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Market update

US tsys opening higher & flatter, US 10Y below 2.10% (2.093 -3.4bps). ‘Risk off’ session o/n with equities lower, volume in tsy futures higher than avg (TY1 <cmdty> VAT).  5Y TIPS auction this aft with 5Y breakevens ~60bps (USGGBE05 <index>) lower over the month @ 116 bps lowest since Jan after weaker CPI & lower oil. Decline in oil will hurt carry in the near term as well. Claims & Phili Fed only data today – the latter more important after sharp drop in Empire. In Canada, GOCs are higher in line with tsys except which are ~3bps wider – 10/30 crv @73.5 yest on provi related rate lock selling as well as curve steeepeners on CPI/Fed.

News headlines

• S. crude prices fall towards $40 on global glut (Reuters) U.S. crude oil prices fell to almost $40 a barrel on Thursday, their lowest since the global financial crisis of 2009, as supplies rose in North America and the Middle East, filling stockpiles to record levels.

• Markets flustered by more China volatility (FT) Equity benchmarks are under pressure while “haven” government bonds are in demand amid fretting over China’s economy and stocks, weak commodity prices, and fragile emerging markets.

• So Long September: Bond Traders Defer Their Date With the Fed (Bloomberg) So much for September.Traders gearing up for the Federal Reserve to raise interest-rates next month reversed course Wednesday after minutes from the central bank’s July meeting showed policy makers were still waffling on whether the economy is strong enough to warrant higher borrowing costs.

• Fed officials are concerned China woes could hit U.S. (Marketwatch) Concerns about China’s economy were apparent at the July meeting of the Federal Reserve, even before that country’s surprise loosening of its currency peg.

Overnight markets

•  Overview: IG24 5Y 80.5/81 (+1.37), US 10yr note futures are up +0.05% at 128-05, S&P 500 futures are down -0.42% at 2064.0, Crude oil futures are up +0.37% at 40.95, Gold futures are up +1.26% at $1142.1, DXY is down -0.20% at 96.171.
• US BANK CDS (5yr): BAC 71/75 (+0), GS 90/94 (+0), MS 80/84 (+0), C 80/84 (+0), JPM 72/76 (+0), WFC 51/55 (+0)

 US Economic Data

• Initial jobless claims came in at 277K  for the week ending August 15, higher than expected (271K) and prior week (273K).
• Continuing claims decreased to 2254K from 2278K and lower than expected (2265K).
• Philadelphia Fed is forecast at 6.5 in August above July level of 5.7.
• Existing home sales are forecast at 5.43M (-1.1% MoM) in July versus June 5.49M (3.2% MoM).
• Leading index is forecast at 0.2% in July less than June 0.6% increase.

Canadian Economic Data

• Wholesale trade sales came in at 1.3% MoM in June better than May -0.9% decrease and higher than expected (0.9%).

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 moving lower after initial spike on tame CPI (but shelter rose 0.4% – largest since 2007),US10Y 2.20% (+1bp) curve 1bp flatter. Equities lower in Europe, Asia higher, gold higher, crude slightly lower (42.50). China stocks – another volatile day – shares were down ~5.0% before PBOC intervention led stocks to close 1.2% higher. FOMC minutes later this afternoon – data since the July meeting has been positive for the most part except inflation is still very much contained as commodities continue to weaken, Fed speak has been mixed with Lockhart pushing for Sep increase while Powell & others prefer to wait. In Canada, GOCs moving lower, spds unch vs tsys with CMB 10Y & FRN this morning. Provis wider, supply still possible despite CMB , long Ont rumored. Alberta expected to price its USD 5Y (MS + 17), Alb/Ont 43 -1/-1.5 (0 /-1) yest…

News headlines 

• China Flips to Gains After Steep Losses Earlier (WSJ) A steep drop in China shares flipped to gains Wednesday, the latest signal that Beijing won’t let the market fall too far before engineering a rescue.

