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08/03/2016

by admin | Mar 8, 2016 | comments

Market update

Tsys sharply higher, curve ~3bps flatter with longs leading (2.643 -6.4bps) and the US 10Y 1.85 (-6bps). European equities unch after being down 1.6% as euro bank stocks surged in just a few minutes ~7:00am. Gold & crude higher. Tsys bid right out the gate in Asia on weak China trade data and huge rally in thirty year JGBs – the largest one-day drop in yields since 2013 (22bps) after the MOF auctioned Y800bln in 30Y bonds with a coupon of 0.8% down from 1.4% on Feb 9th and a strong bid/cov of 4.21 (3.04). Latest JPM US Tsy Client Survey showed the most shorts since Feb 1st. GOCs higher, curve ~4bps flatter with 10s ~4.5bps better on the curve, provis starting out bit wider as cda yields are ~6bps lower out the curve. Quebec officially in blackout with budget March 17th.

News headlines

China Reality Check Dashes Stocks Rally as Commodities Decline (Bloomberg) Global stocks dropped as a slump in Chinese exports dragged commodities prices lower and brought equities’ five-day winning streak to a halt. Japanese government bonds surged in a haven-asset rally that also lifted the yen, gold and Treasuries. The Stoxx Europe 600 Index extended its decline from a five-week high as investors sold equities that had led the recent rebound, while Brent crude slid after closing on Monday above $40 a barrel for the first time this year
Treasuries Rally as Japan Yields Extend Record Low on Safety Bid (Bloomberg) Treasuries gained with Japanese bonds, whose 10-year yields extended their push below zero, as stock-market declines drove demand for the relative safety of sovereign debt. The world’s two biggest bond markets advanced after official data showed Chinese exports tumbled and Japan’s economy contracted, sending stocks in the region lower.
German Industrial Production Surges by Most Since 2009 (Bloomberg) German industrial production jumped by the most in more than six years in January, in a sign that strong domestic demand may be helping to underpin output even as external trade cools. Production, adjusted for seasonal swings, climbed 3.3 percent from the prior month after retreating a revised 0.3 percent in December, data from the Economy Ministry in Berlin showed on Tuesday.
Carney’s `Brexit’ Stance Under Fire as BOE Accused of Bias (Bloomberg) Mark Carney was accused of jeopardizing the Bank of England’s credibility in the European Union debate as he faced a fiery line of questioning from U.K. legislators. While the BOE governor has spent months trying to avoid the political battle — a task lawmaker Andrew Tyrie compared to bomb disposal — some members of the Treasury Committee said BOE statements including an October report and a letter published Tuesday supported the government’s bid to keep Britain in the bloc. They questioned whether the central bank had overstated the positives.
Oil edges lower after Kuwait dents hopes for output freeze (Reuters) Oil prices edged lower on Tuesday after Kuwait said it would only agree to an output freeze if all major producers take part and Goldman Sachs analysts poured cold water over the prospects for a sustained rally.
Iron Ore’s Rally Stalls as Goldman to Citigroup Forecast Retreat (Bloomberg) Iron ore’s rally stalled on Tuesday after a record 19 percent advance a day earlier as banks from Goldman Sachs Group Inc. to Citigroup Inc. together with some of the largest miners said that the surge wasn’t likely to endure. Ore with 62 percent content delivered to Qingdao dropped 0.2 percent to $63.63 a dry metric ton, Metal Bulletin Ltd. data showed. The decline was preceded in Asia by a fall in bellwether futures in Singapore, which lost as much as 12 percent.

Overnight markets

Overview: US 10yr note futures are up 0.3636% at 129-13, S&P 500 futures are down -0.3% at 1993, Crude oil futures are up 0.55% at $38.11, Gold futures are up 0.73% at $1273.2, DXY is up 0.04% at 97.107.

US Economic Data

NFIB Small Business Optimism came in at a level of 92.9, weaker than expected and down from prior month.

Canadian Economic Data

Housing Starts number came in at a level of 212.6k, beating the estimate by 23K and up by 47.5k from prior month.
Building Permits MoM growth was -9.8%, weaker than expected and down 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

07/03/2016

by admin | Mar 7, 2016 | comments

Market update

Treasuries open NY weaker, 10-year note 1.907%, 2-year 0.894%. In Asian session, China foreign exchange reserves declined but at smaller pace than previous months; China Communist Party sets goal of 6.5 to 7 percent yearly growth. Asian commercial banks bought two year Tsys, while other buying occurred in ten year notes. Asian and Japanese real money bought 3-year notes. Asian bank trading accounts do one year receiving in US swaps. Iron ore price jumped 19% in one day, in what Credit Agricole’s David Keeble caps the largest one day jump ever, on hopes of stronger China economic growth. In LONDON, Treasuries receded lower anew. European stocks moved lower led by banks and miners, with ED&F stock esp. lower. Crude oil moved higher. CRT said cash US ten year notes are most active at 32%. Bunds rose, especially intermediates amid weak German manufacturing orders and weak European Sentix investor sentiment.

