Commentaires

19/01/2016

par admin | Jan 19, 2016 | commentaires

Market update

US tsys trading lower after ‘risk on’ session after China GDP, which thou less than exp, exceeded some forecasts and left door open for further stimulus. US 10Y 2.055 (+1.5bps) vs 2.085 in early NA trading. Light data session so bonds likely to take cue from stocks esp in light of ongoing volatility, both BOA & MS beat Q4 earnings exp which should also support stocks. Euro stocks higher (+2.5%), crude up 0.75%,core Euro bonds lower with longs underperforming after better than exp German ZEW (59.7 vs 53.1). GOCs lower led by 10s, curve ~1.5bps steeper with longs well bid 10/30 ~1bp flatter. Provis 1bp tighter on no trade, Ont 46 117/116, Ont 25 106.5/106.

News headlines

C hina GDP Slows to Weakest Since 2009 on Manufacturing Slide (Bloomberg) China’s economy slowed in December, capping the weakest quarter of growth since the 2009 global recession, as the Communist leadership grapples with a transition to consumer-led expansion. Industrial production, retail sales and fixed-asset investment all slowed at the end of the year, while gross domestic product rose 6.8 percent in the fourth quarter from a year earlier. Full-year growth of 6.9 percent, the least since 1990, was in line with the government’s target of about 7 percent.
Oil rises on record Chinese demand, oversupply caps gains (Reuters) Oil prices rose more than 3 percent on Tuesday as data showed Chinese oil demand likely hit a record high in 2015, but contracts remained near 12-year lows as the IEA said the market should stay oversupplied this year. Iran has said it plans to increase oil production by 500,000 barrels a day now that sanctions have been lifted under a nuclear deal with world powers.
Euro zone inflation confirmed at 0.2 percent in December (Reuters) Euro zone inflation was confirmed at 0.2 percent in December, the European Union’s statistics office data showed on Tuesday, with prices going up in restaurants and cafes and falling the most for fuel. Eurostat confirmed its earlier estimate that consumer prices in the 19 countries sharing the euro were flat month-on-month in December for a 0.2 percent year-on-year rise. However, the statistics office revised down the inflation number for November to 0.1 percent year-on-year from 0.2 percent reported earlier.
François Hollande Aims 2 Billion Euro Plan at France’s Economic ‘Emergency’ (NYTimes) Declaring the French economy to be in a “state of emergency,” President François Hollande announced on Monday a 2 billion euro plan to subsidize job creation and temporarily move half a million unemployed people off the welfare rolls, as record unemployment threatens his bid for re-election next year.
IMF cuts global growth forecasts (TheGuardian) The Washington-based body said world output would be 0.2 points lower in 2016 and 2017 compared with forecasts made just three months ago – and that the risks to its predictions were to the downside.
A Hint of Trouble in European Debt (WSJ) A wave of selling has taken Europe’s corporate-bond market to levels typically seen during recessions, another indication that the turmoil in global markets could spread into the wider economy. The gap in yields, or spread, between Eurozone high-grade corporate debt and safer government bonds has ballooned to its widest level in nearly three years, according to Barclays bond indexes. Three years ago, the European economy was in recession following the sovereign-debt crisis that had engulfed the continent.
Fed Almost Certain to Keep Interest Rates Unchanged at Next Meeting (WSJ) Federal Reserve officials, facing an economic jumble as 2016 begins, will almost certainly keep short-term interest rates steady at a policy meeting this month and turn their focus toward a potential cliffhanger decision about whether to lift them when they gather again in March.
‘Currency instability’ now a serious concern for Canada (FinancialPost) Canada’s economy is being threatened by “currency instability” as the loonie’s rapid decline against the U.S. dollar is hurting business and consumer confidence, economists warn. The loonie fell last week below 70 cents against the U.S. dollar for the first time since 2003, with the currency trading at just under 69 cents on Monday.
Why the price of oil will recover faster than you think (FinancialPost) It no doubt feels like a new paradigm for oil investors with the price of oil failing 72 per cent since 2014, the second-largest peak-to-through decline in more than 30 years. Many are pointing fingers at the Organization of the Petroleum Exporting Countries for the monster wave of oil now hitting the markets, but it really all started with the U.S. shale producers.
German Jan ZEW Econ Expectations 10.2 Vs 16.1 in Dec German economic sentiment deteriorated at the start of the year, albeit less than forecast, as slower growth in China and problems in other large developing economies cloud Germany’s economic outlook, a survey of analysts and institutional investors showed Tuesday. The ZEW indicator of economic expectations fell to 10.2 in January from 16.1 in December, its lowest level since October last year. Economists polled by The Wall Street Journal had forecast a decline to 8.0.

