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Market update

US tsys trading higher, curve flatter on lower crude & stocks, US 10Y 2.033 (-2.3bps), curve ~3bps flatter as 2s are ~1bp higher in yield @0.88%. Dallas Fed only real eco data in the US today, but FOMC decision on Wed looms large thou there is no press con or updated projections. Latest CFTC COT report for Jan18 showed specs adding to shorts in 2s, 10s & 30s – 10Y specs the most short since Nov 6th. In Canada, GOCs are higher , spds unch vs tsys afer last week’s ~15bp underperformance. Provis opening basically unch awaiting supply, , ont 46s 118/117, Ont 25 107/106.

News headlines

• Opec official calls for co-operation to stem price collapse (FT) The Opec secretary-general has called on the world’s largest oil producers to help arrest the worst price collapse in decades, as one of Russia’s biggest oil companies said it would not oppose joining the cartel in output cuts.
• Japan’s Annual Trade Deficit Narrows as Energy Import Costs Fall (Bloomberg) Japan’s annual trade deficit narrowed almost 80 percent from a record as energy import costs fell and the weaker yen helped spur a modest increase in exports.
• Russian GDP contracted 3.7% in 2015 (FT) The Russian economy contracted 3.7 per cent in 2015, the country’s stats office said, a chunky drop that is the worst in six years, but slightly more moderate than the 3.8 per cent decline forecast by economists.
• McDonald’s to open more than 60 restaurants in Russia in 2016 (Reuters) McDonald’s plans to open more than 60 restaurants in Russia in 2016, increasing the pace of expansion from last year, after its focus on local suppliers and affordable menus has proved successful in an economic crisis.
• Yellen Losing Dollar Bet as its Rise Slows Growth and Inflation (Bloomberg) Federal Reserve Chair Janet Yellen and her colleagues have so far found themselves wrong-footed by the stronger dollar after they raised interest rates last month for the first time since 2006. In spite of suggestions by some officials that the U.S. currency’s rise would soon run out of steam, the dollar has appreciated by some 2 percent since the central bank last met on Dec. 16, measured on an effective exchange rate-basis. Coming on top of a 11 percent increase in the year prior, the latest advance will curb already slowing economic growth and put downward pressure on an inflation rate that the Fed judges is too low as it is.
• Greece threatened with expulsion from Schengen over migration crisis (Reuters) European Union interior ministers on Monday urged Greece to do more to control the influx of migrants, some threatening to exclude it from the continent’s prized passport-free travel zone as the crisis increasingly divides the bloc’s members. Greece was the main gateway to Europe for more than a million refugees and migrants who reached the EU last year. But it has been criticized for a failure to control the flow of arrivals, which have shown little sign of falling over the winter months.

Overnight markets

• Overview: US 10yr note futures are up +0.15% at 128-18, S&P 500 futures are down -0.49% at 1890.50, Crude oil futures are down -3.04%% at 31.21$, Gold futures are up +1.04% at $1107.70, DXY is down -0.27% at 99.306.

US Economic Data

• Dallas Fed manufacturing index will be released today at 9h30am

 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 trading lower in spillover from yesterday’s risk on rally post Draghi, US 10Y 2.06 (+2.7bps), curve ~1bp flatter. Nikkei up 5.9% as expectations build for further BOJ stimulus – the JPY lower for a second day. US tsys rebounded somewhat in Europe with bunds as European data weak incl EZ PMIs, UK retail sales… GOCs lower, extending underpeformance vs tsys after stronger Dec Retail Sales even as core CPI weaker (-0.4% vs -0.3% exp). Cad continuing its march higher , up 0.64% @ 1.4174 with crude above $31. Provis saw saolid sponsorship yest despite long Man supply, and spds are in another 2bps this morn. Could expect supply after a relatively quiet two weeks, Ontario a strong candidate.