News headlines

Stocks Fall With Copper, Euro as Investors Weigh Stimulus Plans (Bloomberg) European shares fell with copper and zinc, while the dollar and German bonds climbed, as investors assessed the impact of China’s growth plans and the potential for European Central Bank stimulus measures this week. Miners, banks and telecoms firms led declines in the Stoxx Europe 600 Index, and U.S. equity-index futures were also lower. Copper fell from a four-month high, while investors continued adding to gold holdings and iron-ore prices surged. French bonds led gains in euro-area government securities, while the shared currency sank on speculation the ECB will lower the deposit rate and boost bond purchases. Crude extended last week’s gains and Treasuries fell.
China Plans Income-Tax Overhaul to Bolster Consumption (Bloomberg) China plans to revamp its income-tax system to include deductions such as mortgage interest, education expenses and the cost of raising children, said Finance Minister Lou Jiwei, as the nation seeks to maintain consumption as a major growth driver. The ministry submitted a draft plan to overhaul the personal income tax system for the nation’s State Council to review and will submit a draft law to the National People’s Congress this year, Lou said Monday at a briefing in Beijing.
China’s Foreign Reserves Slow Decline as Currency Stabilizes (Bloomberg) China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized and policy makers took more steps toward shoring up growth. The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February, the People’s Bank of China said in a statement Monday. That was the smallest decline since June and less than the $40.9 billion decrease expected by economists surveyed by Bloomberg, who had a median projection that reserves would fall to $3.19 trillion.
CMHC revs up hunt for foreign flows into torrid housing market (TheGlobeandMail) Canada’s housing agency, looking for new methods to track foreign ownership in the country’s soaring real estate markets, may tap money laundering police and classify international university students as foreign buyers, according to internal documents. Canada Mortgage & Housing Corp., the crown corporation that backstops mortgages and tracks new housing data, has been in contact with at least eight government agencies to find data on offshore buyers in Vancouver, Toronto and Montreal as prices continue to soar, according to 486 pages of e-mails, briefing notes, and other documents Bloomberg News obtained through a freedom of information request.
Iron Ore Jumps Most on Record as Market Goes ‘Berserk’ (Bloomberg) Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user and igniting speculation that some investors who’d bet against the market had been caught out. Ore with 62 percent content delivered to Qingdao jumped 19 percent to $63.74 a dry metric ton, Metal Bulletin Ltd. data show. That’s the biggest gain in daily data going back to 2009 and the highest price since June. The surge was preceded in Asia by a rally in futures, with the most-active contract on Singapore Exchange Ltd. climbing 21 percent to $60 and prices on the Dalian Commodity Exchange rising by the daily limit.
Insight: Wall Street vets battle BP in fallout over Canada refinery (Reuters) A legal battle between a team of former Wall Street oil traders and behemoth producer BP plc (BP.L) over a remote Canadian refinery sheds rare light on the murky world of crude trading. The first salvo in the previously unreported dispute was fired by BP in December. The oil company demanded, through arbitration, $110 million from the private equity-backed NARL Refining for its alleged failure to properly manage and maximize profits from the Come-by-Chance plant in Newfoundland.
Hong Kong Home Sales Tumble 70% as Slowdown Intensifies (Bloomberg) Hong Kong residential home sales plunged 70 percent in February from a year earlier to a 25-year low, as falling prices and economic uncertainty deterred buyers. Last month, 1,807 homes were sold in Hong Kong, compared with 6,027 a year earlier, according to government statistics. Home sales fell from 2,045 in January, the data show.
China’s Foreign Reserves Slow Decline as Currency Stabilizes (Bloomberg) China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized and policy makers took more steps toward shoring up growth. The world’s largest currency hoard dropped by $28.6 billion to $3.2 trillion in February, the People’s Bank of China said in a statement Monday. That was the smallest decline since June and less than the $40.9 billion decrease expected by economists surveyed by Bloomberg, who had a median projection that reserves would fall to $3.19 trillion.

Overnight markets

Overview: US 10yr note futures are down -0.0847% at 128-32, S&P 500 futures are down -0.38% at 1987.5, Crude oil futures are up 1.25% at $36.37, Gold futures are up 0.1% at $1272, DXY is up 0.22% at 97.559.