Overnight markets

Overview: US 10yr note futures are down -0.16% at 128-08, S&P 500 futures are up +1.19% at 1897.50, Crude oil futures are up +0.68% at 29.62$, Gold futures are down -0.50% at $1085.20, DXY is up +0.33% at 99.286.

US Economic Data

NAHB Housing Market Index will be released at 10am
Net Long-term TIC Flows at 4pm from the US Treasury

Canadian Economic Data

Foreign investment in Canadian securities continued in November, at a net $2.58-billion, though that amount was dwarfed by October’s $19.08-billion, which was revised sharply down from $22.08-billion.

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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

15/01/2016

par admin | Jan 15, 2016 | commentaires

Market update

US tsys sharply higher, 10Y below 2.0%(-8bps) for the first time since Oct 16th after Jan Empire Man fell to lowest since June 2009 (new orders -23.5 vs -6 in Dec). China & oil main themes o/n with brent below $30 o/n while the China CSI 300 fell 3.0%. Core Retail sales also weak (-0.1% vs 0.2% exp) while PPI came in as exp. Fed Dudley to speak@ 9:00 on the economy and mon policy. Core Euro bonds higher, German 10Y bund lagging the rally in tsys – -4bps @ 0.53%, the DAX -2.4% close to Sep lows. GOCs are higher, lagging the move in tsys ~4bps thru the curve longs particularly heavy all week – 10/30 now 85 bps + 2bps , 8bps wider on the week with 2/10 unch!, so longs start to look interesting here.

