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Market update

US tsys lower despite weaker non-farm payrolls 151K vs 192K  with Dec revised lower 262K from 292K, but AHE , unemp rate & part rate all stronger., US 10Y 1.86 (+, crude up 1.1% @ 32.07, Asian stocks lower o/n. Core Euro bonds lower led by 10Y UK gilts, yields on shorter bonds close to Wed record lows.  GOCs lower after mixed empl data – employment lower yet full time jobs +5.6K , part time -11.3K while the unemp rate rose 0.1% to 7.2%. Provis unch after early buying failed to move spds tighter despite higher equities/crude.

News headlines

• Obama $10-Per-Barrel Oil Tax Lands With Thud in Congress (Bloomberg) President Barack Obama will propose a $10 per barrel tax on oil in his fiscal 2017 budget plan, an idea that received a chilly reception in the Republican-controlled Congress that oversees spending. With the proceeds targeted to transportation and climate initiatives, the proposal announced Thursday deepens Obama’s environmental credentials and signifies his ambitions to aggressively push action on climate change during his final year in office.
• Pressure on Cameron as poll suggests voters edging towards Brexit (TheGuardian) A new poll has suggested more Britons favour leaving the EU over staying in, with 45% supporting “Brexit” compared with 36% against, while a fifth remain undecided.
• Goldman Sees Pound Tumbling by as Much as 20% on `Brexit’ (Bloomberg) The pound could fall as much as 20 percent if Britain quits the European Union, according to Goldman Sachs Group Inc. The U.S. investment bank doesn’t expect U.K. citizens to vote to leave the EU in the referendum that may be held as soon as June. But if they did, it predicts sterling could drop to $1.15-$1.20 — levels last since in 1985. It was at $1.4638 as of 9:25 a.m. London time on Thursday.
• Dollar Set for Biggest Weekly Loss Since 2009 Before Jobs Data (Bloomberg) The dollar is headed for its biggest weekly decline since 2009, and Friday’s payrolls report is unlikely to offer much in the way of redemption.
• S. Panel Says Yuan Will Erode, Not Challenge, Dollar Dominance (Bloomberg) China’s yuan, which earned reserve status from the International Monetary Fund last year, enjoys growing prominence as an international currency that will diminish the dollar’s role in trade and transactions over time, according to a U.S. congressional panel.
• K. Poll Shows `Out’ Campaign Leads by 9 Points After Tusk Deal (Bloomberg) The campaign to take Britain out of the European Union led by 9 percentage points in one survey after voters had their first chance to assess the changes Prime Minister David Cameron aims to secure in the functioning of the 28-nation bloc.
• Indian Central Bank Calls for Joint Action to Calm Markets (Bloomberg) India’s central bank is calling for coordinated action by monetary authorities to address the turbulence that’s roiling foreign-exchange markets this year.
• Ukrainian Bonds Plummet as Government Unity Efforts Stumble (Bloomberg) Ukrainian government bonds plunged as efforts faltered to shore up the ruling coalition after a key reformer quit and accused presidential party members of corruption
• BNP Paribas to shrink investment banking division (FT) BNP Paribas said it would shrink the riskiest parts of its investment bank in the face of tougher regulation as France’s largest bank by assets reported a more than 50 per cent fall in net income in the fourth quarter. The Paris-based lender plans to cut its assets weighted by risk by 11 per cent, or about €20bn. It will reduce its exposure to fixed income, while doubling down on fee-generating businesses that use less capital, such as securities services and cash management.
• ArcelorMittal launches $3-billion share issue as profit plunges (TheGlobeandMail) ArcelorMittal, the world’s largest steel maker, launched plans on Friday to raise $3-billion from a share issue to reduce debt, as it continues to suffer from the Chinese industry’s overcapacity which it says has driven down world prices. ArcelorMittal’s share price has dropped 60 per cent in the past 12 months, cutting the group’s market value to just €6.2-billion ($6.94-billion). The shares were down a further 7.5 per cent in early trading on Friday, making them by far the worst performer in the European FTSEurofirst300 index.
• LinkedIn Shares Plummet On Weak Forecast (Forbes) LinkedIn shares plummeted as much as 29% in after-hours trading after the professional networking site on Thursday released forecasts for the first quarter and all of 2016 that were well below analysts’ estimates.
• News Corp’s revenue falls for fourth quarter in a row (Reuters) News Corp’s revenue fell for the fourth quarter in a row, hurt by a stronger dollar and dwindling advertising revenue in its core news and information business, which includes the Wall Street Journal. News Corp, controlled by media mogul Rupert Murdoch, said revenue at its news and information unit declined 8.1 percent in the second quarter. The unit, which accounted for about 65 percent of total revenue, also houses Dow Jones and the New York Post. Here, ad revenue fell 12 percent, mainly due to weakness in print ads.

