Commentaires

Market update

US tsys opening lower led by the 5Y (+2.3bps @ 1.45%) with the 10Y 2.01 (+1.9bps)- narrow o/n range with prices breaking lower in the last hr as European equities , crude rebound from losses. FOMC this aft, no change expected yet stmt should reflect deterioration in eco env and risks to growth posed from weakness overseas, lower commodities. Mkt barely pricing in one rate hike all year so a less dovish stmt could impact the short end. GOCs are lower, spds 1-2bps narrower vs tsys, longs still heavy 10/30 @80. Provis 0.5bps wider after closing weaker yest after initial rally, selling vs new issues  a factor keeping spds under pressure (Mcgill , Nwrwpt)

News headlines

• Bond Bulls Bank on Fed Mention of Market Chaos as Drag on Growth (Bloomberg) Bond bulls are looking to the Federal Reserve’s decision Wednesday for vindication as Treasuries head for their best month in a year.
• Alberta lost the most jobs in 2015 since 1980s recession: Statistics Canada (Financial Post) Alberta lost more jobs last year than in any year since the 1982 recession, revised numbers from Statistics Canada show.The updated figures released Tuesday show the province lost 19,600 jobs in 2015, up from an earlier estimate of 14,600.
• Fed seen keeping interest rates steady amid market volatility (Reuters) The Federal Reserve is expected to leave interest rates unchanged on Wednesday and acknowledge that turmoil in financial markets threatens its upbeat view of the U.S. economy, leaving the chances of a March hike diminished but alive.
• Oil falls as inventory build dashes optimism over supply (Reuters) Oil futures fell on Wednesday, after a surprise rise in U.S. inventories wiped out the optimism that had built up the day before over the potential for the world’s largest exporters to cut output enough to stem a 19-month-long price slide.
• Apple Says Sales of iPhones Have Slowed (NYTimes) Apple on Tuesday reported results for its fiscal first quarter that showed iPhone sales rose less than 1 percent from a year earlier, the slowest year-over-year growth rate ever for the device, which accounts for about two-thirds of the company’s revenue. Apple also issued a sales forecast that signaled that the sluggishness would continue, with the company projecting its first revenue decline in more than a decade.

Overnight markets

• Overview: US 10yr note futures are down -0.18% at 128-19, S&P 500 futures are down -0.26% at 1891, Crude oil futures are down -2.16% at $30.77, Gold futures are down -0.14% at $1119, DXY is down-0.52% at 98.845.

US Economic Data

• Mortgage application increased for the third week in a row, rising 8.8% from one week earlier, according to the latest data from the Mortgage Bankers Association’s weekly mortgage applications survey for the week ending Jan. 22, 2016.
• New home sales figures for December are due at 10am. Economists forecast that new-home sales rose 2 percent last month to a seasonally adjusted annual rate of 500,000, according to a survey by data firm FactSet.
• The Federal Reserve concludes its latest Federal Open Market Committee (FOMC) meeting with a statement release due at 2pm.

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 unch, yields on the rise as oil and stocks recover from earlier weakness – US 10Y 2.0% after falling to 1.96% in early European trading. WTI fell ~3.7% to $29.20 then bounced on DJ news that Saudi & Russia were more on oil cuts (BN). US Tsy auctions $26bln 2Y notes at 1:00PM before heavier supply next week (2Y FRN, 5 & 7 Y notes for $79bln). Latest JPM Treasury Client Survey showed the most shorts among All Clients since August 3, 2015 at 27. GOCs opening lower, spds unch with tsys. Eco calendar sparse until Friday’s Nov GDP. Provi spds opening another 0.5-1bp weaker after a brutal session yest. Onts closed 3bps wider, Alberta reopened their June 25s @Ont +12 – they closed 13.5/12.5 and are 15/13 this morn! Even as crude is higher on the day. Deere came with a CAD 3Y @ 135 – recall they issued a USD 3Y back on Jan 5th at t+85/GOCs + 105. So spds ~30 bps wider over 2 weeks, so looked like a 5-10bp  concession to us.

News headlines

• China shares end at 14-month lows after late selling frenzy (Reuters) Chinese shares plunged more than 6 percent to 14-month lows on Tuesday after oil prices dropped again, reviving concerns about global growth and prompting a sell-off in the world’s equity markets.
• Investment inflows into Brazil  soar as external gap meets forecasts (Reuters) Foreign direct investment into Brazil came in December at more than twice the amount estimated by analysts, as a weakening currency and declining asset prices triggered a jump in merger and acquisition activity at the end of last year.
• German two-year yields hit new low as March ECB cut priced in (Reuters) German two-year bond yields hit a record low on Tuesday as another fall in oil prices prompted a dip in money market rates, implying that investors expect the European Central Bank to cut its deposit rate in March.
• ‘Ocean of fear’: Canadian investors sitting on record cash pile risk billions in lost returns (Financial Post) A new report suggests Canadians are sitting on a record $75-billion in excess cash in their portfolios, fearful of making a move in today’s volatile markets.
• Brexit ‘would trigger economic and financial shock’ for UK (The Guardian) A UK vote to leave the EU would trigger a snap recession, prompt a fall in share prices and house prices and knock as much as 2% off GDP, according to analysts at the investment bank Credit Suisse.

Overnight markets

• Overview: US 10yr note futures are up +0.07% at 128-21, S&P 500 futures are up +0.36% at 1877.00, Crude oil futures are up +1.02175%% at 30.65$, Gold futures are up +0.75072% at $1113.90, DXY is down -0.017% at 99.328.

US Economic Data

• The S&P/Case-Shiller 20-City Composite rose 5.8 percent year over year in November, above consensus estimates for a 5.6-percent jump and faster than the 5.5-percent increase in October.
• Markit Services and Composite PMI data is due at 9h45am
• US Consumer Confidence survey and Richmond Fed business survey for January will also be out at 10am

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 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