Comments

Market update

US tsys opening sharply higher, curve flatter after Thurs huge post FOMC rally, US 10Y 2.154 (-3.6bps). Tsys were flat most of the early o/n session but started to take off as overseas stock mkts tumbled, with the DAX at key support. US auctions 10Y TIPs later this morn with the backdrop of lower crude prices and 10Y breakevens at five year lows. In Canada GOCs are higher, lagging tsys by ~1bp after spds widened by 5-7 bps across the curve in tsy rally yest. No reaction to as expected CPI. Provi spds narrowed 1bp after the FOMC, but look to be opening 0.5bps wider this morn.

News headlines

• Stocks Fall as Federal Reserve Decision Sparks Growth Concerns (WSJ) Global stock markets fell Friday after the U.S. Federal Reserve’s decision not to raise short-term interest rates sparked fresh concerns over the state of the global economy.

• The ‘dots’ just got more dovish (BI) The Federal Reserve is keeping interest rates nice and low for a very long time. At the conclusion of its long-awaited Federal Open Market Committee (FOMC) meeting, the Fed announced it would keep its fed funds rate target range at 0 to 0.25%, which is where it’s been since December 2008.

• Fed adds urgency to market’s China focus (FT) This is what it sounds like when doves cry. By the time the Federal Reserve announced that its target interest rates would not, after all, be rising this month, it came as little surprise. But its reasoning did, and means that investors’ focus will move ever more urgently towards China.

• Banks Warn of Cost Cuts Ahead (WSJ) No news was bad news for the country’s banks on Thursday. After years of having their profits pinched by low interest rates, banks—and their investors—had been itching for the Federal Reserve to make a move.

• Defaults Mount in Beleaguered Energy Industry (WSJ) The well is running dry for deeply indebted energy companies. Samson Resources Corp. became the latest, and largest, victim of an industry downturn, as it filed for chapter 11 protection late Wednesday. Industry experts say more oil-and-gas companies are poised to follow the Tulsa, Okla., company into bankruptcy as oil prices remain low following a steep drop that began last year.

• Fed adds urgency to market’s China focus (FT) This is what it sounds like when doves cry. By the time the Federal Reserve announced that its target interest rates would not, after all, be rising this month, it came as little surprise. But its reasoning did, and means that investors’ focus will move ever more urgently towards China.

Overnight markets 

• Overview: IG24 5Y 78.25/78.75 (+1.75), US 10yr note futures are up +0.39% at 127-25+, S&P 500 futures are down -1.35% at 1950.5, Crude oil futures are down -2.45% at 45.75, Gold futures are up +2.03% at $1139.7, DXY is down -0.39% at 94.257.
• US BANK CDS (5yr): BAC 72/76 (+0), GS 87/91 (+0), MS 78/82 (+0), C 80/84 (+0), JPM 71/75 (+0), WFC 52/56 (+0)

US Economic Data

• Leading index is forecast at 0.2% in August less than July -0.2% increase.

Canadian Economic Data 

• CPI is flat 0.% MoM (+1.3% YoY) in August (0.0% MoM and 1.3% YoY Expec) versus July 0.1% MoM (1.3% YoY).
• CPI core came in at 0.2% MoM (2.1% YoY) in August (0.2% MoM and 2.1% YoY Expec) compared to previous month 0.0% MoM (2.4% YoY).

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 after housing starts/claims and after a quiet session o/n before FOMC decision, US 10Y 2.284 (-1.3bps).US stock futures lower, core euro bonds mixed – 10Y gilts lower, EU periph spds mixed. There is no real consensus on Fed decision with odds of a hike ~50% and differing opinions as to bond mkt reaction in either scenario. Suffice it to say we feel risk is far more skewed to a bearish flattening on a 25bp hike. GOCs unch, spds another ~1bp wider vs tsys – the ~6% rally in crude yest weighing esp heavy on short end spds.

News headlines

• Wall Street Has Doubts About Fed Lifting Interest Rates (WSJ) Wall Street is skeptical that the Federal Reserve has room to raise short-term interest rates Thursday, underscoring persistent doubts about the health of the global economy and financial markets following seven years of easy policy.

• Global stocks at three-week highs as Fed decision looms (Reuters) World stocks inched to a three-week high on Thursday while the dollar drifted lower against other currencies, as investors consolidated positions ahead of a nail-biting U.S. Federal Reserve interest rate decision.

• US rate rise harder to justify nine years on (FT) The last time the Federal Reserve raised its target interest rate, it did not seem such a big deal. It was June 29, 2006, US inflation was running at 4 per cent, far above the Fed’s target, stock markets had been rising unremarkably for 18 months, and everyone knew that the rise was coming.

