Commentaires

Market Update

Tsys rallying on strong risk-off tone, yields 6- 13 bps lower with the 2s10s curve inverted for the first time since 2007, 10Y yield lowest since 2016 , heavy volume in TY futures (768k), 21K TY contracts trading in a two  minute period once prices broke above Tuesday high was breached (130-17). Global stocks lower o/n while USTs and JPY gained. European equities down 1.75%, US equity futures -1.5%, crude -4.0%.  China industrial production rose at the slowest rate since 2002 in July, while retail sales rose less than exp( 7.6% vs 8.6%). Yest Trump announced a delay of tariffs on certain Chinese goods from Sep1st to Dec 15th to ‘save christmas’.   In Canada, GOCs higher, curve 4bps flatter 2s10s, 10s30s unch  @ 21.5 –  3bps tighter on the week despite the rally in 10s to new lows, yet lagging the 7bp narrowing in US 10s30s.  Long auction at noon – reopening of the Dec 2051s for $1.4bln with the Dec51/48 roll -0.3/-0.5.

News headlines

Stocks Slide, Bonds Flash Warning After Weak Data: Markets Wrap (Bloomberg) American equity-index futures slumped alongside stocks in Europe as weak data from two of the world’s biggest economies overshadowed an apparent de-escalation in the trade war. Treasuries and European bonds rallied, with key parts of both the U.S. and U.K. yield curves inverting.

TSX futures fall on lower crude prices (Reuters) Futures for Canada’s main stock index were down on Wednesday, as oil prices dropped on concerns over weaker economic data from Europe and China.

Oil Retreats After Biggest Jump in Five Weeks as Stockpiles Rise (Bloomberg) Oil declined after its biggest surge in five weeks as an industry report showed American crude stockpiles expanded, paring a rally that was fueled by signs the U.S.-China trade deadlock may be easing.

China industrial output weakens to 17-year low as economy slows (BNN) China posted the weakest industrial output growth since 2002 and slumping retail sales in July, as a cyclical slowdown and trade tensions add to the case to roll out more stimulus

Shrinking German economy ‘on edge of recession’ as exports stutter (Reuters) Slumping exports sent Germany’s economy into reverse in the second quarter, with prospects of an early recovery slim as its manufacturers struggle at the sharp end of a global slowdown amplified by tariff conflicts and fallout from Brexit.

U.S. Treasury bond curve inverts for first time since 2007 in recession warning (Reuters) The U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007, in a sign of investor concern that the world’s biggest economy could be heading for recession.

Euro zone GDP slows in second-quarter as growth in Germany shrinks (Reuters) The euro zone’s GDP barely grew in the second quarter of 2019, data showed on Wednesday, as economies across the bloc lost steam and the largest, Germany, contracted thanks to a global slowdown driven by trade conflicts and uncertainty over Brexit.

Kremlin says WTO’s existence would be in doubt if U.S., others left (Reuters) The Kremlin said on Wednesday that the existence of the World Trade Organization (WTO) would be in serious doubt if major economies such as the United States left it, a prospect raised a day earlier by U.S. President Donald Trump.

Market Overview: US 10yr note futures are up 0.493% at 130-15, S&P 500 futures are down -1.31% at 2893.5, Crude oil futures are down -2.75% at $55.53, Gold futures are up 0.78% at $1525.9, DXY is down -0.12% at 97.693, CAD/USD is up 0.53% at 0.7522.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.325%	2 Year	1.601%
5 Year	1.171%	5 Year	1.499%
10 Year	1.152%	10 Year	1.589%
30 Year	1.374%	30 Year	2.023%

US Economic Data

07:00 AM	MBA Mortgage Applications, Aug 9  Survey: — Actual: 21.70% Prior: 5.30%
08:30 AM	Import Price Index MoM, Jul  Survey: -0.10% Actual: 0.20%  Prior: -0.90%
	Import Price Index YoY, Jul  Survey: -2.00% Actual: -1.80% Prior: -2.00%
	Export Price Index MoM, Jul  Survey: -0.10% Actual: 0.20%  Prior: -0.70%
	Export Price Index YoY, Jul  Survey: — Actual: -0.90%  Prior: -1.60%

Canadian Economic Data

There is no Canadian economic data for 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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update

US tsys slightly lower before July CPI, US 10Y 1.65%, having erased earlier gains, strong volume in TY futures (~600k). Long term tsys continuing to outperform, after well-received UK 30Y auction, 30Y tsy yield fell to 2.095% within 1bp of 2016 record low 2.088% . Situation in Hong Kong escalating with flights cancelled, also a huge miss in ZEW confidence (-13.5 vs -6.3) – German bund curve 4bps flatter.  In Canada, GOCs mostly unch, 10s30s flatter for second day in line with global flattening.

News headlines

Stocks Retreat Amid Hong Kong, Argentina Turmoil: Markets Wrap (Bloomberg) U.S. equity futures struggled for direction after stocks fell in Europe and slumped in Asia as turmoil in Hong Kong and Argentina spooked investors already on edge over the trade war. The dollar was steady as gold and silver rallied.

TSX futures point to flat opening (Reuters) Futures for Canada’s main stock index were little changed on Tuesday, as gains in gold prices were countered by lower oil.

Oil Steadies Near $55 as Demand Fears Mix With Tighter Supply (Bloomberg) Oil steadied near $55 a barrel in New York as persistent concerns over slowing demand jostled with expectations that U.S. crude stockpiles will continue to tighten.

