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29/02/2016

by admin | Feb 29, 2016 | comments

Market update

US tsys higher, US 10Y 1.75% (-1.5bps) in range bound overnite session (TY1 in 5 tick range) , mild risk off tone with European equities slightly down, China CSI Comp -2.3% despite cut in reserve ratio. No big headlines out of G20 meeting just a commitment to spurring growth. Core Euro bonds outperforming in bull flattener on month end duration buying with the 10Y bund @ .114% close to all time low in yield (Apr 15 0.095%). The European bond index extends 0.11yrs which is ‘exceptionally large’ according to MNI. Month end ext also a factor in the US as the Barclays Tsy index extends 0.13yrs but the long Govt/Credit is 0.18yrs. In Canada GOCs are slightly higher, little reaction to higher IPPI, Raw Materials prices. Provis opening 1bp wider after Friday’s rally – expect supply from Ont, Sask and NB. TD issued $1.25bln in 10Y NVCC on Friday @360 (368.7) which closed 361/357.

News headlines

S&P 500 Futures Trim Drop as China Boosts Support; Valeant Falls (Bloomberg) U.S. stock-index futures pared earlier losses, following a second weekly gain for the Standard & Poor’s 500 Index, after China’s central bank stepped up efforts to cushion the country’s economic slowdown. S&P 500 contracts expiring in March fell 0.2 percent to 1,938.75 at 7:19 a.m. in New York. They trimmed losses of as much as 0.8 percent after China cut the amount of cash the nation’s lenders must hold as reserve. Dow Jones Industrial Average futures dropped 0.3 percent to 16,558.
China Stocks Tumble Toward 15-Month Low as Stimulus Bets Unwind (Bloomberg) Chinese stocks fell, with the benchmark index approaching the lowest level since November 2014, as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meetings in Shanghai. The Shanghai Composite Index dropped as much as 4.6 percent. The measure has declined 24 percent this year, the worst performer among 93 global equity indexes, on concern capital outflows will accelerate and earnings deteriorate as the economic slowdown deepens. The yuan capped its longest losing streak this year.
China cuts reserve requirement ratio for fifth time since Feb. 2015 (Reuters) China’s central bank reduced the amount of cash that banks must hold as reserves for the fifth time since February, 2015, as it seeks to revive a stumbling economy. The People’s Bank of China said on its website that it would cut the reserve requirement ratio by 50 basis points for all banks, taking the ratio to 17 percent for the country’s biggest lenders. China last cut the RRR on Oct. 23, when it also reduced interest rates by 25 basis points to rein in financing costs.
Euro-Area Prices Decline Most in Year as ECB Mulls Easing (Bloomberg) The inflation picture in the euro area deteriorated in February, giving European Central Bank policy makers more bad news to digest just a week before their next meeting. Consumer prices in the 19-nation bloc declined to minus 0.2 percent from a positive reading of 0.3 percent in January, according to data published Monday. Core inflation, which strips out volatile elements such as food and energy, was at 0.7 percent, down from 1 percent in the prior month. Those are the worst readings since February and April of last year, respectively.
Global shares fall on G20 disappointment, Fed hike prospect (Reuters) Global shares retreated on Monday after a weekend meeting of G20 finance chiefs ended with no new plan to spur global growth and as investors fretted the U.S. Federal Reserve could raise interest rates before year-end. The dollar, however, tumbled against the Japanese yen as investors sought shelter from the fall in equities, which saw Chinese stocks lose nearly 3 percent. Gold, another “safe haven”, rose and was on track for its best month in four years.
Bullish Oil Bets Rise as Hedge Funds See Supply Tightening (Bloomberg) Talk of an output freeze by OPEC and Russia along with falling U.S. production spurred money managers to bet oil is ready for a rebound. Prices have risen 13 percent since Saudi Arabia, Russia, Venezuela and Qatar tentatively agreed on Feb. 16 to cap production at January levels. U.S. crude output dropped for a fifth week, government data showed Feb. 24.
Brexit would negatively affect lives of millions, official UK report says (TheGuardian) Car manufacturing, farming, financial services and the lives of millions of Britons living in Europe will all be affected as the UK takes 10 years to extricate itself from the EU, an official report says. The government’s first official analysis into how Brexit would unfold in practice says a decade of uncertainty would hit “financial markets, investment and the value of the pound”. It also warns that the rights of 2 million British expats to work and access pensions and healthcare in EU countries may no longer be guaranteed.

Overnight markets

Overview: US 10yr note futures are down 0% at 130-12, S&P 500 futures are up 0.1% at 1944.75, Crude oil futures are up 1.31% at $33.21, Gold futures are up 0.57% at $1227.3, DXY is up 0.17% at 98.313.

