Commentaires

Market update

US tsys yields higher on almost double the avg. volume in TY futures, US 10Y 1.73 (-2bps), after trading in a 9bp range o/n and hitting a low 1.68% in Asia trading. Tsys were bid in Tokyo with the Nikkei down 5.4%, 10Y JGBs trading below zero for the first time.  But oil & stocks recovered somewhat in European trading, which saw heavy sales in front end Euro dollar contracts and German bunds. Nothing on the eco calendar today of significance, the US auctions $24bln in 3Y notes at 1:00PM. GOCs higher, 10Y closing in on 1.0%Provi spds opening unch after closing 2-2.5bps wider yest. Ont 46 123/122, Ont 25 112.5/122.

News headlines

• Nikkei posts biggest drop in three years as global growth fears hit banks (Reuters) Japan’s Nikkei share average posted its biggest daily drop in nearly three years on Tuesday, with banks taking the brunt of the sell-off, while a stronger yen dragged down stocks across the board. The Nikkei .N225 ended 5.4 percent lower at 16,085.44 points, its lowest closing level since Jan. 21 and its heftiest percentage drop since mid-2013.
• IEA sees global oil glut worsening, OPEC deal unlikely (TheGlobeandMail) The world will store unwanted oil for most of 2016 as declines in U.S. output take time and OPEC is unlikely to cut a deal with other producers to reduce ballooning output, the International Energy Agency said. The agency, which co-ordinates energy policies of industrialized countries, said that while it did not believe oil prices could follow some of the most extreme forecasts and fall to as low as $10 per barrel, it was equally hard to see how they could rise significantly from current levels.
• Oil Seen `Lower for Longer’ by Morgan Stanley as Forecasts Cut (Bloomberg) Low oil prices will persist for longer than previously expected, according to Morgan Stanley, which reduced its quarterly crude forecasts for this year by as much as 51 percent. Morgan Stanley now sees oil mostly falling through 2016, compared with a previous outlook for prices to rise each quarter, analysts including Adam Longson said in a report Thursday. Brent crude is expected to average $29 a barrel in the three months to December, compared with an estimate for $59 in a Jan. 18 note.
• Fed May Lack Legal Authority for Negative Rates: 2010 Memo (Bloomberg) The Federal Reserve may not have the legal authority to set negative interest rates in the U.S., according to a 2010 staff memo that was posted late last month on the central bank’s website.
• IEA Raises Estimate of Surplus Oil Supply on Higher OPEC Output (Bloomberg) The global oil surplus will be bigger than previously estimated in the first half, increasing the risk of further price losses, as OPEC members Iran and Iraq bolster production while demand growth slows, according to the International Energy Agency.
• Global Bond Rally Near ‘Panic’ Level With Japan Yield Below Zero (Bloomberg) Sovereign bonds surged, sending the Japanese benchmark 10-year yield below zero for the first time, as investors seeking the safest assets gorged on government debt.
• Bonds Follow Bank of Japan Into Negative Territory (NY times) Given Japan’s outsize public debt, holding an i.o.u. from its government might seem like a risky proposition that would require the promise of a substantial reward.
• Global economic woes will delay a UK interest rate rise until 2020, say analysts (TheGuardian) Anxiety in global markets and a weakening US economy will force the Bank of England to delay UK interest rate rises until at least 2020, according to a leading firm of analysts.
• Futures lower as investors shy away from risk (Reuters) U.S. stock index futures were lower on Tuesday, as cautious investors doubled down on safer assets amid increasing concerns of a sustained slowdown in global economic growth.
• Global stocks hit the rocks after Asian markets slump (Reuters) A drop in bank shares kept European shares under pressure on Tuesday, after losses in Asian markets sent investors scurrying for safe havens.
• Greece, lenders should conclude first bailout review the soonest: government (Reuters) Greece and its official lenders must conclude a first assessment of the country’s compliance with agreed reforms as fast as possible, the government’s spokeswoman said on Tuesday.
• North American oil producers face more pressure to cut spending (TheGlobeandMail) The slumping crude price is putting new pressure on North American oil producers to further slash capital spending to reflect depressed revenues, as analysts paint a bleak picture of coming distressed asset sales and looming bankruptcies.