• Surge in emerging market capital outflows hits growth and currencies (FT) A surge of capital gushing out of emerging markets has risen toward $1tn over the past 13 months, roughly double the amount that fled during the financial crisis amid slumping confidence in the world’s developing economies.

• ECB’s Market Dilemma: What Happens When Bond Supply Dries Up? (Bloomberg) As the European Central Bank purchases bonds in an effort to stimulate the euro region’s economy, policy makers in Frankfurt face a dilemma: what to do when they run short of securities to buy.

• Target Lifts Earnings Outlook (WSJ) Target Corp. on Wednesday lifted its profit outlook for the year after posting stronger-than-expected earnings in its second quarter and its fourth straight quarter of same-store sales growth.

• Housing woes? $12-million Calgary listing bucks trend in luxury real estate (G&M) Luxury home sales in Calgary have taken a hit this year thanks to slumping oil prices, but that isn’t preventing Sotheby’s from listing a $12.25-million home today.

Overnight markets

• Overview: IG24 5Y 78.6/79 (+0.92), US 10yr note futures are up +0.01% at 127-15, S&P 500 futures are down -0.27% at 2088.25, Crude oil futures are down -0.38% at 42.46, Gold futures are up +0.44% at $1121.8, DXY is down -0.10% at 96.939.
• US BANK CDS (5yr): BAC 71/74 (+0), GS 90/93 (+0), MS 80/83 (+0), C 80/83 (+0), JPM 72/75 (+0), WFC 51/54 (+0)

 US Economic Data

• MBA mortgage applications came in this morning at +3.6% for the week ending August 14, versus prior week 0.1% increase.
• CPI increase 0.1% MoM (0.2% YoY) in July (0.2% MoM and 0.2% YoY Expec) versus June 0.3% MoM (0.1% YoY).
• CPI core came in at 0.1% MoM (1.8% YoY) in July (0.2% MoM and 1.8% YoY Expec) compared to previous month 0.2% MoM (1.8% YoY).
• 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 marching higher on weaker NY Empire survey, curve flatter US 10Y 2.165 (-4bps), with focus on commodities as crude trades at new low below 42. Core EU bonds higher led by 10Y gilts (-4bps). Comments on Greek bail-in debt also supporting tsys, with Greek senior bank debt falling on prospect of losses as a condition of bailout. In Canada, GOCs are higher led by 10s (-3bps). Provis opening with heavy tone, supply expected this week.

News headlines

• Oil Price Starts the Week in the Red (WSJ) The oil price kicked off the week in the red as the market remained under selling pressure, with U.S. oil prices dropping below $42 a barrel.

• Divergent inflation trends complicate rate moves in U.S., Canada (GI) In the intense discussion about I the fast-evolving interest rate policy at North America’s central banks, somewhat lost in all the intrigue has been the critical role of inflation. The trend in consumer prices could still prove the pivotal factor in rate decisions on both sides of the Canada-United States border – and we’ll get an update on the numbers for both countries at a key policy juncture this week.

• Japan’s economy contracts in second quarter (FT) The Japanese economy shrank at an annualised rate of 1.6 per cent in the second quarter of 2015, in a blow to Prime Minister Shinzo Abe’s hopes of reviving the country’s growth.

• BOE Official Says Don’t Wait Too Long on Rates (WSJ) The Bank of England is under no immediate pressure to raise interest rates in the U.K., but officials shouldn’t wait too long to do so, one of the central bank’s nine policy makers said on Monday.

Overnight markets

• Overview: IG24 5Y 76.6/77 (+0.3), US 10yr note futures are up +0.29% at 127-23+, S&P 500 futures are down -0.36% at 2082.0, Crude oil futures are down -1.76% at 41.75, Gold futures are up +0.65% at $1119.9, DXY is up +0.10% at 96.617.

 US Economic Data

• Empire manufacturing decreased to -14.92 in August from a reading of 3.86 in July. Analysts had expected the index to rise to 4.5.
• Net long-term TIC flows for June will be release at 16:00.

Canadian Economic Data

•  Int’l securities transactions for April came in at 8.51B, higher than previous month (-5.46B).

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