US Economic Data

ISM Milwaukee will be released at 9:00 AM
Chicago Purchasing Manager will be released at 9:45 AM
Pending Home Sales MoM growth will be released at 10:00 AM
Dallas Fed Manufacturing Activity will be released at 10:30 AM

Canadian Economic Data

Industrial Product Price MoM growth was released at a level of 0.5% higher than expected by the analysts and up 0.7% from prior month.
Raw Materials Price Index MoM growth was -0.4%, beating the estimate 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

26/02/2016

by admin | Feb 26, 2016 | comments

Market update

US tsys sharply lower on strong Q4 GDP (1.0 vs 0.4) after inventories revised higher. in range bound session (7 ticks in TY1), US 10Y 1.76 (+5bps). Core Euro bonds mixed – curves steeper with longs underperforming. German CPI & HICP both came in lower than exp. With CPI lower in both Germany & France in Feb expectations for additional stimulus at the March 10th ECB meeting have risen based on Eonia forwards Risk on trade pressuring bonds with European equities higher for a second day led by 3% rise in energy on higher crude back above $33.00. GOCs are lower led by 10s which are 4bps cheaper on the curve so far. Today’s rescheduled UST 7Y auction could put additional pressure on the belly of the curve. Provies opening tighter Ont longs -2bps @ 119 on Ontario budger with lower deficits for FY 15/16 and lower net borrowing. TD in the market with a 10Y sub debt issue @ ~362 which looks like a 10-15bp concession at first glance…

News headlines

Global Stocks Rise With Commodities as China Sees Room to Ease (Bloomberg) Stocks rallied around the world and oil gained with industrial metals as China’s central bank said it sees room for monetary easing in the build-up to Group of 20 finance chiefs’ discussions on the global economy.
How the Fed’s Cold War With Congress Could Harm the U.S. Economy (Bloomberg) Federal Reserve Chair Janet Yellen’s relations with Congress look as strained as those of her predecessor, and that could undermine the central bank’s ability to confront the next crisis. At a time when it may require congressional support for new powers should the U.S. economy stumble, the Fed is fending off lawmaker criticism of its policies, while enduring attacks from candidates campaigning to be the next president.
French Fourth-Quarter Growth Revised Up on Consumer Spending (Bloomberg) The French economy grew faster in the fourth quarter than initially estimated as household spending recovered quickly after the Nov. 13 terrorist attacks. Gross domestic product expanded 0.3 percent in the final three months of the year instead of the 0.2 percent estimated Jan. 29, national statistics office Insee said Friday. Consumer spending rose 1 percent in December, instead of the 0.7 percent originally estimated, reducing its drag on fourth-quarter GDP, Insee said.
Laid Bare in Shanghai: G-20 Tensions Over How to Spur Growth (Bloomberg) Global finance chiefs split over how best to revive the world economy, risking disappointment for investors seeking a coordinated campaign. Differences were laid bare on Friday as central bankers and finance ministers from the Group of 20 developed and emerging markets gathered for talks in Shanghai.
Countries should use all policy levers to support economy: Lew (Bloomberg) U.S. Treasury Secretary Jack Lew on Friday urged countries to avoid competitive devaluation and said it was increasingly important to use all available policy tools to address a shortfall in global demand.
Germany’s Schaeuble says little room left for more monetary stimulus (Bloomberg) Germany’s finance minister, Wolfgang Schaeuble, said on Friday that many policy makers from the Group of 20 leading economies agreed that there was little room left for additional monetary measures by central banks.
Oil set for weekly rise as gasoline buoys prices (Bloomberg) Crude oil prices reversed early losses on Friday, with Brent on track for its first weekly gain in a month, as strong U.S. gasoline demand and hopes of OPEC action outweighed concerns over fundamental oversupply.
China Flags Scope for Policy Stimulus, Tweaks Monetary Stance (Bloomberg) China’s central bank tweaked the description of its monetary policy stance to reflect a recent ramp-up in liquidity injections and moves to guide money market rates lower, with Governor Zhou Xiaochuan highlighting the scope for further actions if needed.

Overnight markets

Overview: US 10yr note futures are down -0.4517% at 130-28, S&P 500 futures are up 0.5% at 1960.25, Crude oil futures are up 3.3% at $34.16, Gold futures are down -0.79% at $1229, DXY is up 0.47% at 97.746.

