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Market update

US tsys are higher, curve flatter as crude continues to decline for a second day, European stocks weaken, US 10Y 1.925 (-2.3bps). Core Euro bonds higher, German 10Y bund yield 3 bps lower @0.32% & curve 2bps flatter despite  German unemployment falling to record low 6.2% last month. Weakness in energy stocks after BP reported $5.2bln annual loss its worst in twenty years while Exxon earnings came in above exp the stock falling ~1.0% pre mkt. GOCs opening higher led  by 10s, with the 10Y butt ~3bps narrower. Provi spds opening unch despite ‘risk off’ and after closing 1bp better yest. Ont 26/25 roll continues to expand, now 2.7/2.5.

News headlines

• BP reports biggest ever annual loss (Reuters) BP slumped to its biggest annual loss last year and announced thousands more job cuts on Tuesday, showing that even one of the nimblest oil producers is struggling in the worst market downturn in over a decade. The British oil and gas company, which is still grappling with about $55 billion of costs from the oil spill in the Gulf of Mexico in 2010, said it would cut 7,000 jobs by the end of 2017, or nearly 9 percent of its workforce. BP said it lost $6.5 billion in 2015 and its fourth-quarter underlying replacement cost profit, which is the company’s definition of net income, came in at $196 million, well below analyst expectations of $730 million.
• Eurozone unemployment at lowest since September 2011 (FT) Greece and Spain may still have unemployment rates that are well over 20 per cent but the jobless rate for the eurozone as a whole is at lows not seen since the autumn of 2011, thanks to a robust jobs market in countries such as Germany. The unemployment rate for the euro area edged down further to 10.4 per cent in December, the lowest since September 2011, from 10.5 per cent the previous month. This was better than expected by economists who had forecast it to remain at 10.5 per cent.
• Australia central bank holds rates, hopeful on growth (Reuters) Australia’s central bank held its cash rate at 2.0 percent on Tuesday and reiterated that the outlook for restrained inflation meant there was scope for a further cut if needed to support the economy.
• Alphabet Reports Rising Profits at Core Google Businesses (WSJ) Google parent Alphabet Inc. reported strong growth and rising profitability at its main Internet business, sparking an after-hours rally that propelled it past Apple Inc. as the world’s most-valuable company. Alphabet, after a corporate reorganization late last year, disclosed that revenue at Google’s core Internet businesses, including search, YouTube and Android, rose 14% last year, to $74.54 billion, from $65.67 billion in 2014. Yearly operating income for these businesses totaled $28 billion, excluding stock-based compensation, up 23% from $22.69 billion a year earlier.
• India’s Central Bank Leaves Key Lending Rate Unchanged (WSJ) Reserve Bank of India Governor Raghuram Rajan left the country’s main interest rate unchanged Tuesday, saying the central bank would watch how inflation behaves and called upon the government to take growth-supportive measures in the federal budget later in the month.
• Brexit May Lose U.K. Billions in Funding for Climate, Renewables (Bloomberg) The U.K. risks losing out on billions of pounds of investment in renewable energy projects such as wind farms and grid upgrades if it quits the European Union and ditches its stake in the European Investment Bank.
• S&P Lowers Shell’s Rating, Puts Other Oil Majors on Watch (Bloomberg) Royal Dutch Shell Plc had its debt rating cut to the lowest since Standard & Poor’s began coverage in 1990, and downgrades of several other major European oil and gas companies will probably follow in coming weeks.
• Global stocks snap winning streak as oil pressure returns (Reuters) World stocks dipped after a three-day run of gains and emerging markets were back under pressure on Tuesday, as a sharp drop in oil prices following lacklustre economic data sparked renewed nerves
• Yen rises as global mood sours again (Reuters) The yen inched higher on Tuesday as another drop in oil and stock markets sent investors back to traditional safe havens, hammering commodity-dependent currencies in the process.

Overnight markets

• Overview: US 10yr note futures are up 0.42% at 129-23, S&P 500 futures are down -1% at 1912, Crude oil futures are down -3.83% at $30.41, Gold futures are down -0.1% at $1126.9, DXY is down-0.12% at 98.89.

US Economic Data

• There is no major economic data today.