News headlines

Charting the Markets: Global Stocks Suffer From China’s Bear Market (Bloomberg) Global stocks are heading for their third consecutive weekly decline. Some $5.6 trillion has been wiped off the value of equities around the world in 2016. The MSCI All Country World Index is hovering above its lowest close since September 2013 as concern persists about the health of China’s economy, while the price of crude oil languishes at 12-year lows. Asian stocks sank to a three-year low, and the Stoxx Europe 600 Index dropped to its lowest since January 2015.
China’s Banks Scaled Back Lending in December (Bloomberg) China’s new bank loans came in lower than expected in December, as lenders sharply scaled back activity at the end of the year amid slowing economic growth and rising bad debt. However a broader measurement of credit that also includes nonbank lending showed a surprise rise, offsetting some of the impact from the retreat of state lenders, which have long been a major lever for Beijing to help lift the world’s second-largest economy.
Oil slides below $30 on oversupply fears (FT) Oil resumed its seemingly inexorable slide on Friday with prices on both sides of the Atlantic slipping below $30 a barrel as investors braced for the full return of Iranian barrels to the market.
Oil Seen Heading to $20 by Morgan Stanley on Dollar Strength (Bloomberg) A rapid appreciation of the U.S. dollar may send Brent oil to as low as $20 a barrel, according to Morgan Stanley.Oil is particularly leveraged to the dollar and may fall between 10 to 25 percent if the currency gains 5 percent, Morgan Stanley analysts including Adam Longson said in a research note dated Jan. 11.
Canadian dollar dips below 69 cents US, pressured by oil prices (TheGlobeandMail) The Canadian dollar was trading below 69 cents US early Friday for the first time since 2003 as crude oil futures dropped below $30 US a barrel. The loonie traded as low as 68.74 cents US about five hours before the Toronto Stock Exchange opened. It was somewhat higher at 6:30 a.m. ET, trading at 68.98 cents US — about two-thirds of a U.S. cent below the Thursday closing price.
Big five US investment banks hurt by China and oil (FT) Wall Street banks are poised to unveil another batch of lacklustre profits after the run-up to the Federal Reserve’s historic interest rate rise failed to boost their crucial trading businesses.
US equity funds hit by outflows for second straight week (FT) Investors pulled billions of dollars from US equity funds for the second straight week as fears of a slowdown in China continued to reverberate through global financial markets.The pace of withdrawals accelerated to $12.4bn in the week to January 13, with stock funds suffering the largest two-week period of redemptions in 10 months, according to fund flows tracked by EP.
Goldman Sachs agrees to tentative $5.1B mortgage settlement (USAToday) Goldman Sachs Group (GS) has reached a nearly $5.1 billion tentative settlement of a federal and state investigation of the investment banking giant’s handling of mortgage-backed securities before the national financial crisis, the bank said Thursday. The New York City-based bank will pay a $2.4 billion civil monetary penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief — including mortgage principal forgiveness for underwater homeowners and distressed borrowers, forecloseure prevention, support for debt restructuring and other programs.
BHP Billiton takes $7 billion hit from U.S. oil business (CNNMoney) BHP Billiton announced a « disappointing » $7.2 billion pre-tax writedown on its U.S. oil and gas assets, following a slump in prices. The Anglo-Australian mining company said it was reducing the number of rigs in its onshore U.S. business to five, from seven currently. Just a year ago it was operating 26 rigs in the U.S. The company also said it will review its investment and development plans for the rest of the 2016 financial year.
Citigroup Earnings Jump on Lower Legal Fees, Higher Revenue (WSJ) Citigroup Inc. said Friday that fourth-quarter profit jumped as legal costs fell and revenue rose at the third-largest U.S. bank by assets. The New York-based bank reported a profit of $3.34 billion, or $1.02 per share. That compares with the $344 million, or 6 cents per share, it reported in the same period of 2014. Revenue edged up 3%, to $18.46 billion from $17.9 billion a year ago. After stripping out accounting adjustments, earnings were $1.06 per share. That edged past the $1.05 expected by analysts polled by Thomson Reuters. Adjusted revenue was $18.64 billion, beating analysts’ expectations of $17.9 billion.
Wells Fargo Reports Stable Profit on Slight Rise in Revenue (WSJ) Wells Fargo & Co. said its fourth-quarter profit was flat compared with the year-ago period, as the nation’s fourth-largest bank by assets continued to wrestle with a slump in oil prices. The San Francisco-based bank reported a profit of $5.71 billion, or $1.03 a share. That compares with $5.71 billion, or $1.02 a share, in the same period of 2014. Analysts polled by Thomson Reuters had expected earnings of $1.02 a share. Revenue rose to $21.6 billion from $21.4 billion. Analysts had expected $21.8 billion.
Canadian Oil Sands claims victory, calls for Suncor to disclose details to public (TheGlobeandMail) Canadian Oil Sands Ltd. is calling on Suncor Energy Inc. to disclose details of how shareholders reacted to its $4.3-billion hostile takeover bid for COS before a Jan. 8 deadline was extended by nearly three weeks.

Overnight markets

Overview: US 10yr note futures are up +0.66% at 128-22, S&P 500 futures are down -2.45% at 1867.75, Crude oil futures are down -4.74% at 29.72$, Gold futures are up +1.86% at $1093.90, DXY is down -0.48% at 98.611.

US Economic Data

Retail sales dipped a seasonally adjusted 0.1% last month to $448.1 billion after having climbed a 0.4% in Nov.
Retail sales excluding automobiles, gasoline, building materials and food services fell 0.3% after a downwardly revised 0.5% rise the prior month.
Core retail sales previously were reported to have advanced 0.6%. Economists had forecast 0.3% increase last month.
Producer prices slipped 0.2% after increasing 0.3% in Nov. Economists had forecast PPI falling 0.2%, 1.0% y/y.
Empire Man fell sharply in Jan plummeting to -19.4 from -6.2 in Dec and -4 exp. This is the lowest reading since 2009 driven by a collapse in new orders to -23.5 from -6.2 while shipments also contracted a lot (-14.4 vs. 4.6 prior).
Industrial Production fell 0.4% in Dec. vs 0.2% est, while capacity utilization dropped to 76.8% from 77%.