• SABMiller Gets Takeover Approach From Anheuser-Busch InBev (WSJ) Anheuser-Busch InBev NV launched an effort to take over SABMiller PLC, a bold move that, if successful, would create a brewing giant that would dominate much of the global beer market.

Overnight markets 

• Overview: IG24 5Y 77/77.4 (+0), US 10yr note futures are up +0.10% at 126-20+, S&P 500 futures are down -0.34% at 1981.25, Crude oil futures are down -0.83% at 46.76, Gold futures are down -0.29% at $1115.7, DXY is down -0.24% at 95.188.
• US BANK CDS (5yr): BAC 72/76 (+0), GS 88/92 (-1), MS 79/83 (+0), C 80/84 (+0), JPM 72/76 (-1), WFC 53/57 (-1)

US Economic Data

• Initial jobless claims came in at 264K  for the week ending September 12th, lower than expected (275K) and lower than prior week (275K).
• Continuing claims decreased to 2237K from 2263K and lower than expected (2258K).
• 2Q 2015 US current account balance came in at -109.7bn  vs -111.5bn expected and -118.3bn for previous quarter.
• Housing starts came in at 1126K (-3.0% MoM) in August versus July 1161K (-4.1% MoM).
• Building permits increase to 1170K (+3.5% MoM) in August compared to previous month 1130K (-15.5% MoM).
• Philadelphia Fed is forecast at 5.9 in September below August level of 8.3.
• Fed minutes from July FOMC meeting will be release at 14:00.

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 after CPI came in as exp, prices unable to rebound despite Tues sharp selloff, US 10Y 2.28 (-0.3bps). Core Euro bonds lower with bunds extending losses after uncovered 20Y bund auction, UK jobs data. 10Y gilt/bund spd ~3bps wider on UK labor mkt data, with wages rising at the fastest pace in six yrs. JGBs higher despite S&P downgrade of Japan to A+ from AA- (see above).  GOCs lower, spds another ~1bp wider vs tsys – yesterday’s tsy selloff failed to move GOC/tsy spds with Cdn corp/provi supply a factor once again – QC, Ont & Alberta rumoured as possible candidates today.

News headlines

• Standard & Poor’s downgrades Japan from AA- to A+ (CNBC) U.S. ratings agency Standard & Poor’s downgraded Wednesday its credit rating for Japan from AA- to A+, but has revised its outlook for the world’s third-largest economy from negative to stable.

• Investors Look Beyond Fed Meeting, See Low Rates (WSJ) Investors may be mixed on what the Federal Reserve will do with interest rates this week. But they are more aligned on what they expect to happen next with rates: not much.

• Eurozone inflation falls unexpectedly in August (Marketwatch) Inflation across the eurozone unexpectedly weakened in August, a development likely to fuel speculation that the European Central Bank may have to expand its bond-buying program.

• Stocks higher as Fed verdict looms (FT) European shares are following Asia and Wall Street higher in the penultimate session before the US Federal Reserve is set to deliver its decision on interest rates.

• Eurozone races to restructure Greek banks as bail-in looms (FT) Eurozone officials are racing to restructure Greece’s banking system before new rules kick in that could wipe out corporate deposits with potentially disastrous effects for the Greek economy.

Overnight markets 

• Overview: IG24 5Y 78.9/79.25 (+0.33), US 10yr note futures are down -0.06% at 126-20, S&P 500 futures are down -0.08% at 1968.5, Crude oil futures are up +1.70% at 45.35, Gold futures are up +0.42% at $1107.02, DXY is up +0.15% at 95.744.
• US BANK CDS (5yr): BAC 74/78 (+0), GS 90/94 (+0), MS 81/85 (-1), C 82/86 (+0), JPM 75/79 (+0), WFC 55/59 (+0)

US Economic Data

• MBA mortgage applications came in this morning at -7.0% for the week ending September 11th, versus prior week -6.2% increase.
• CPI decrease -0.1% MoM (+0.2% YoY) in August (-0.1% MoM and 0.2% YoY Expec) versus July 0.1% MoM (0.2% YoY).
• CPI core came in at 0.1% MoM (1.8% YoY) in August (0.1% MoM and 1.9% YoY Expec) compared to previous month 0.1% MoM (1.8% YoY).
• NAHB housing market index is forecast at 61.0 in September equal to August.
• Net long-term TIC flows for July will be release at 16:00.

Canadian Economic Data 

• Int’l securities transactions for July came in at 8.51B, lower than previous month (8.51B).

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