Commentaires

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

Market update

US tsys yields ~1bp higher led by 5s for a second day with the curve ~0.5bps steeper out to 10yrs, longs outperforming. Core Euro bonds higher, 10Y bunds -4bps  @ 0.48% new low as EU stocks hit hard -1.6%  led by financials – Italian banks in focus after disappointment with ‘bad bank’ deal, shares of BMPI – 10%. Also some catchup with yest post FOMC rally in tsys as stmt was less dovish than exp. US auctions $29bln in 7Y notes at 1:00PM with yields close to recent lows, while the 7Y looks rich on the cash tsy curve vs 5s/10s – 7 bps vs 15bps @ last auction on Dec 30th. So could expect similar setup going into 7Y auction as yesterday’s somewhat dissapointing (1bp tail) 5Y auction. Provis opening 1bp tighter, Ont 25s lifted @ 108.5 from yest 110/109 clse, Ont 46 trading up @119. Still expect Ont to come one of these days, 10Y rumoured  as wel as QC longs.

News headlines

• Wall Street Turmoil to Bend, Not Break, U.S. Economic Expansion (Bloomberg) The turmoil in financial markets may slow the U.S. economic expansion. But it probably won’t kill it.While the threat of a downturn has risen, consumers and companies have the wherewithal to weather the turbulence in stocks and keep the economy afloat, economists say.

• S. Federal Reserve leaves rates unchanged, closely monitoring global economy (FP) The U.S. Federal Reserve raised concerns about the U.S. economy’s growth late last year and said it is “closely monitoring” the turmoil in global markets as it decided to leave its benchmark interest rate unchanged Wednesday.
• Euro Rises Against Dollar in Longest Winning Run Since September (Bloomberg)  The euro rose for a fourth day, headed for its longest winning streak since September. The shared currency erased its earlier slide versus the dollar after data showed inflation accelerated this month in four out of the six German states to report figures. The euro was also buoyed after the Federal Reserve said Wednesday that officials are “closely monitoring” developments from China to Europe, prompting speculation a dollar-boosting March interest-rate increase is unlikely.
• UK economy grows 0.5% in fourth quarter (BBC) The UK economy grew by 0.5% in the three months to the end of December, official figures show, taking the annual rate of growth for 2015 to 2.2%. The Office for National Statistics show an improvement on the third quarter figure of 0.4%. But the 2.2% annual growth in 2015 was down compared with 2.9% in 2014.
• CMHC adds Calgary housing market to list of cities with ‘problematic conditions’ (Financial Post) Canada Mortgage and Housing Corp. will tell you the housing market has what it calls “problematic conditions,” but one word the federal agency doesn’t like to use is “correction.”
• Oil Trade Slows as Storage Glut Snares Tankers in Bottlenecks (Bloomberg) The world’s biggest oil companies are asking tanker operators to slow down delivery of crude amid an ever-expanding supply glut on land, Europe’s largest owner of supertankers said.
• Brazil Signals Rate to Stay Flat on Impact of China Slowdown (Bloomberg) Brazil’s central bank president Alexandre Tombini is betting on a weak domestic economy and slowing Chinese demand to help bring inflation down this year, signaling the benchmark lending rate will stay on hold.
• Deutsche Bank Confirms the Damage: A Record Loss (NYTimes) Deutsche Bank, confirming bad news it had previewed last week, on Thursday made it official: The giant German bank had a record loss of 6.8 billion euros, or $7.4 billion, in 2015, as it set aside money to cover lawsuits and official investigations, and it suffered a decline in revenue in its investment banking unit.
• Facebook cashes in on digital advertising (FT) The social networking company had pulled off a remarkably quick transition of its business to mobile devices. From a standing start in early 2012, mobile advertising grew to account for 78 per cent of revenues by the third quarter of last year. With fourth-quarter earnings, Facebook has shown it is in position to capitalise on the acceleration of spending on mobile advertisers as brands belatedly seek to follow their audiences to smartphones.

Overnight markets

• Overview: US 10yr note futures are up 0.11% at 129-0, S&P 500 futures are up 0.41% at 1882.75, Crude oil futures are up 1.8% at $32.88, Gold futures are up 0.52% at $1122.1, DXY is down-0.2% at 98.7.

US Economic Data

• Initial jobless claims fell last week after touching a seven-month high earlier in January, offering fresh evidence the labor market is still doing pretty well despite a slower U.S. economy. The 4wk average of initial claims also tacked lower, down 2,250 to 283,000, the Labor Department said Thursday. Continuing claims were 49,000 higher compared to the prior week.
• Durable goods, excluding defence and transportation orders, fell 0.2 percent last month as November’s decline was revised down to a steeper 1.1 per cent. Durable goods, excluding defence and transportation orders, fell 0.2 percent last month as November’s decline was revised down to a steeper 1.1 per cent.
• Pending home sales will be released at 10ham. Consensus forecasts that the pending home sales index rose by 0.9% in December.
• Kansas City Fed manufacturing index will be published at 11ham (prior -9.0).

 Canadian Economic Data

• A free-falling dollar and the decline of oil have driven Canadian small business confidence levels to new post-recession lows in January as the national Business Barometer® Index dropped to 54.3, about 10 points below the level associated with normal economic growth.

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