US Economic Data

Labor Market Conditions Index Change will be released at 10:00 AM
Consumer Credit number will be released at 15:00 AM

Canadian Economic Data

There is no major economic data for today

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

04/03/2016

by admin | Mar 4, 2016 | comments

Market update

Tsys lower after Feb payrolls came in better than exp despite lower wage growth, US 10Y 1.86 (+2bps). Risk on session o/n with European equities higher, USD lower, crude unch. Core European bonds lower, German 10Y bund 3bps higher @0.20% – according to MNI story there is no consensus on further easing measures next wek beyond a ‘plain vanilla’ rate cut (10bps). Tsy futures confined to tight range before payrolls, volume lighter than avg (~270k TY1 contracts). GOCs lagging the pullback in tsys after rally yest saw spds close 1-2 bps tighter except in longs which lagged. The 10/30 curve closed 2bps wider @81, unwinding of hedges vs provi & corp supply supported tens. The long awaited Sask 10Y came @120 (onts +3) and met with good demand, selling out quickly. Quebec took advantage of the positive tone to issue $500mln in reopened 22048s @ 119.5 (onts +3.5). TD issued $1.5bln in 5Y deposit notes @ 136.3 (guidance was 139 +/- 3) – the bonds closed 130/127.

News headlines

Payrolls in U.S. Surge While Wages Drop in Mixed Jobs Report (Bloomberg) Employers added more workers in February than projected but wages unexpectedly declined, dashing hopes that reduced slack in the labor market was starting to benefit all Americans. The 242,000 gain followed a 172,000 rise in January that was larger than previously estimated, a Labor Department report showed Friday. The jobless rate held at 4.9 percent as people entered the labor force and found work. Average hourly earnings dropped, the first monthly decline in more than a year.
Global Stocks Advance With Copper on China Stimulus Speculation (Bloomberg) Stocks climbed around the world as emerging markets extended their best week since October and copper advanced on speculation China will boost stimulus at an annual gathering of the nation’s legislature. Treasuries were little changed before U.S. jobs data. Glencore Plc was among the biggest gainers on the Stoxx Europe 600 Index and credit markets strengthened as copper led metals higher and gold extended gains after entering a bull market. Chinese equities rose for a fourth day, with state-backed funds said to have intervened in the market ahead of the National People’s Congress on Sunday.
China’s premier says economy faces greater difficulties in 2016: state radio (Reuters) China’s economy is facing greater difficulties and challenges in 2016 as the government forges ahead with structural reforms, state radio on Friday quoted Premier Li Keqiang as saying. The government will keep economic growth within a “reasonable range” this year, Li said
Economist: For The ECB, It’s No Longer About Oil (Bloomberg) Inflation in the euro area came in at 0.2 percent in February, piling further pressure on policymakers at the European Central Bank ahead of next week’s monetary policy meeting. While the largest component of the price fall in the common currency zone remains energy, the ECB is becoming increasingly concerned about second round effects and the prospect of the oil-price collapse pushing the euro area into deflation.
Tsipras Must Purge Cabinet to Lift Economy, Greek Industry Says (Bloomberg) Greek Prime Minister Alexis Tsipras desperately needs more competent officials in his administration to attract greater investment in the country and put the economy on firmer footing, according to the head of the main Greek business group. Theodore Fessas, chairman of the Athens-based Hellenic Federation of Enterprises, said most Greek ministers should be replaced by people with technical knowledge and reform credentials. Otherwise, he said, Greece will struggle to enact overhauls required under its 86 billion-euro ($94 billion) international aid program and to restore economic growth.
Brazilian Real, Stocks Rally as Traders Root for Impeachment (Bloomberg) Brazil’s real led global gains and stocks rallied as traders bet that a change in government may be closer than ever after months of political gridlock that has prevented lawmakers from focusing on kick-starting the stalled economy and closing a crippling budget gap. The rally was triggered by news that the federal police had raided the house of former President Luiz Inacio Lula da Silva, fueling speculation that support will grow to impeach his mentee and successor, President Dilma Rousseff. While markets have been split in the past about whether a Rousseff ouster would be good or bad, many now say it may be the only way out of the political quagmire.

Overnight markets

Overview: US 10yr note futures are down -0.0362% at 129-15, S&P 500 futures are up 0.05% at 1991.5, Crude oil futures are up 0.43% at $34.72, Gold futures are up 0.21% at $1260.8, DXY is up 0.21% at 97.8.

US Economic Data

Change in Nonfarm Payrolls was released at 242k, stronger than expected and up 91k from prior month
Change in Manufacturing Payrolls number came in at a level of -16k, weaker than the analyst estimate and down 45k from the previous month
Underemployment Rate was released at 4.9%, at the same level than expected.
Average Hourly Earnings growth was released at a level of -0.1% missing the estimate and down 0.6% from prior month.

Canadian Economic Data