 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 opening slightly lower, curve flatter, US 10Y 1.931 (+1bp), so far only small reaction to weaker US Dec PCE deflator. Core Euro bonds lower, German 10Y bunds lower ~2bps higher @0.343, after initially rallying on weaker China PMI, giving up gains on  mixed Euro PMIS with UK Jan Man PMI rising to 52.9 vs 51.6 exp and hawkish comments from ECB Nowotny. Latest CFTC COT report for Jan26th showed large specs reducing shorts across the curve, part in the 10Y note going from -68K to +44K. Top Tier US eco data with ISM Manunf later this morn. GOCs unch , spds unch vs tsys. Provis opening unch, Ont 46 119.5/119, Ont 25 108.5/107.5, Ont 25 108.5/107.5. New ont 26 which came at 110 on Friday, 111/110 this morn or 2.5/2.0 vs Ont 25s

News headlines

• China official manufacturing PMI eases to 49.4 in January, misses forecasts (Reuters) Activity in China’s manufacturing sector contracted more than expected in January, missing market expectations and weaker than the previous month, an official survey showed on Monday.
• Cheap oil won’t juice the U.S. economy this time: Reuters poll (Reuters) U.S. consumers are cautious about spending their windfall from cheap gasoline and are saving more, according to a Reuters/Ipsos poll and official data, suggesting low oil prices are less of a boon for the U.S. economy than in the past.
• Oil falls on China data and fading prospects of OPEC action (Reuters) Oil fell nearly four percent on Monday as weak economic data from China, the world’s largest energy consumer, weighed on prices and an OPEC source played down talk of an emergency meeting to stem the decline.
• Euro-Area Factories Cut Prices as Deflation Risks Loom Large (Bloomberg) Factories in the euro area slashed prices of goods by the most in a year in January, highlighting the deflationary risks that’s keeping alarm bells ringing at the European Central Bank..
• South Korean Exports Fall at Fastest Pace Since Financial Crisis (WSJ) South Korea’s exports fell at their fastest pace since they were slammed by the fallout from the global financial crisis, the latest warning sign about international trade as concerns mount about the drag on growth from a slowing Chinese economy and withering oil prices. South Korean data are viewed as a proxy for the global trade picture.
• A huge Ponzi scheme was reported in China ((WSJ) Chinese authorities accused an online financing platform of bilking mostly small investors of more than 50 billion yuan ($7.6 billion) through a Ponzi scheme—the latest allegation of fraud against a loosely regulated part of China’s financial-products market.

Overnight markets

• Overview: US 10yr note futures are up 0.02% at 129-20, S&P 500 futures are down -0.75% at 1915.5, Crude oil futures are down -3.69% at $32.38, Gold futures are up 0.51% at $1122.1, DXY is down-0.33% at 99.274.

US Economic Data 

• The Personal Income growth for last month came in at 0.3% as expected, up 0.1% from the previous month
• The Personal Spending change for last month was released at 0.0 % missing the forecast by 0.1% and down 0.5% from last month
• The Markit US Manufacturing PMI will be release at 9:45 AM, analysts are expecting a level of 52.6 points
• The ISM Manufacturing number will be release at 10:00 AM, the actual forecast is 48.4 points
• The ISM Price paid number will be release at 10:00 AM, the market is expecting a level of 35 points
• The Construction Spending MoM growth for last month will be release at 10:00 AM, the market is expecting a growth of 0.6% 

Canadian Economic Data 

• The RBC Canadian Manufacturing PMI will be release at 9:30 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 sharply higher, curve ~1bp flatter, US 10Y 1.92% ( -7bps) on surprise move by BOJ , thou some pullback post Q4 GDP, ECI  as PCE better than exp (2.2 vs 1.8). BOJ announced negative rates, cutting rates on reserves by 20bps to -0.10% – this comes barely a week after Kuroda said adopting negative rates was not on his plan (http://goo.gl/IryM5k). Crude higher for a 4th day, up 1.6% @ 33.77 – Russia denying reports of meeting with OPEC to discuss prod cuts. Core Euro bonds higher, curves ~4bps flatter with 2& 5Y German govts hitting fresh lows in yield, 10Y low since May of last yr. GOCs higher led by 10s, which are 3bps better on the curve. Provis opening another 1bp tighter after closing firmer yest as well, expect supply given lower GOC yields & tighter spds. Yest OPB Fin trust (AA+/AAH) issued CAD $250mm in 10Y bonds @ 163 OTC , we had the OPB 22s at 120, so ~45 bps in credit for 4yrs –didnt’t seem like much of a concession still the bonds broke 2bps (original guidance was 165 +/- 2)

