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Market update

US tsys on the defensive this morn after yields reached two month lows yest after weak ISM (priced paid 44 vs 49 exp). 10Y 2bps higher @ 2.17, curve ~1bp steeper. WTI is ~1.6% higher after falling 4% yest, other metals higher as well. Core Euro bonds lower/curves flatter, EU periph spds unch except  Greece which is 10 bps narrower vs bunds. Canada playing catch up mode after holiday yest, Cda/US in ~5bps in 10s & 30s. This week is all about payrolls in the US as there is no Fed speak or tsy supply to deal with.

News headlines

• Puerto Rico Defaults on Bond Payment (NYT) Puerto Rico defaulted on a $58 million bond payment on Monday, a risky move that seemed to intensify the pressure on creditors for broader debt renegotiation, but might also make future borrowing far more difficult.
• China Dethroned as World’s Most Liquid Stock Market (Bloomberg) After Curbs China has lost its title as the world’s most liquid stock market as trading halts and regulatory efforts to curb bearish transactions drive away investors.
• Pimco Gets Warning From SEC That Lawsuit Could Be Coming (WSJ) Bond giant Pacific Investment Management Co. said Monday that it could be sued by the country’s top securities regulator over how it valued assets in one of its most popular funds aimed at small investors.

Overnight markets

• Overview: IG24 5Y 71.7/72 (-0.03), US 10yr note futures are down -0.12% at 127-21+, S&P 500 futures are down -0.12% at 2088.5, Crude oil futures are up +1.75% at 45.96, Gold futures are up +0.07% at $1090.2, DXY is down -0.20% at 97.299.

US Economic Data

• ISM New York (July) will be release at 9:45 (last report: 63.1).
• Factory orders are expected at 1.8% MoM in June versus -1.0% in May.
• IBD/TIPP economic optimism is forecast at 47.8 in August 0.3 point lower than July (48.1).

Canadian Economic Data

• RBC Canadian Manufacturing PMI will be released at 9h30am.
• 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 trading lower 10Y 2.275 (+2.5bps), focus on FOMC meeting later this aft. Tsys fell o/n with core Euro bonds on recovery in risk assets as China stocks rose 3.0%. Bunds, gilts lower even as Greece 10Y ~43bps higher as Tsipras warns of snap elections, bailout talks begin in Athens. US pending home sales later this morning followed by supply – $35bln in 5Y notes and $15bln 5Y notes at 1:00. In Canada, GOC are lower, spds unch vs tsys , except in 2s on central bank policy divergence, oil hovering near the lows .Provis unch – QC 45s 93.5 , Q45/O45 trading down at 4.5 , Ont 46s unch @ 89.

News headlines

• Fed expected to push ahead with rate hike plan (Reuters) The Federal Reserve is expected on Wednesday to point to a growing U.S. economy and stronger job market as it sets the stage for a possible interest rate hike in September.

• Russia Calling Off Dollar Buying Bolsters Ruble as Oil Slides (Bloomberg) The ruble ended five days of losses as the Bank of Russia said it was stopping daily purchases of foreign exchange, signaling policy makers don’t want to add impetus to the currency’s decline before an interest-rate decision this week.

• Carney Begins Final Countdown to Bank of England Data Overload (Bloomberg) Brace yourself. Mark Carney is about to unleash a flood of data in one fell swoop in what will be an unprecedented move for a major central bank. Instead of staggering releases over two weeks, the Bank of England will on Aug. 6 simultaneously publish its policy decision, minutes of meeting, officials’ votes and new forecasts covering every facet of the economy.

• US Treasuries market faces liquidity concerns (FT) Investors are asking themselves a question that until recently had never been up for debate; how “liquid” are US Treasuries?

• U.S. trading revenues a sign of caution for Canadian banks (FP) Better-than-expected second-quarter results for most U.S. financials bode well for Canadian banks in the third quarter, but trading revenues are expected to be a major factor driving sector valuations.

Overnight markets

• Overview: IG24 5Y 70.1/70.5 (-0.7), US 10yr note futures are down -0.16% at 126-25+, S&P 500 futures are up +0.10%  at 2089.25, Crude oil futures are down -0.90% at 47.55, Gold futures are down -0.16% at $1095.0, DXY is up +0.05% at 96.817.

US Economic Data

• MBA mortgage applications came in this morning at 0.8% for the week ending July 24th, versus prior week 0.1% increase.
• Pending home sales are forecast at 0.9% MoM (11.1% YoY) in June versus May 0.9% MoM (8.3% YoY).
• FOMC Rate Decision is schedule 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 opening slightly lower, lagging the sizeable rally in Euro govt bonds on weaker data, month end extensions. US 10Y 2.273 (+0.4bps), curve unch. Tsy futures volume way below avg, TY1 traded in a 5 tick range o/n. Core Euro bonds higher, led by 10Y gilts. Weaker than exp China & Euro PMIs with the former falling to a 15 month low in July,  In Canada, GOCs slightly higher, 1bp tighter vs tsys in 10s & longs. The loonie hit a 11Y low in early N.A. trade 1.3082 as commodities plumb new lows in the wake of the weak Chinese data. Yest we saw buyers of longs on the uptrade and vs 10s, both fm momentum type trades.  No data in Cda only US new home sales which are expected to have risen 0.3% in June after a 2.2% increase in May. Interesting to note that while sales volumes are still ~60% below the peak of 2005, prices are basically back to pre-crisis levels.

News headlines

• German Manufacturing Growth Slowed in July as Exports Decline (Bloomberg) German manufacturing growth unexpectedly cooled in July as exports fell for the first time in six months.

• Copper, Aluminum Prices Follow Gold’s Wake to Hit Multiyear Lows (WSJ) Prices of major traded-metals tumbled to multi-year lows Friday as weak Chinese manufacturing data added to the brew of excess supply and a strong dollar that has put pressure on several commodities this week.

• Fed and BoE take pole positions in rate race (FT) Central banks are starting to resemble Formula One drivers of current vintage — two of them well out in front, dominating the field, the rest trailing in their wake.

• Canada bouncing back, further rate cuts unlikely, economists say (G&M) The Canadian economy is already bouncing back from a slump in the first half of the year, but it remains vulnerable to further falls in oil prices and any renewed weakness in export demand from the United States, a Reuters poll found.

Overnight markets

• Overview: IG24 5Y 69.5/70 (+1.25), US 10yr note futures are up +0.14% at 126-25, S&P 500 futures are up +0.02%  at 2099.0, Crude oil futures are up +0.95% at 48.91, Gold futures are down -1.08% at $1082.3, DXY is up +0.37% at 97.470.
• US BANK CDS (5yr): BAC 68/72 (+0), GS 85/89 (+0), MS 77/81 (+0), C 76/80 (+0), JPM 68/72 (+0), WFC 51/55 (+0)

US Economic Data

• Markit US Manufacturing PMI (Preliminary) is forecast at 53.6 for July, equal to previous month.
• New home sales are forecast at 548K (0.3% MoM) in June versus May 546K (2.2% MoM).

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