Overnight markets 

• Overview: US 10yr note futures are down -0.16% at 130-2, S&P 500 futures are down -0.12% at 1905.5, Crude oil futures are down -0.44% at $31.58, Gold futures are down -0.74% at $1148.9, DXY is up0.61% at 97.063.

US Economic Data 

• The Trade Balance number came in weaker than expected at a level of 43.36 Billion, and down 0.83 Billion from the previous month.
• The Unemployment Rate number was better than expected at 4.9% and down 0.1% from last month.
• The Change in Nonfarm Payrolls was release at a level of 151k weaker than expected, down 111k from the previous month.
• The Change in Manufacturing Payrolls number came in at 29k stronger than expected and was up 16k from the previous month
• Average Hourly Earnings MoM growth number came in stronger than expected by the analysts at a level of 0.5% and up 0.5% from the prior month

Canadian Economic Data 

• The Unemployment Rate number was worse than expected at 7.2% and up 0.1% from last month.
• The Net Change in Employment number was release at a level of -5,7k down 28.5k from last 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

Market update

US tsys are little changed with the US10Y 1.872 (-1bp), reversing earlier losses as equity futures decline, crude oil moves below $32.00 and weaker data (claims higher, productivity -3.0% vs -2.0% exp). Global equities mixed – Euro stocks slightly lower but China Comp +1.2%.  Core Euro bonds lower, peripherals wider on supply as Spain sold E2.8bln of bonds with mixed results. GOCs trading higher, spds unch vs tsys . Provis opening firm, spds narrowed ~2bps yest post QC 10Y issue @ 114 – now 112.5.

News headlines

• Suncor Cuts Spending After Posting Surprise Loss on Writedowns (Bloomberg) Suncor Energy Inc. will cut spending by about 10 percent this year after the oil-sands producer posted a surprise loss for the fourth quarter amid writedowns on the value of Canadian, Libyan and offshore assets.
• Draghi Says Weak Global Inflation No Reason for ECB Inaction (Bloomberg) Mario Draghi said the fact that inflation is weak globally won’t stop the European Central Bank from adding stimulus for the euro area if needed.
• EU Slashes 2016 Inflation Forecast to 0.5% as Growth Seen Slower (Bloomberg) The slowdown in emerging economies is posing a major threat to recovery in the euro area, the European Commission said as it trimmed its 2016 growth forecast for the 19-nation region and warned inflation would be much slower than expected.
• Brexit could slash sterling by 20%, warns Goldman Sachs (TheGuardian) Analysts at Goldman Sachs are warning that sterling could fall by up to 20% if Britain votes to leave the European Union.
• Bank of England cuts growth outlook; call for rate hike dropped (TheGlobeandMail) The Bank of England cut growth forecasts on Thursday and the lone advocate of a rate hike reversed his position, suggesting rates were on hold for an extended period even as its governor said the next move was still likely to be up.
• Fast and furious: Canada’s economy skidding from top of G7 to bottom (TheGlobeandMail) It’s amazing how fast you can go from first to worst, hero to zero, bruiser to loser. Or, in this case, from G1 to G7.

Overnight markets 

• Overview: US 10yr note futures are up 0.16% at 130-7, S&P 500 futures are down -0.56% at 1897.75, Crude oil futures are down -0.65% at $32.07, Gold futures are up 1.1% at $1153.9, DXY is down-0.82% at 96.486.