News headlines

• Stocks Rally With Bonds as BOJ Ends Grim January on High Note (Bloomberg) Stocks and bonds rallied around the world as the Bank of Japan unexpectedly stepped up monetary stimulus, joining other central banks responding to this month’s financial-market turmoil. The yen tumbled, while oil pared gains.
• Yen slides after BOJ stuns markets with negative rates (Reuters) The yen was on track for its biggest daily fall against the dollar in over a year on Friday after the Bank of Japan stunned markets by joining a handful of major central banks in adopting negative interest rates.
• Oil heading for weekly gain on supply cut deal hopes (Reuters) Oil edged up above $34 a barrel on Friday, a gain of some 25 percent from the 12-year lows seen earlier in January, on hopes that a deal between major exporters to cut production could help reduce one of the worst oil gluts in history.
• Brazilian Budget Gap Hits Record as Commodity Boom Turns to Bust (Bloomberg) Brazil reported its largest budget deficit on record last year, underscoring the Latin American country’s struggles to cope with falling tax revenue as the commodity boom ends.
• S. GDP Advances 0.7% in Fourth Quarter (WSJ) The U.S. economy sputtered in the final months of 2015, a sign of flagging momentum amid global weakness and financial market turmoil. Gross domestic product, a broad measure of economic output, expanded at a 0.7% seasonally adjusted annualized rate in the fourth quarter, the Commerce Department said on Friday.
• Indian Lender Surges Most Since 2013 on Asset Quality Surprise (Bloomberg) Yes Bank Ltd., the Indian lender with the lowest bad-loan ratio, gained the most since September 2013 months after saying it expects an improvement in its asset quality this quarter, making it the nation’s best-performing banking stock this month.
• Lehman Pulled Money Out of Anglo Irish Days Before Bankruptcy (Bloomberg) Days before Lehman Brothers Holdings Inc. filed for bankruptcy in 2008, the U.S. investment bank pulled 350 million euros ($380 million) out of Anglo Irish Bank Corp., exacerbating the Irish lender’s funding crisis.

Overnight markets

• Overview: US 10yr note futures are up 0.38% at 129-17, S&P 500 futures are up 0.64% at 1892.75, Crude oil futures are up 2.41% at $34.02, Gold futures are down -0.14% at $1114.5, DXY is up0.95% at 99.449.

US Economic Data

• The quarterly growth of the US GDP was 0.8%, down 1.2% from Q3 2015 and missing the estimate by 0.1%
• The GDP Price Index growth came in at 0.8% as expected and down 0.5% from prior number.
• The Personal Consumption number for Q4 2015 came in at 2.2%, down 0.8% from previous quarter and beating the expectation by 0.4%
• The Core PCE QoQ number came in at 1.2% as expected and down 0.2% from previous quarter
• The Employment Cost Index number came in at 0.6% as expected and was at the same level of the previous quarter
• The ISM Milwaukee was released at 50.36, better than expected and up 1.47 from Q3 2015
• Chicago PMI for January will be released at 9h45am and is expected at 44.0 from 42.9 in December and 48.7 in November.
• US Michigan Consumer Sentiment will be released at 10am  The second release on January Michigan Sentiment is out today and should reveal a 93.5 (median 93.1) headline following 93.3 in the first release and 92.6 in December.

 Canadian Economic Data

• The GDP MoM and YoY came in at 0.3% and 0.2% respectively just as expected by the analysts.
• The Industrial Product Price MoM change came in at -0.3% for December, beating the estimate by 0.1% and being down 0.1% from the last month
• The raw material price Index number was released at -5.0% down 1% from Q3 2015 and missing the analyst’s estimate by 1%

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