PMI Numbers came in weaker than expected

JULY 24,2019


Overnight we got PMI numbers from Europe which came in weaker than expected and helped push Bund yields even lower. This morning we have PMI numbers in the US at 9:45.

The News Canada

  • CBC: More millennials base dating decisions on property-buying prospects than looks, survey suggests”( // Kelsey Johnson: “Canadian millennials are more likely to pick a future partner based on shared home-buying aspirations than on good looks, a new survey has found. Beyond the Bricks, a survey commissioned by HSBC, found just 2.8 per cent of respondents said that appearance was their top consideration when choosing whom to date, compared to 12.7 per cent who said a property-related quality topped their list.”

  • GM: “‘It’s preposterous how long this process is taking’: Investor advocates angered over lack of reforms to early-withdrawal fees on funds” ( // Brandie Weikle: “The renewed calls for action come after fines were levied against certain advisers who improperly sold the products to senior citizens who had no idea they were subject to the fees.“It’s preposterous how long this process is taking,” said John De Goey, a portfolio manager with Wellington-Altus Private Wealth. Last fall, after a six-year review, provincial securities regulators proposed a prohibition on what are known as deferred sales charges (DSCs), a fee investors must pay when they pull money from their mutual fund before a set date. Shortly after, the Ontario government released a statement opposing the ban on DSC funds.”

The News International

  • FT: “UK sells 10-year debt at close to lowest yield on record” ( // Tommy Stubbington: “Britain has sold 10-year bonds at close to the lowest yield in history, as investors respond to growing risks of a no-deal Brexit by gravitating towards safe assets. The £2.75bn sale attracted strong demand, enabling the UK to sell the bonds at a yield of 0.789 per cent — the second-lowest on record after an auction following the Brexit vote in 2016.”

  • FT: “Gloomy factory data depress Bund yields to near historic lows” ( // Adam Samson: “A grim survey of German factory executives has sparked a fresh rally in eurozone government bonds just a day before the European Central Bank is set to deliver its latest monetary policy decision. Factory activity in Europe’s biggest economy hit its lowest level in seven years this month, according to a poll of purchasing managers released on Wednesday. The report was the latest sign of malaise in Germany and comes as several investment banks reckon the country’s output contracted in the April to June quarter.”

  • REUT: “China warns of war in case of move toward Taiwan independence” ( // Michael Martina: ““However, we must firmly point out that seeking Taiwan independence is a dead end,” Wu said. “If there are people who dare to try to split Taiwan from the country, China’s military will be ready to go to war to firmly safeguard national sovereignty, unity, and territorial integrity,” he said. The United States is the main arms supplier to Taiwan, which China deems a wayward province. Beijing has never renounced the use of force to bring the island under its control.”

  • ZERO: “JPMorgan: We Believe The Dollar Could Lose Its Status As World's Reserve Currency” ( // “Recent data on currency reserve holdings among global central banks suggests this shift may already be under way.  As a share of overall central bank reserves, the USD’s role has been declining ever since the Great Recession (see chart). The most recent central bank reserve flow data also suggests that for the first time since the euro’s introduction in 1999, central banks simultaneously sold dollars and bought euros.  Central banks across the globe are also adding to gold reserves at their strongest pace on record. 2018 saw the strongest demand for gold from central banks since 1971 and a rolling four-quarter sum of gold purchases is the strongest on record. To us, this makes sense: gold is a stable source of value with thousands of years of trust among humans supporting it.”


Thoughts & Trades

The graph shows the Ontario 2048 spread that is slowly moving towards its target of 74.  Since the beginning of the year, spreads have made lower highs and lower lows, with small periods of consolidation.  Each of these consolidations resumed on the down side, while preserving the down trend (red line).  We continue to expect Ontario spreads to move to 74.

2019 Casgrain & Cie. All Rights Reserved

2019 Casgrain & Cie. All Rights Reserved