US Economic Data 

• The Initial Jobless Claims number came in at 285k, worse than expected and up 8k from the prior month.
• The Continuing Claims number came in at a level of 2255k, worse than expected and down 18k from the previous month
• The Factory Orders growth will be release at 10:00 AM
• The Durable Goods Orders will be release at 10:00 AM

Canadian Economic Data 

• There is no major economic data 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

US tsys are lower, US 10Y 1.89 (+3bps), curve unch after ADP came in above exp (205k vs 195k) despite another weak Asian equity session . ADP may have been overstated according to SMRA as it included ‘real activity measures that improved as well as a lagged payroll input’ – so it is keeping its non farm est at 170k vs 195k median est. Brief rally in longer tsys after the US Treasury announced cuts to coupon sizes at this month’s refunding: 10Y $23bln (-1bln), 30Y $15bln (-1bln) while nominal issuance will be cut by $12bln this qtr. GOCs lower after yesterday’s huge rally led by 10Y (11bps), with 10s on the curve the most expensive since 1998! Vs 2s/30s.  Provis opening unch after 2-3bp widening yest.

News headlines

• ‘No limit’ to Japan easing, says Kuroda (FT) Haruhiko Kuroda said there was “no limit” to monetary easing as he vowed to slash Japanese interest rates deeper into negative territory if necessary.
• Oil rises after Russia says open to OPEC meeting (TherGlobeandMail) Oil rose on Wednesday, paring earlier losses after Russia reiterated its openness to talking with OPEC about output cuts, which helped revive hope among investors that the world’s largest producers could act to boost prices.
• Fed’s Dudley: Conditions tighter than Dec, would weigh on FOMC (CNBC) Financial conditions have tightened since the Fed raised interest rates in December, New York Fed president Bill Dudley said on Wednesday, according to a report from news service MNSI.
• Fed vs. the Dollar: Why Yellen Can’t Win (WSJ) The U.S. dollar sits at the center of a tangle of negative feedback loops that are roiling financial markets and economies around the world. It is coming to the point where the Federal Reserve may have to try to cut through the snarl.
• China Sets 6.5% to 7% Growth Target, First Range Since 1990s (Bloomberg) China set a range for its economic growth target for the first time in two decades, saying the world’s second-largest economy would expand 6.5 percent to 7 percent this year, slower than last year’s goal of about 7 percent.
• Euro-Area Price Cuts Intensify Pressure on Draghi to Act (Bloomberg) The euro area’s manufacturing and services industries cut prices at the fastest pace in almost a year in January, underlining concerns about weak inflation in the region.
• China seeks food security with $43 billion bid for Syngenta (Reuters) China made its boldest overseas takeover move when state-owned ChemChina agreed a $43 billion bid for Swiss seeds and pesticides group Syngenta on Wednesday, aiming to improve domestic food production.
• Yahoo Signals It’s Open to a Sale (WSJ) Yahoo has been brushing off sale talk for a while despite mounting pressure from investors, claiming the embattled portal would go ahead with its ‘reverse spin’ plans. But now Yahoo has announced plans to seek “strategic alternatives,” reports The Wall Street Journal.
• Down payments cut to boost China’s housing market (SD) Now, after the government lowered the minimum deposit for home purchases in most cities, including Zhengzhou, Zhang can pay 120,000 yuan less, allowing him to afford a house with a little help from his family.
• GM’s Earnings Surge on Strength in China, U.S. (WSJ) General Motors Co.’s fourth-quarter profit surged amid growth in China and booming sales of pickup trucks and sport-utility vehicles in the U.S.

Overnight markets

• Overview: US 10yr note futures are down -0.1% at 129-31, S&P 500 futures are up 0.59% at 1908.75, Crude oil futures are up 3.28% at $30.86, Gold futures are down -0.01% at $1127.1, DXY is down-0.61% at 98.265.

 US Economic Data 

• Mortgage applications fell 2.6% from one week earlier after three weeks of steady increases
• ADP report published today noted private-sector employment increased by 205,000 from December to January, on a seasonally adjusted basis.
• Markit’s US services PMI will be released at 9h45am
• US ISM non-manufacturing index is scheduled to be released at 10ham and expectations are for the index to have edged slightly lower to 55.1 from a reading of 55.3 in the previous month.

Canadian Economic Data 

• There is no major economic data 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