Commentaires

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

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

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

• Labor Productivity QoQ growth was released at level of 0.1%, stronger than expected.
• Ivey Purchasing Managers Index will be released at 10:00 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

Market update

US tsys trading lower after fairly subdues session with little reaction to the 6k jump in initial claims & better than exp Q4 productivity (-2.2 vs -2.9). Euro stocks lower, Asian stocks higher for a second day, crude lower @ $34.40.   Aussie govt bonds lower with the 2Y ~15 bps higher since Monday’s RBA meeting followed by better than exp Q4 GDP. GOCs are unch, 1bp tighter vs tsys, longs trading heavy with 10/30 back above 80bps. Yest $400mln RRB 47 auction went very well , breakevens rallying ~9bps since yest with shorter RRBs lagging. The positive momentum in provis continuing after yesterday’s 2-3bp rally – Ont 26s are 108.5 from 112 at issue yest.

News headlines

• ECB Brainstorms as Draghi Seeks Boost That Won’t Hurt Banks (Bloomberg) One week before a long-awaited stimulus decision, European Central Bank officials are privately deliberating over how to enhance their monetary policy stance without maiming its transmission. Committees studying how to mitigate the impact on banks have prepared potential measures that range from variations on a tiered deposit rate to techniques for countering the impact of stimulus on excess liquidity, according to people familiar with the discussions. The suggestions could still be rejected by the Executive Board or turned down at the Governing Council’s March 10 meeting. An ECB spokesman declined to comment.
• European Stock Rally Runs Out of Steam; Oil Falls, Bonds Rise (Bloomberg) European stocks halted their longest rally since October, oil fell from an eight-week high and bonds in the region rose as investors awaited fresh indications of the strength of U.S. economic growth. A five-day winning streak in European stocks came to a stop, with the U.K.’s Whitbread Plc and Germany’s Evonik Industries AG falling after earnings. Standard & Poor’s 500 Index contracts were little changed. Italian, Spanish and Portuguese bonds climbed. Russia’s ruble weakened as Brent ended a three-day rally. Asian shares and currencies held gains along with industrial metals amid speculation of increased Chinese stimulus.
• China Policy Moves Risk Property Price Bubble, PBOC Adviser Says (Bloomberg) China’s monetary policies have encouraged investors to pour money into real estate, inflating prices in cities such as Beijing, Shanghai and Shenzhen and increasing the risk that bubbles could form, central bank policy adviser Bai Chongen said in an interview. At the same time, smaller property markets are struggling with excess inventory, making it difficult to craft a unified policy response and requiring careful coordination with fiscal measures, he said Wednesday on the sidelines of a joint symposium hosted by the People’s Bank of China and the Federal Reserve Bank of New York in Hangzhou.
• Scotiabank urges Ottawa to spend $20-billion in rapid stimulus (TheGlobeAndMail) Bank of Nova Scotia wants the federal government to pump $20-billion into economic stimulus by mid-2017 to help get Canada out of the economic funk sparked by the collapse in oil prices. That, Scotiabank said last night, would equal 1 per cent of gross domestic product and would play into its new economic forecast for GDP growth of 1.3 per cent this year and 2.5 per cent next.
• Trudeau’s Message to World: Let Government Spending Do the Work (Bloomberg) Canadian Prime Minister Justin Trudeau is urging global leaders to rely more on government spending and less on monetary policy to spur growth as he prepares a budget that will push his country into deficit. In a wide-ranging interview Wednesday in Vancouver, Trudeau highlighted the importance of infrastructure spending and measures to bolster incomes of middle classes he says are critical to driving growth. He also defended his plan to go willingly into the red.
• Fastest-Growing Region in the Americas Is Loving the Oil Slump (Bloomberg) The slump in raw materials prices that has hurt Brazil, Chile, Peru and Colombia is leaving Central America unscathed. The region is bucking a trend of sluggish growth in the rest of Latin America as cheaper crude prices cut its fuel bills and faster growth in the U.S. boosts remittances and tourist spending. The region will grow by 4.2 percent this year, led by Panama’s 6.3 percent expansion, according to forecasts from the International Monetary Fund. That compares to an 0.8 percent growth forecast for Latin America as a whole.
• S. fourth-quarter productivity revised to show a less steep decline (Reuters) U.S. nonfarm productivity fell less steeply than previously thought in the fourth quarter, but still pushed up labor-related costs as companies employed more workers to raise output. The Labor Department said on Thursday that productivity, which measures hourly output per worker, decreased at a 2.2 percent annual rate and not the 3.0 percent pace it reported last month. It was still the biggest drop since the first quarter of 2014. Economists polled by Reuters had expected fourth-quarter productivity would be revised to show it contracting at a 3.2 percent rate. Productivity increased at a 2.0 percent rate in the third quarter and rose only 0.7 percent in 2015 – the smallest gain since 2013.

Overnight markets

• Overview: US 10yr note futures are down -0.0483% at 129-9, S&P 500 futures are down -0.1% at 1981.5, Crude oil futures are down -0.69% at $34.42, Gold futures are up 0.18% at $1244, DXY is down -0.24% at 97.974.

US Economic Data 

• Initial Jobless claims was at a level 278k weaker than expected by the analysts and up 6k from prior week
• Continuing Claims number came in at a level of 2257k, worse than the analyst estimate and up 4k from prior week.
• Markit US Services PMI will be released at 9:45 AM
• Markit US Composite PMI will be released at 9:45 AM
• ISM Non-Manufacturing Composite index will be released at 10:00 AM
• Factory Orders will be released at 10:00 AM
• Durables Goods Orders will be released at 10:00 AM
• Durables Goods Ex Transportation will be released at 10:00 AM

Canadian Economic Data 

• There is no major economic data for today

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