News headlines

• US Is Hiding Treasury Bond Data That’s Suddenly Become Crucial (Bloomberg) It’s a secret of the vast U.S. Treasury market, a holdover from an age of oil shortages and mighty petrodollars: Just how much of America’s debt does Saudi Arabia own? But now that question — unanswered since the 1970s, under an unusual blackout by the U.S. Treasury Department — has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars in the Middle East.
• Canadian dollar rallies as oil price climbs (Globe and Mail) The Canadian dollar strengthened the most in 10 months as crude-oil prices rose following signals the European Central Bank may take further measures to stimulate that region’s economy.

• Stocks, oil jump as Draghi the dove tame global bears (Reuters) Stocks and oil, at the forefront of a global market rout since the turn of the year, rebounded strongly on Friday thanks to hints of more monetary policy support by the European Central Bank and bargain-hunting by bruised investors. World stocks recorded their biggest rise in a month, and Asian stocks had their best day in three months. Oil rallied 6 percent, after gaining 5 percent on Thursday, recovering from 12-year lows to go back above $30 a barrel.
• Argentina’s Macri hopes for creditor deal early in 2016 (Reuters) Argentine President Mauricio Macri said on Friday that talks with U.S. creditors in a long-running legal battle over unpaid debts had not made much progress, although he hoped to reach a settlement early this year. “We want to reach a settlement, find a fair agreement,” Macri told Reuters on the sidelines of the World Economic Forum in Davos, adding that he hoped to reach a deal “this year, early this year”.
• Global Markets Continue to Rally as Investors Seek Bargains (NY Times) Surging Japanese shares led a strong rebound in markets across Asia on Friday, and Europe had its second consecutive day of gains, as investors buffeted by days of volatility saw opportunity amid the recent sell-offs.

Overnight markets

• Overview: US 10yr note futures are down -0.25% at 128-11, S&P 500 futures are up +1.57% at 1890.25, Crude oil futures are up  5.45%% at 31.14$, Gold futures are down -0.16% at $1096.40, DXY is up +0.30% at 99.356.

US Economic Data

• December Chicago Fed National Activity Index narrowed to -0.22 from the revised -0.36 the previous month. The index was expected to come in at at -0.5.
• Markit will release its flash US manufacturing PMI for January at 9h45am
• US existing home sales are likely to bounce back to ‘normal’ after a 10% (MoM, sa) collapse in November wasn’t corroborated by any of the other housing data. Data will be released later today at 10ham

Canadian Economic Data

• Retail Sales came in at 1.7%, better than expected and up from last month’s 0.1%. The analysts were expecting a growth of 0.2% this month.
• Auto Retail Sales came in at 1.1% better than expected and up from last month’s : 0% growth . Expectations were for a growth of 0.4%.
• Consumer Price Index (CPI) number came in at 1.6% missing the estimate by 0.1% and up by 0.3% from last year’s number.

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 slightly higher, curve unch, US 10Y 1.964 (-1.2bps) vs 1.94 yest low. ECB left rates unch as exp. Draghi press conf likely to focus on the collapse in inflation expect – Eur 5Y5Y inf swaps back to Jan 15 low where QE was announced. Crude ~1.0% lower at 28.07, Asian stocks were lower led by Shanghai Comp -3.2% but Euro stocks are 1.0% higher. Dow futs -0.25%. The PBOC injected 400bln Yuan ($61bln) with reverse repos, the largest such operation since 2013. Core Euro bonds mixed, bunds higher, gilts lower blamed on switch trades out of gilts to bunds (MNI) after yest weak 5Y gilt auction. GOCs are lower,spds ~2bps wider vs tsys in the short end – curve flatter led by the belly. GOC curve saw large swings post BOC, ended up ~12bps flatter 2s/10s. Provis opening ~1bp weaker Ont 46 122/121. Focus on 10Y auction – $2.5bln reopening of June 26 with the roll 13.2/13.