US Economic Data

GDP Annualized QoQ growth was released at a level of 1.0%, beating the analysts estimate by 0.6% and up from prior quarter
Personal Consumption Spending growth came in at 2.0%, worse than expected and down from prior month
GDP Price Index growth was released at a level of 0.9%, beating the analysts estimate and down from prior quarter
Core PCE QoQ growth was 1.3%, better than expected and up from prior quarter
Personal Income growth will be released at 10:00 AM
Personal Spending growth will be released at 10:00 AM
University of Michigan Sentiment will be released at 10:00 AM

Canadian Economic Data

There is no major economic data 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

25/02/2016

by admin | Feb 25, 2016 | comments

Market update

US tsys opening higher, curve unch, 10Y 1.73 (-2bps), fairly confined trading range since European trading, main theme was selling in Asia despite a steep decline in the China comp on a hike in the reserve ratio for certain banks and an increase in the repo rate (2.10% vs 1.97 prev day avg). Yet European stocks higher, EGBs lower, crude back over $32. Fed Bullard said he doesn’t see recession risk, but Fed is not on pre-determined path to rate hikes. Core Euro bonds lower led by 10Y gilts – UK Q4 GDP was in line at 0.5%. In Canada, GOCs are opening small higher led by 10s, provis opening ~0.5bps tighter after wild ride yest saw spds recover to close 1bp wider. Ontario budget this aft.

News headlines

Risk rally fades as stocks, oil slip back into the red (Reuters) The recent recovery in riskier assets fizzled out on Tuesday, with a fall in stocks, oil and the value of China’s yuan currency boosting investor demand for safer assets such as the Japanese yen, government bonds and gold. Oil fell more than 2 percent and the main European stock indices fell as much as 1 percent, giving back some of their recent gains: oil rose more than 5 percent on Monday and world stocks recorded their biggest rise last week since early October.
Earliest Chinese Data Signal Slowdown Hasn’t Bottomed Out Yet (Bloomberg) The first indicators for China’s economy this month signal its slowdown hasn’t bottomed out yet, highlighting the case for continued stimulus as the nation prepares to host finance chiefs and central bankers from the Group of 20 later this week. Private gauges of manufacturing and services fell to new lows, a reading of business confidence slipped, and interest in small and medium sized businesses deteriorated, the readings show. If confirmed in official data for February that starts to roll out from March 1, such weakness would suggest a slowdown in the nation’s old growth drivers may be deepening.
The Trickle of U.S. Oil Exports Is Already Shifting Global Power (Bloomberg) The sea stretched toward the horizon last New Year’s Eve as the Theo T, a red-and-white tug at her side, slipped quietly beneath the Corpus Christi Harbor Bridge in Texas. Few Americans knew she was sailing into history. Inside the Panamax oil tanker was a cargo that some on Capitol Hill had dubbed “Liquid American Freedom” — the first U.S. crude bound for overseas markets after Congress lifted the 40-year export ban.
Canada’s banks could be forced to raise equity, cut dividends if oil prices keep sinking, Moody’s warns (Financial Post) Some Canadian banks could be forced to preserve capital by raising equity or even cutting dividends if oil prices continue to slump, Moody’s warns in a new report. In a “severe stress” scenario modelled by the ratings agency, and included in the report to be widely circulated Monday, losses in consumer lending portfolios would exceed historic peaks and capital markets activity at the country’s biggest banks would be significantly crimped.
BMO Profit Increases 6.8% After Bank Buys GE Finance Unit (Bloomberg) Bank of Montreal posted fiscal first-quarter profit that beat analysts’ estimates as contributions from its purchase of General Electric Co.’s transportation-finance business added to U.S. earnings. Net income for the period ended Jan. 31 climbed 6.8 percent to C$1.07 billion ($778 million), or C$1.58 a share, from C$1 billion, or C$1.46, a year earlier, Canada’s fourth-largest lender by assets said Tuesday in a statement.
BHP, Standard Chartered Drag Europe Stocks From Three-Week High (Bloomberg) A retreat in miners, led by BHP Billiton Ltd. after it cut its dividend, sent European stocks lower for the second time in three days. BHP lost 3.5 percent after also reporting a profit drop. That dragged down a gauge tracking commodity producers, after Monday’s surge to the highest level since Dec. 3. Standard Chartered Plc was another notable decliner, down 3.7 percent after posting a surprise annual loss.
Carney Says BOE Has Room for Maneuver Should Economy Weaken (Bloomberg) Mark Carney said Bank of England officials have scope to loosen monetary policy if needed as concerns that Britain may leave the European Union put further pressure on the pound. “If we were in a position where the economy needed additional stimulus, we do have considerable room,” the central bank governor told lawmakers in London on Tuesday.

Overnight markets

Overview: US 10yr note futures are up 0.0477% at 131-2, S&P 500 futures are up 0.18% at 1933.75, Crude oil futures are down -1.28% at $31.74, Gold futures are down -0.25% at $1236, DXY is up 0.08% at 97.536.

US Economic Data

Initial Jobless Claims number came in at a level of 272k, worse than expected and up 10k from prior week
Continuing Claims number was at a level of 2253k as expected by the analyst and down 20k from prior period
Durable Goods Orders growth was 2.9% higher than expected by the analysts and up 9.9% from prior month
Durables Ex Transportation growth was 1.8% better than expected and up 2.8% from the previous month
FHFA House Price Index MoM growth will be released at 9:00 AM
Kansas City Fed Manufacturing Activity will be released at 11:00 AM

Canadian Economic Data