Exclusive: Yuan at right level, disorderly capital flows unlikely – China central bank official (Reuters) China’s yuan is at an appropriate level currently and two-way fluctuations in the currency will not necessarily cause disorderly capital flows, a senior official at the People’s Bank of China told Reuters on Tuesday.

U.S. President Trump asked Japan PM to buy farm products: Kyodo (Reuters) U.S. President Donald Trump has directly asked Japanese Prime Minister Shinzo Abe to buy farm products worth a ‘huge amount’, Kyodo news agency reported on Tuesday, citing unidentified Japanese and U.S. government sources.

Draghi’s parting gift to tie Lagarde’s hands (Reuters) The European Central Bank’s imminent stimulus package is unlikely to cut record low borrowing costs much further but will tie its new president’s hands for much of the next year, giving her little leeway to act while the economy ails.

PRECIOUS-Gold hits more than 6-year high on Hong Kong, Argentina (Reuters) Gold hit a more than six-year high on Tuesday as unrest in Hong Kong and a rout in the Argentine peso drove investors already spooked by the U.S.-China trade war into havens such as bullion at the expense of riskier assets such as stocks.

Market Overview: US 10yr note futures are down -0.096% at 130-08, S&P 500 futures are down -0.28% at 2872.25, Crude oil futures are down -0.96% at $54.4, Gold futures are up 1.25% at $1536.2, DXY is up 0.02% at 97.401, CAD/USD is up 0.21% at 0.7537.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.326%	2 Year	1.592%
5 Year	1.195%	5 Year	1.504%
10 Year	1.188%	10 Year	1.644%
30 Year	1.434%	30 Year	2.116%

US Economic Data

06:00 AM	NFIB Small Business Optimism, Jul  Survey: 104.0  Actual: 104.7 Prior: 103.3
08:30 AM	CPI MoM, Jul  Survey: 0.30%  Prior: 0.10%
	CPI Ex Food and Energy MoM, Jul  Survey: 0.20%  Prior: 0.30%
	CPI YoY, Jul  Survey: 1.70%  Prior: 1.60%
	CPI Ex Food and Energy YoY, Jul  Survey: 2.10%  Prior: 2.10%
	CPI Core Index SA, Jul  Survey: 263.302  Prior: 262.803
	CPI Index NSA, Jul  Survey: 256.441  Prior: 256.143
	Real Avg Hourly Earning YoY, Jul  Survey: —  Prior: 1.50%
	Real Avg Weekly Earnings YoY, Jul  Survey: —  Prior: 1.20%

Canadian Economic Data

There is no Canadian economic data for 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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update

US tsys stronger, yields 5-6bps lower with the 10Y 1.69% (-5.5bps).  European equities erased earlier gains, US equity futures  -0.5% on avg volume in TY futures (350k). Escalating tensions and an upset defeat for President Macri in Argentina’s primary election. Quiet on the US data front today, July CPI tomorrow and Retail Sales on Thursday the highlights for the week. GOCs lagging the rise in tsys by ~1bp,  the BOC will auction $1.4bln Dec 2051s on Wednesday with the 51/48 roll fairly flat after having reached 1bp thru in early July, prior to the huge FTQ rally which has been lead by 10s and has seen 10s30s resteepen  by 10bps.

News headlines

U.S. Stock Futures Decline as Hong Kong Sours Mood: Markets Wrap (Bloomberg) U.S. equity futures reversed an advance on Monday alongside European stocks as mounting unrest in Hong Kong weighed on investor sentiment. Treasuries and the yen extended gains while gold and the dollar both turned higher.

TSX futures drop as trade war, recession worries weigh (Reuters) Futures for Canada’s main stock index pointed to a lower opening on Monday, as oil prices dropped amid worries of an economic slowdown and a year-long Sino-U.S. trade tariff tussle.

Oil Declines as Trade Tensions Continue to Stoke Demand Fears (Bloomberg) Oil dropped as U.S. President Donald Trump said planned trade talks with China next month could be called off, stoking concerns the deepening dispute will damage global growth.

U.S. adviser Bolton courts Brexit Britain with a trade deal talk (Reuters) U.S. President Donald Trump wants to see a successful British exit from the European Union that Washington will support with a U.S.-UK free trade agreement, national security adviser John Bolton told British officials on Monday.

Fed remains a target as economy falls short of Trump’s ambitious goals (Reuters) It has become a jarring and frequent contradiction. President Donald Trump blames the Federal Reserve for putting the U.S. economy at risk while data shows an economy in “reasonably good” shape, as the head of the central bank recently said.

Global economic outlook darkens amid escalating trade dispute, Ifo says (Reuters) The economic outlook has deteriorated worldwide as the trade dispute between the United States and China escalates, a survey showed on Monday.

Goldman Sachs economists say fears rise that U.S.-China trade war leading to recession (Reuters) Goldman Sachs Group Inc (GS.N) said on Sunday that fears of the U.S.-China trade war leading to a recession are increasing and that Goldman no longer expects a trade deal between the world’s two largest economies before the 2020 U.S. presidential election.

Market Overview: US 10yr note futures are up 0.241% at 130-00, S&P 500 futures are down -0.55% at 2903.75, Crude oil futures are down -0.75% at $54.09, Gold futures are up 0.48% at $1515.8, DXY is up 0.05% at 97.537, CAD/USD is up 0.08% at 0.7558.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.348%	2 Year	1.598%
5 Year	1.223%	5 Year	1.524%
10 Year	1.226%	10 Year	1.69%
30 Year	1.479%	30 Year	2.204%

US Economic Data

02:00 PM

Monthly Budget Statement, Jul  Survey: -$120.0b  Prior: -$76.9b

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Aug 9  Survey: —  Prior: 58.6

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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