Commentaires

12/02/2016

par admin | Fév 12, 2016 | commentaires

Market update

US tsys opening lower, steeper, US 10Y 1.70 (+4bps) after Jan Retail Sales came in above exp, import prices fell less than exp. European equities higher, crude up 5% above $27.50. Tsys pressured overnite with only a brief bounce on Nikkei decline (-5%), yet European stocks are higher led by financials as Commerzbank rose 15% on Q4 earnings beat, Deutsche Bank announcing plans to buy back $5.4bln in bonds. Core Euro bonds lower on bounce in stocks, with Euro & German GDP coming in as expected. Peripheral spreads tighter, Portugal 10Y -15bps below 4% despite weaker Q4 GDP. With momentum indicators on longs USTs way above overbought levels (daily RSI on US1 ~82, Pandemonium Index sentiment highest since Apr 2015) we have been looking for opportunities to go short but have been stymied by intraday volatility. In Canada, GOCs are lower, spds ~2bps wider vs tsys which would normally be considered unusual as GOCs tend to lag tsys either way in large moves… But considering at one point yest the 10Y Cda/Tsy spd was ~8bps tighter in the rally (-68 bps thru), 10s look vulnerable here. Provi spds opening better bid after another wild day yest which saw spds close ~2bps tighter after opening 3bps wider.

News headlines

S. Benchmark Yield Will Be at Record Low in March at This Rate (Bloomberg) Treasury benchmark yields are on course to set a new all-time low in March if they keep rallying at the current pace. Ten-year yields dropped almost 40 basis points during the past three weeks to 1.66 percent. The record low of 1.379 percent was set in July 2012.
Yellen’s dilemma: A downturn with no easy response (Reuters) The U.S. Federal Reserve’s carefully scripted decision to raise interest rates last December, and begin a return to « normal » policy, may now become a nightmare for the central bank if an economic downturn forces a return to unconventional methods.
Germany Keeps Momentum Showing Resilience to Global Turmoil (Bloomberg) Germany’s economy sustained its momentum at the end of 2015, showing resilience amid an emerging-market slowdown that’s heightened concerns about global growth and sent equities plunging this year.
Here Is Trudeau’s Six-Point Checklist for Bombardier’s Bailout (Bloomberg) Prime Minister Justin Trudeau will have a hard time saying no to Bombardier Inc.’s request for aid to complete the troubled C Series aircraft because of the company’s deep political and economic roots in Canada.
PM says may be hard to keep balanced budget promise (Reuters) The Canadian government could find it hard to balance the budget by 2019/20 as promised if the economy continues to struggle, Prime Minister Justin Trudeau said in an interview published on Thursday.
Economists Are Ditching Their Calls for a Fed Rate Hike in March (Bloomberg) Economists are pushing back their calls for the next Federal Reserve interest-rate hike in droves. Trouble overseas and uncertain economic conditions at home have helped move the median forecast to June from March.
Eurozone Economy Grows, but Total Output Still Lags Behind 2008 (NY Times) Europe is still trying to crawl back to where it was in 2008. That was the underlying message of the economic data for the eurozone published on Friday.
Oil prices jump on talk OPEC is ready to deal, but traders are wary of ‘jawboning’ (Financial Post) Still, analysts said such a move remained unlikely and prices for Brent and U.S. West Texas Intermediate (WTI) crude were on track for weekly losses of more than 7 per cent and 11 per cent, respectively, as oversupply weighed.

Overnight markets

Overview: US 10yr note futures are down -0.36% at 131-18, S&P 500 futures are up 1.11% at 1844.75, Crude oil futures are up 6.26% at $27.85, Gold futures are down -0.99% at $1235.4, DXY is up0.5% at 96.036.

US Economic Data

The Import Price Index MoM number came in at a level -1.1%, better than expected and up 0.1 % from last month
The Retail Sales Advance MoM growth was 0.1%, beating the analysts estimate by 0.1%, up 0.3% from prior month
The Retail Sales Auto MoM growth was 0.1%, better than expected and up 0.2% from the previous month
The Retail Sales Ex Auto and Gas growth was 0.4%, beating the analysts estimate by 0.1%, up 0.1% from the previous month
The University of Michigan Sentiment index will be released at 10:00 AM

Canadian Economic Data

There is no major economic data release 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

