymakers said sterling had been dealt a big hit by uncertainty in the run-up to the referendum on EU membership and that growth could slow, after voting unanimously to keep rates steady. The central bank said the upcoming vote on June 23 could delay some spending decisions, though it said recent indicators suggested growth would keep the same momentum this quarter as it had at the end of last year.
Australian dollar scales 8-month peak as unemployment rate falls (Reuters) Australia’s jobless rate took a surprising drop in February even as employment all but stalled, a mixed bag that left the outlook clouded but did seem to lessen the chance of a cut in interest rates in the near term. Thursday’s report from the Australian Bureau of Statistics showed unemployment fell to 5.8 percent in February, when analysts had expected it to stay at 6.0 percent.
Dollar at Five-Month Low as Commodities, Emerging Markets Jump (Bloomberg) The dollar sank to a five-month low, commodities gained with emerging markets, and government bonds advanced as central banks from the U.S. to Norway indicated a willingness to keep monetary policy accommodative. Developed-market stocks sank on concern that the stimulus is failing to boost growth and corporate earnings.
Canadian dollar hits 77¢ with ‘good reasons to rise and shine today’ (GlobeandMail) The Canadian dollar cracked the 77-cent mark today, carrying on the dramatic run from the Fed-induced weakness of the U.S. currency yesterday. The loonie is now up by about 9 cents from its January depths, at a five-month high, having been driven up over the past several weeks by more stable oil prices and the outlook for monetary policy in Canada and the United States.
Yellen steers Fed with cautious hand, despite hints of inflation (Reuters) Federal Reserve policymakers urging caution over interest rate hikes have gained the upper hand in the central bank’s internal debate, but the risk for the U.S. economy is that they are wrong to downplay a recent rise in inflation.

Overnight markets

Overview: US 10yr note futures are up 0.2789% at 129-7, S&P 500 futures are down -0.26% at 2012, Crude oil futures are up 1.43% at $39.01, Gold futures are up 2.99% at $1266.6, DXY is down -0.91% at 95.022.

US Economic Data

Current Account Balance number came in at a level of $-125.3b better than expected by the analyst and down from prior month
Initial Jobless Claims number came in at a level of 265k as expected and up from prior week
Philadelphia Fed Business number came in at a level of 12.4 beating the analyst estimate by 13.9 points.
Leading Index will be released at 10:00 AM

Canadian Economic Data

Wholesale Trade Sales MoM growth 0.0% missing the estimate by 0.3% and down 1.8% from prior month

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

16/03/2016

par admin | Mar 16, 2016 | commentaires

Market update

Tsys moving lower after core CPI came in stronger for Feb (0.3 vs 0.2), Housing Starts also above exp. Core Euro bonds higher overnite, strong rally in JGBs after BOJ Kuroda told the Japanese parliament that negative rates were possible, backtracking from stat ~$16.5bln of IG new issuance just in the last two days including Andarko, Ford but issuance likely to be fairly quiet today in front of the FOMC decision later this aft. GOCs slightly lower after 8:30 data, manufacturing sales 2.3% vs 0.5% exp. Provis opening unch, after ending 1-1.5bps wider yest, new CMB 5Y 52/51.