Overnight markets 

• Overview: US 10yr note futures are up 0.21% at 131-19, S&P 500 futures are down -1.2% at 1829.75, Crude oil futures are down -0.91% at $29.42, Gold futures are down -0.03% at $1197.5, DXY is down-0.47% at 96.112.

US Economic Data 

• The NFIB Small Business Optimism number was released at a level of 93.9 missing the estimate by 0.6 point and down 1.3 points from the prior month
• The Wholesale Invetories MoM will be released 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 higher, 10Y  below 1.80% , 1.79 (-4.3bps) with crude below $30, European stocks -2.6%, peripheral spds wider led by Greece  (+42bps). No real catalyst for the ‘risk off’ session –MNI attributing selloff in crude to bearish comments from CEO of Vitol Grp saying crude could remain low for decade, also article in WSJ on large companies reining in capital spending as profit margins are under pressure.  GOCs opening well bid, outperforming tsys in the rally ~2bps in 10s, 30s with the curve 3bps flatter and the 10Y new low 1.07%. Provis opening ~3bps weaker, Ont 46 123/122, Ont 25 112.5/112, QC 48 128.5/127.5.

News headlines

• European Stocks Fall, Credit Weakens as Signs of Distress Abound (Bloomberg) Signs of distress in financial markets are gathering force as concern over the state of the global economy deepens. European stocks are down for a sixth day and the cost of protecting European banks’ and insurers’ senior debt is on its worst run since March 2013.
• India Sees Growth Exceeding Estimate as Modi Prepares Budget (Bloomberg) India sees its growth exceeding economists’ estimates to overtake a slowing China, a pace Prime Minister Narendra Modi’s government will be under pressure to sustain when it presents its budget on Feb. 29.
• Russian Hackers Moved Currency Rate With Malware, Group-IB Says (Bloomberg) Hackers used malware to penetrate the defenses of a Russian regional bank and move the ruble-dollar rate more than 15 percent in minutes, according to a Moscow-based cyber-security firm hired to investigate the attack.
• Bank of Japan says will disclose findings of probe into negative rate leak (TheGlobeandMail) Bank of Japan Governor Haruhiko Kuroda said on Monday he will publish the outcome of investigations the central bank is conducting into a media leak of its impending decision last month to deploy negative interest rates.
• Trudeau Said To Tie Bombardier Aid to Governance Changes (Bloomberg) The Canadian government is pushing for changes in the dual-class share structure of embattled aircraft manufacturer Bombardier Inc. in exchange for possible financial aid, officials familiar with the plans said.
• EU proposals will force multinationals to disclose tax arrangements (TheGuardian) US multinationals such as Google, Facebook and Amazon will be forced to publicly disclose their earnings and tax bills in Europe, under legislation being drafted by the EU executive.
• Russia plans first bond issuance since sanctions (FT) Russia is exploring international bond issuance for the first time since the war in Ukraine sparked sanctions from the west, in a sign that the Kremlin is keen to find additional sources of revenue as the economy heads for a second year of recession.
• China’s Forex Reserves May Already Be Below IMF Safety Line (Forbes) Sunday, the People’s Bank of China, the central bank, announced that China’s foreign exchange reserves fell $99.5 billion in January. After the drop, the reserves stood at $3.23 trillion, their lowest level since May 2012. January’s decline was well below consensus forecasts. The latest Bloomberg survey, for instance, predicted the reserves would fall by $120 billion.

Overnight markets 

• Overview: US 10yr note futures are up 0.34% at 130-26, S&P 500 futures are down -1.27% at 1851.5, Crude oil futures are down -1.49% at $30.43, Gold futures are up 2.38% at $1185.3, DXY is up0.29% at 97.315.

US Economic Data 

• The Building Permits MoM growth was released at a level of 11.3 % stronger than expected, up 31.2 % from the prior 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

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