Commentaires

Market update

US tsys lower, curve steeper , US 10Y 2.025 (+3bps) as equities are higher while the tsy mkt continues to price out rate hikes this year. Odds of a 25bp hike at the Mar 16 meeting have been pared back to ~50% from 66% on Thursday pre nonfarm. Fed Rosengren, in an interview with MNI, said that a 2015 rate hike is still appropriate. Core Euro bonds lower led by UK 10Y gilts despite weaker UK service PMI. GOCs are lower, steeper, longs ~2bps wider , 10/30 @79. Provis weaker, Ont 46s trading down @113, 25s @ 104, negative tone stemming partly from news Ontario decided to pull Euro benchmark 10Y sale.

News headlines

• Euro-Area Growth Seen Slowing in Sign More Stimulus May Be Ahead (Bloomberg) The euro region’s economic recovery risks faltering after growth momentum eased in September, Markit Economics said. A Purchasing Managers’ Index for manufacturing and services fell to 53.6 in September from 54.3 in August, the London-based company said in a report on Monday. That’s below a Sept. 23 preliminary reading of 53.9. A print above 50 indicates expansion.

• Despite ‘weak’ jobs report, Fed’s Rosengren still sees 2015 rate hike (CNBC) Eric Rosengren still expects the Federal Reserve to raise interest rates this year despite what the head of the Boston Fed called a « weak » September jobs report, which could signal a more significant economic slowdown that delays the policy tightening.

• Glencore surges 70% on Viterra sale speculation (G&M) Shares of Glencore, the world’s biggest commodities trader, surged more than 70 per cent in Hong Kong trading and rose 20 per cent in early London trading on speculation that it is open to takeover offers and is close to selling its Canadian agriculture business.

• Suncor Energy Inc launches unsolicited offer to buy Canadian Oil Sands Ltd for $4.3 billion (FP) Suncor Energy Inc., Canada’s biggest energy company, made an unsolicited offer to acquire all outstanding shares of Canadian Oil Sands Ltd. for about $4.3 billion, taking advantage of plunging crude prices to add production in Alberta.

• National Bank forced to cut as many as 400 jobs as economy, investment risk takes toll (FP) National Bank of Canada will cut as many as 400 jobs, or 2.3 per cent of its workforce, as it seeks to reduce costs amid changes in technology and customer preferences, a person familiar with the plan said.

Overnight markets 

• Overview: IG24 5Y 85.556/86.281 (-2.096), US 10yr note futures are down -0.16% at 129-04+, S&P 500 futures are up +0.73% at 1957.25, Crude oil futures are up +0.83% at 45.92, Gold futures are down -0.04% at $1136.2, DXY is down -0.07% at 95.767.

US Economic Data

• Markit US Services PMI for August (Final) is forecast at 55.6, equal to preliminary report.
• ISM non-manufacturing is forecast at 57.5 in September lower than August 59.0.
• Labor market conditions for September will be release at 10:00 and is forecasted at 1.4 after a 2.1 level in August.

Canadian Economic Data

• Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.

 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, Pierre-Olivier Boulanger
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 5bps steeper, US 10Y below 1.95% (-9bps) with Fed fund futures pushing out the first rate hike to March 16 at the earliest. Payrolls were weak all around, except for the unemployment rate which was unch at 5.1%. Payrolls were well shy of expectations, the workweek declined and AHE were flat. GOCs are higher, lagging tsys by 2-4bps mostly in the short end as Fed fund futures reprice rapidly, longs underperforming  by ~3bps, 10s/30s above 80.Provis 0.5bps- 1 bp wider since payrolls, 3 bps since yest, Ont 46s 114/113.5, Ont 25s 105/104.

News headlines

• S. gains 142,000 new jobs in September; unemployment 5.1% (Maketwatch) The U.S. economy created just 142,000 new jobs in September and the number of new hires in August and July was also revised lower, suggesting the labor market cooled off toward the end of summer.

• US earnings pose test for bullish views (FT) Having endured the worst quarterly performance in four years, US equity investors have priced in plenty of bad news for the global heavyweight of share markets. Or have they?

• The credit bubble, the bears and the central bankers (FT) When officials at the International Monetary Fund and World Bank first decided to hold this year’s annual meeting in Peru, some hoped that the location would offer a celebratory backdrop.

• US swap dealers return to negative quotes (FT) A dislocation between the two interest rate markets shows little sign of easing, with US derivative traders quoting negative figures for benchmark swaps over Treasury yields.