Canadian Economic Data

Canadian Dec. Existing Home Sales Fell 0.6%, Realtor Group Says

Disclosure and Disclaimer

Ivan Greenstein, Stephan Buu
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

14/01/2016

par admin | Jan 14, 2016 | commentaires

Market update

US tsys higher, 10Y 2.093 (-1bp), curve 2bps steeper led by 5Y, maintain gains after i. US yields briefly touched yest post Beige book lows before stocks reversed higher. Core Euro bonds also higher with flight to quality bid as crude fell to new lows o/n (brent @ 29.73). Bunds also supported by lower stocks led by industrials with ~11% fall in Renault shares. US auctions $13bln in 30Y bonds at 1:00ESt after a solid 3& 10Y. GOCs higher with ‘risk off’ theme, provis unch after some early buying, Ont 46s trading up @ 116, Ont 25 @ 105.5, ~11bps wider since y/e.

News headlines

JPMorgan profits jump as costs reined in (FT) JPMorgan Chase saw the US banks’ fourth-quarter earnings season off to a solid start with a 10 per cent rise in net income, after cost cuts compensated for sluggish results from the investment banking arm and a near-50 per cent jump in bad loan provisions. The biggest US bank by assets is often seen as a barometer for an industry still grappling with tougher post-crisis rules on capital and liquidity, patchy client activity and near-zero interest rates. By that token, the results were encouraging, showing a slight lift in net revenues across the group and a 7 per cent fall in non-interest expenses.
Bank of England votes 8-1 to hold rates at 0.5% (BBC) UK interest rates have been left unchanged again at 0.5% by the Bank of England’s rate-setters. Eight of the nine rate-setters on the Monetary Policy Committee (MPC) voted for no change, with one voting for a rise. The Bank rate has been at the record low of 0.5% since March 2009. A number of economists have been pushing their expectations of the first UK interest rate rise from the end of 2016 into the start of 2017.
Bank of Indonesia Cuts Rates to 7.25% (Bloomberg) Indonesia’s central bank cut its main interest rate for the first time in 11 months, prioritizing a boost to flagging economic growth over concern looser policy could trigger more currency weakness. Bonds rose and stocks pared losses incurred earlier due to deadly attacks in Jakarta.
Bank of Korea sets new 3-yr inflation target at 2 pct, drops band (Reuters) South Korea’s central bank said on Wednesday it was setting its new three-year inflation target at 2 percent, scrapping its current policy of using a targeted band for consumer prices. The target band is now 2.5 to 3.5 percent and will expire at the end of this year. Before the current target, South Korea used a midpoint of 3.0 percent within a range of 2.0 to 4.0 percent. The new target will be used from 2016 to 2018.
Brent hits new 12-year oil below $30 in Asian trading (CNBC) Brent oil prices dipped below $30 in Asian hours Thursday, underscoring weakness in the energy market amid a continued increase in the supply of the commodity. U.S. WTI light sweet crude fell as much as 0.7 percent and was last at $30.66 a barrel while Brent oil fell as much as 1.9 percent to $29.73–its lowest level since February 2004–and was last at $30.05 a barrel.

Overnight markets

Overview: US 10yr note futures are down -0.11% at 127-29+, S&P 500 futures are up +0.54% at 1891.75, Crude oil futures are up +1.12% at 30.83$, Gold futures are down -0.33% at $1083.5, DXY is down +0.02% at 98.910..

US Economic Data

Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended Jan. 9. Economists polled by Reuters had forecast claims slipping to 275,000 in the latest week.
The four-week moving average of claims, considered a better measure of labour market trends as it strips out week-to-week volatility, rose 3,000 to 278,750 last week.
Continuing claims rose 29,000 to 2.26 million in the week ended Jan. 2. The four-week moving average of the so-called continuing claims increased 5,250 to 2.22 million.
S. Import prices fell 0.5% in November, revised from a 0.4% decline.

Canadian Economic Data