News headlines

Fed to Signal Worst Is Over, Hikes Coming: Decision-Day Guide (Bloomberg) This week, Federal Reserve Chair Janet Yellen and her colleagues have an opportunity to clarify where they stand on the outlook for interest rates. The message will probably be that plans for additional tightening have been postponed, but not for long. Fed officials are expected to reduce the number of rate hikes they see in 2016 and leave the target range for the federal funds rate unchanged at 0.25 percent to 0.5 percent after a two-day gathering of the Federal Open Market Committee in Washington. Here’s what to look for when the FOMC releases its post-meeting statement and updated forecasts at 2 p.m. Wednesday
Dollar Rallies Into Fed Meeting; Oil Rises, Stocks Are Stable (Bloomberg) The dollar extended its best run of gains in a month and oil rallied before the Federal Reserve’s policy review on Wednesday that may shed light on the timing of U.S. interest-rate increases. America’s currency climbed versus the yen after Bank of Japan Governor Haruhiko Kuroda said the Asian nation’s key rate could theoretically drop to minus 0.5 percent. It also climbed against the pound before the release of Britain’s annual budget. Oil rebounded to about $37 a barrel. Gains in German shares failed to hold up the Stoxx Europe 600 Index and U.S. equity-index futures were little changed as investors awaited signals on the health of the world’s biggest economy and whether the Fed will boost borrowing costs in the coming quarter.
Trudeau Said to Forgo Added Stimulus With C$30 Billion Deficit (Bloomberg) Prime Minister Justin Trudeau will post a deficit of about C$30 billion ($22.5 billion) in his first budget next week, signaling he won’t unveil additional initiatives to kick-start the economy, government officials said. The budget, to be released March 22 by Finance Minister Bill Morneau, will mainly comprise pledges made during and since last year’s election, two governmental officials said on condition they not be identified because the plans aren’t yet public.
Valeant Pharmaceuticals International Inc shares plunge after company reports Q4 loss, slashes 2016 revenue forecast (FinancialPost) When Valeant Pharmaceuticals International Inc. management said it was taking full responsibility for the company’s poor performance during its quarterly earnings call Tuesday morning, it probably wasn’t prepared to take the onus for wiping out more than half the stock’s value by market close.
K. Pay Growth Edges Up as Jobless Rate Stays at Decade Low (Bloomberg) U.K. unemployment held at its lowest rate for a decade and wage growth ticked higher as the labor market continued to improve. Wage growth excluding bonuses climbed to 2.2 percent in the three months through January, the Office for National Statistics said in London on Wednesday. Economists had forecast a pickup to 2.1 percent from 2 percent in the fourth quarter. Unemployment fell by 28,000, leaving the rate at 5.1 percent, the lowest since early 2006.
London Stock Exchange, Deutsche Boerse Agree on Merger (Bloomberg) Deutsche Boerse AG agreed to acquire London Stock Exchange Group Plc to create a giant in European trading, a deal that may kick off a bidding war as rivals look to scupper the agreement. While the companies declared it a merger of equals, Deutsche Boerse stockholders will get 54.4 percent of the enlarged group in the all-share agreement, and German boerse Chief Executive Officer Carsten Kengeter will run the enlarged business. The board will be equally split between directors from LSE and Deutsche Boerse. LSE’s market capitalization is $14.3 billion.
From Oil Curse to Cure? Why Rebound in Crude Won’t Bring Russian Rate Cut (Bloomberg) Goldman Sachs Group Inc. says Russian monetary policy is now little more than a function of oil prices. Here’s why a 12 percent gain in crude since the central bank last reviewed interest rates probably won’t sway policy makers when they meet on Friday. With the benchmark on hold at 11 percent since July, Governor Elvira Nabiullina is coming off a surprise warning in January that the Bank of Russia may tighten policy if inflation risks intensify. Slowing price growth may indeed be grounds for monetary easing, but not when inflation expectations have barely budged.

Overnight markets

Overview: US 10yr note futures are down -0.1704% at 128-6, S&P 500 futures are down -0.35% at 1999.5, Crude oil futures are up 1.43% at $36.86, Gold futures are down -0.17% at $1228.9, DXY is up 0.32% at 96.941.

US Economic Data

MBA Mortgage Applications variation was -3.3%, down 3.5% from prior month
Housing Starts number came in at a level of 1178k better than expected and up 58k from prior month.
Housing Starts MoM growth was 5.2% beating the estimate by 0.6% and 9% from prior month
Building Permits number came in at a level of 1167k weaker than expected, and down 37k from prior month
Building Permits MoM variation was -3.1% worse than the estimate and down from prior month
CPI MoM variation was -0.2% as expected and down 0.2% form prior month
CPI Ex Food and Energy MoM growth was 0.3% beating the estimate and at the same level than prior month
CPI YoY growth was 1.0% better than expected and down 0.4% from prior year
CPI Ex Food and Energy YoY growth was 2.3%, beating the analyst estimate and up 0.1% from prior year
Industrial Production MoM will be released at 9:15 AM
Capacity Utilization number will be released at 9:15 AM
FOMC Rate Decision will be released at 2:00 PM