• Glencore Isn’t Out of the Woods Yet (NYT) Shares of Glencore, the giant Swiss-based mining and trading company, may have recovered from a panic sell-off this week, but few analysts consider the company out of danger.

Overnight markets 

• Overview: IG24 5Y 92.470/93.187 (+2.985), US 10yr note futures are up +0.66% at 129-19, S&P 500 futures are down -1.1% at 1895.75, Crude oil futures are up +0.63% at 45.02, Gold futures are up +1.25% at $1127.6, DXY is down -0.87% at 95.344.

US Economic Data

• Change in nonfarm payrolls was 142K MoM in September compared to August 136K and 201K was expected.
• Unemployment came in at 5.1% in September equal to 5.1% in August and was expected at 5.1%.
• Participation rate came in at 62.4 in September versus 62.6% for previous month.
• Avg hourly earnings increase 0.0% MoM (2.2% YoY) in September versus 0.3% MoM (2.2% YoY) for August.
• Avg weekly hours came in at 34.5 in September 0.1 hour lower than previous month.
• ISM New York (September) will be release at 9:45 (last report: 51.1).
• Factory orders are expected at -1.2% MoM in August fallowing +0.4% in July.

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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market update

US tsys slightly higher, rebounding sharply in NY trading with the 10Y 2.03% (-1bp) and the curve 1bp flatter. Buying in tsys spurred by higher initial claims, thou tsys were already in rally mode with German 10Y bunds as the 10Y bund future  triggered buy stops. GOCs are higher, outperforming tsys in the rally despite higher CAD for a second day and yest strong July GDP. Provis another 1bp wider after finishing yest 0.5-1bp wider – Ont 25s 101/99.5 came at 100 yest and was quickly sold out. BC in EUR mkt with 10Y @ MS +7. BMO in the mkt with a 5Y dep note ~130 which looks to be at least a 5-7bp concession based on where we mark BMO 2.84s (116 mid), TRP reopening their longs @ 247 200mln expect fills to be small on that one…

News headlines

• After Rough Quarter, Investors Buckle Up (WSJ) Investors are bracing for more large price swings across stocks, bonds and commodities heading into a month that is associated with market tumult.

• China manufacturing contracts for 2nd consecutive month (FT) Chinese manufacturing activity contracted for the second consecutive month in September, adding to gloom over the state of the economy and raising analysts’ expectations of another rate cut from the central bank.

• Carney on climate: Central bankers stray from mandate (FT) Mervyn King, the former Bank of England governor, said “a successful central bank should be boring”. Judging from Mark Carney’s surprise intervention in the climate change debate this week, his predecessor’s views are out of fashion at Threadneedle Street.

• Questions About Leak at Federal Reserve Escalate to Insider-Trading Probe (WSJ) A high-profile investigation into a leak of sensitive information from the Federal Reserve in 2012 has escalated to an insider-trading probe led by a key market surveillance agency and federal prosecutors in Manhattan, according to people familiar with the matter.

• Sharp rise in Canadian home prices among fastest in the world (G&M) Canadian home prices are rising at a rapid-fire pace that is among the fastest in the world. A quarterly look by Bank of Nova Scotia’s Adrienne Warren shows prices in Canada rose 8.2 per cent in the second quarter of 2015, compared to a year earlier.

Overnight markets

• Overview: IG24 5Y 89.380/90.005 (+0.617), US 10yr note futures are up +0.10% at 128-27+, S&P 500 futures are up +0.17% at 1912.0, Crude oil futures are up +3.39% at 46.62, Gold futures are up +0.08% at $1116.1, DXY is down -0.14% at 96.214. 

US Economic Data

• Challenger job cuts came in at 93.2% YoY in September, compared to prior month 2.9% increase.
• Initial jobless claims came in at 277K  for the week ending September 25th, higher than expected (271K) and higher than prior week (267K).
• Continuing claims decreased to 2191K from 2244K and lower than expected (2230K).
• Markit US Manufacturing PMI (Final) is forecast at 53.0 in September, equal to preliminary report.
• ISM Manufacturing is forecast at 50.6 in September versus August 51.1.
• Construction spending is forecast at 0.5% MoM in August versus 0.7% in July.
• Total vehicle sales are expected at 17.60M in September lower than July 17.72M.

Canadian Economic Data

• RBC Canadian Manufacturing PMI will be released at 9h30am.

 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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