11/02/2016

par admin | Fév 11, 2016 | commentaires

Market update

US tsys surging higher overnite, US 10Y 7bps lower @ 1.61% as equity mkts tumble, yen surged to 16mnth high vs USD. Tsys coming under pressure since ~8:00EST with prices falling further after initial claims fell 11k to lowest level in seven weeks. Euro stoxx -3.4%, peripheral spds sharply wider led by Portugal (70bps) & Greece, crude -3.6% below $27. Core Euro bonds also higher, 10Y bunds 7bps lower @ 0.18% new low, 10Y gilt 12bps lower & 10/30 curve 4bps steeper after weak 2045 gilt auction (1bp tail 2.08 b/c). Soc Gen -12% as Q4 eps missed driven by 35% drop in investment bank earnings. GOCs pairing early gains, 10s trading below 1.0% for first time. With mega flattening since last BOC, the short end is now inverted out to four years. Indeed, using old 5s (Sep 20s) 2s/5s is barely 6bps, so 5s/10s @ 50 looks relatively attractive. Buying of longs yest aft flatten 10/30 back towards 80 bps. Provis opening 4bps wider Ont 46s traded down @ 125.5 , now 124 bid so fairly volatile to say the least.

News headlines

Gold Roars to One-Year High as Turmoil Drives Safe Haven Demand (Bloomberg) Gold climbed to the highest in a year as investors sought a haven from tumbling stock markets after Federal Reserve Chair Janet Yellen suggested the central bank may delay raising interest rates.
Music stops for buyers of Bank Coco debt (FT) A lot of the recent worries with European banks have been centered on coco bonds, or contingent convertible bonds. These bonds automatically convert debt to equity when a bank’s cash reserves fall below a certain level. Thursday’s selling has run the yields on Deutsche Bank’s and Santander’s coco bonds to fresh highs (yields rise when prices fall), causing more concerns about Europe’s banks. Bank stocks across Europe are down at least 3%.
Sweden Cuts Rates Deeper Into Negative Territory, Says May Go Further (Bloomberg) Sweden’s central bank lowered its key interest rate even further below zero and said it’s prepared to use its full toolbox of measures as it battles to revive inflation and keep the krona from appreciating.
No Respite for S&P 500 as U.S. Stock Futures Join Global Selloff (Bloomberg) U.S. stock futures followed oil prices lower, extending an earlier slump as investors shunned risk worldwide to spark a global selloff in equities.
Business Leaders Urge Zuma to Sell South Africa State Assets (Bloomberg) The heads of South Africa’s biggest companies urged President Jacob Zuma to sell state-owned assets, increase taxes and review the country’s labor laws as part of a raft of proposals to try and avoid a credit-rating downgrade to junk.
Canadian dollar’s ‘petro-currency’ status may soon weaken, analysts say (TheGlobeandMail) Currency analysts at Bank of Nova Scotia believe the Canadian dollar’s “petro-currency” status may be about to weaken. Don’t get the wrong idea. The loonie’s ties to oil will remain, but possibly weaken, according to strategists Shaun Osborne and Eric Theoret.
K. Bond Yield Drops to Record as Investors Seek Safer Assets (Bloomberg) U.K. government bonds advanced, sending the 10-year gilt yield to the lowest on record, as global stock markets resumed declines and boosted demand for the relative safety of sovereign debt.
Yen Advances to 15-Month High as Korean Tensions Stoke Haven Bid (Bloomberg) The yen climbed against every major currency as a drop in global stocks and rising tensions between North and South Korea boosted demand for havens.
Jobless Claims in U.S. Decline to Lowest Level in Seven Weeks (Bloomberg) Filings for unemployment benefits in the U.S. declined to a seven-week low as hiring managers demonstrated confidence in the outlook after temporary adjustments around the holidays.
SocGen Slumps as Quarterly Profit Hurt by Securities Drop (Bloomberg) Societe Generale SA, France’s second-largest bank by market value, posted fourth-quarter profit that missed analysts’ estimates as earnings at the investment bank dropped 35 percent. The shares plunged the most since 2011.
Oil falls on U.S. supply record, weak demand outlook (Reuters) Oil slid on Thursday, dented by record U.S. crude inventories, worries about the demand outlook and a Goldman Sachs forecast that prices would remain low and volatile until the second half of the year.
Futures slump as global growth worries resurface (Reuters) U.S. stock index futures plunged on Thursday, with risk-averse investors piling into safe haven assets as another sharp fall in oil prices and cautious comments from Federal Reserve Chair Janet Yellen raised fresh doubts about the health of the economy.

Overnight markets

Overview: US 10yr note futures are up 0.71% at 132-14, S&P 500 futures are down -1.6% at 1817.25, Crude oil futures are down -2.73% at $26.7, Gold futures are up 3.48% at $1236.2, DXY is down-0.28% at 95.615.