News headlines

• PBOC Injects Most Cash in Three Years in Open-Market Operations (Bloomberg) China’s central bank cranked up cash injections in its money-market operations for the third week in a row, heading off a squeeze as a seasonal jump in demand for funds coincides with surging capital outflows. The People’s Bank of China added 400 billion yuan ($61 billion) to the financial system using reverse-repurchase agreements, the most in three years, bringing net injections via its various lending tools for the month to more than 1 trillion yuan.
• Even the ECB’s Cash Can’t Stop Investors Worrying About Portugal (Bloomberg) As bonds tumble across southern Europe, it’s beginning to look like the European Central Bank’s market stimulus never existed for Portugal. The country’s bonds have slid since an inconclusive election on Oct. 4 led to weeks of political wrangling and a minority Socialist government promising to ease austerity. Yields on benchmark 10-year securities have climbed almost 80 basis points since then to 3.09 percent. They’re higher than when ECB President Mario Draghi unveiled his bond-buying program, or quantitative easing, last January.
• Treasury Volatility at 4-Month High Leaves Analysts Struggling (Bloomberg) Treasury volatility jumped to the highest in almost four months, challenging analysts trying to predict the path of the securities amid whipsawing global financial markets. Yields on U.S. 10-year securities approached the lowest since October, erasing an earlier advance, as futures contracts on the Standard & Poor’s 500 Index slid and the Stoxx Europe 600 Index struggled to shrug off its recent losses. With inflation expectations in the U.S. tumbling along with oil prices, the nation is scheduled to sell $15 billion of 10-year Treasury Inflation Protected Securities Thursday.
• ECB holds steady, takes cautious stance as markets tumble (Globe and Mail) The European Central Bank held interest rates at record lows on Thursday, but the market crash, tumbling bank stocks and ebbing inflation may set the stage for action later in the year. In December, the Governing Council cut the deposit rate, increased the charge on banks for parking money at the ECB, and expanded its purchase program to buy chiefly government bonds.
• Loonie falls to ‘least favourite currency’ of 2016 for Australian bank strategist (Globe and Mail) When currency strategist Ray Attrill arrived in Toronto last month, he was feeling quite positive about the Canadian dollar. After meetings with investors and economists, his view changed.
• S. economy could start feeling tremors of global market instability (Globe and Mail) After another punishing day on global stock and commodity markets, there is growing anxiety in some quarters that the financial turmoil could undermine the broader U.S. economy. The United States has been an island of stability in a world of bad news, churning out jobs and registering steady if unspectacular growth. Now some economists and investors fear that a bout of extended instability in financial markets threatens to weaken the country’s economy.
• Greek PM says accepts partners’ demand for IMF role in bailout (Reuters). Greek Prime Minister Alexis Tsipras said on Thursday that Athens accepts its European partners’ insistence that the International Monetary Fund should play a role in supervising the country’s international bailout. Addressing the World Economic Forum in Davos on a panel that included German Finance Minister Wolfgang Schaeuble, Tsipras said Greece believed the European Union could manage the program on its own but it accepted that other partners wanted the IMF involved.

Overnight markets

• Overview: US 10yr note futures are up  +0.17% at 129-03, S&P 500 futures are up +0.35% at 1861.75, Crude oil futures are down  -0.21% at 28.28$, Gold futures are down -0.89% at $1096.30, DXY is up +0.64% at 99.704.

 US Economic Data 

• The Philly Fed manufacturing index came in at -3.5, better than expected and up from last month’s -10.2 reading. Expectations were for the report to come in at -5.9.
• Initial jobless claims increased by 10,000 to a seasonally adjusted 293K , est. 277k. That was the highest level since early July. The 4wk moving average of claims increased by 6,500 to 285,000. That was the highest reading since April 2015.
• Continuing unemployment benefit claims–those drawn by workers for more than a week–decreased by 56K to 2,208K
• Bloomberg Economic Expectations for January (prior 43.5) & Bloomberg Consumer Comfort for last week (prior 44.4) will be released at 9h45am

 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