US Economic Data

The Initial Jobless Claims was released at a level of 269k better than expected by the analysts, and down 16k from the previous week
The Continuing Claims number came in at a level of 2239k, better than expected and down 6k from prior period

Canadian Economic Data

The New Hosing Price Index MoM growth was 0.1%, worse than expected and down 0.1% from the previous 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

10/02/2016

par admin | Fév 10, 2016 | commentaires

Market update

US tsys opening lower, US 10Y 1.766 (+2bps) with curve slightly steeper, avg volume o/n in ten yr futs (428k vs 460k). Tsys rebounding on Fed Yellen comments that pace of rate hikes could be slowed, citing rising global risks. Tsys lower o/n with Euro govt bonds on recovery in European bank stocks with Deutsche Bank up 13%. Rumours that ECB may purchase bank stocks as part of its QE also supporting stocks. Mkt awaits Q&A from Fed Yellen later this morning and $23bln 10Y note auction at 1:00PM. GOCs rebounding higher with tsys on Yellen, spds 1-2bps narrower vs tsys. Provis opening 0.5bps better after better buying yest aft took spds ~2bps tighter at the close.

News headlines

Currency market is braced for Janet Yellen’s Congressional testimony (FT) A jittery currency market is braced for further volatility on Wednesday when Janet Yellen, the Federal Reserve chair, delivers her semi-annual testimony on the outlook for the economy and policy before Congress.The dollar has lately come under growing pressure against its main peers, led by the yen, euro and Swiss franc as the bond market has priced out the prospect of further increases in overnight borrowing costs set by the central bank.
Deutsche Bank Jumps as Lender Said to Consider Bond Buyback (Bloomberg) Deutsche Bank AG shares jumped the most in almost seven years and credit risk fell as Germany’s biggest bank considers a bond buyback to help ease investor concerns about its funds, according to a person with knowledge of the matter.
Yellen Signals Fed Rate Path Hinges on Whether Turmoil Persists (Bloomberg) Chair Janet Yellen said the Federal Reserve still expects to raise interest rates gradually while making it clear that continued market turmoil could throw the central bank off course from the multiple increases that policy makers have forecast for 2016.
Russia’s Biggest Oil Producer Skeptical on Output Deal With OPEC (Bloomberg) Russia’s largest oil producer Rosneft OJSC said it will defend traditional markets and expressed doubts over any coordinated action by crude-exporting nations to curb output.
S. 10-Year Sale’s Lowest Yield Since 2012 May Diminish Demand (Bloomberg) The U.S. Treasury is scheduled to auction $23 billion of 10-year debt Wednesday in a sale that looks set to draw the lowest yield since 2012 as turmoil in equity, credit and commodity markets boosts demand for the safest fixed-income assets.
Europe’s Crumbling Inflation Outlook Matches Record Low: Chart (Bloomberg) The outlook for consumer-price inflation in the euro area, as implied by one of European Central Bank’s preferred metrics, has matched the lowest on record.
Manufacturing’s rebound faces ‘significant’ structural hurdles: federal memo (TheGlobeandMail) Amid hopes that Canadian manufacturing will drive economic growth in a country reeling from low oil prices, internal federal documents warn the sector’s rebirth is staring at “significant” structural obstacles.
Strong demand for German two-year bonds at minus 0.50 pct yields (Reuters) Germany’s two-year bond sale drew strong demand on Wednesday, with safe haven flows and bets that the European Central Bank may cut its deposit rate by more than 10 basis points in March sugar-coating the minus 0.50 percent yield on offer.
IMF warns Ukraine it will halt $40bn bailout unless corruption stops (TheGuardian) The International Monetary Fund has warned it will halt its $40bn (£28bn) bailout programme to Ukraine unless the conflict-torn eastern European country takes immediate action to tackle corruption. The IMF’s managing director, Christine Lagarde, said on Wednesday that “without a substantial new effort” to improve governance, it was hard to see how the Washington-based organisation could continue to provide financial help.
Japan’s Asahi ‘to buy Peroni and Grolsch brands’ (TheGuardian) Asahi Group has reportedly reached a preliminary deal to buy SABMiller’s Peroni and Grolsch beer brands for over 400bn yen (£2.3bn). Asahi, known for its Super Dry beer, is Japan’s biggest brewer with a 38% market share. But the company has sought growth outside Japan where beer sales have fallen over the past two decades, as the population shrinks and wine becomes increasingly popular.
World’s Negative-Yielding Bond Pile Tops $7 Trillion: Chart (Bloomberg) More than $7 trillion of government bonds offered yields below zero globally as of Monday, making up about 29 percent of the Bloomberg Global Developed Sovereign Bond Index. The total is poised to swell further after Japan’s 10-year yield went below zero for the first time on record on Tuesday, as central-bank easing policies push borrowing costs to new depths. A negative yield means investors who buy the debt now and hold to maturity will receive less than they paid.

Overnight markets

Overview: US 10yr note futures are down -0.24% at 131-0, S&P 500 futures are up 0.84% at 1863.75, Crude oil futures are up 0.29% at $28.02, Gold futures are down -0.91% at $1187.7, DXY is up0.29% at 96.347.

US Economic Data