Market wrap and Asia open - TDS

In a market wrap, analysts at TD Securities explained that North American equities were mixed on Thursday with major US indices slightly lower (SPX: -0.2%) on light trading while the TSX saw a 0.5% gain to outperform.

Key Quotes:

"Treasuries bull-flattened on a 4bp rally in the long-end as Canadian rates outperformed to narrow CAD-USD spreads by roughly 1bp."

"The USD saw a broad advance against G10 FX, with NZD (-1.9%) leading the decline after yesterday's RBNZ meeting. EURUSD (-0.6%) traded through the May lows en route towards 1.15 while EM currencies were led lower by another rout in TRY (-4.6%)."

"Friday is busy for data with Japanese GDP and the RBA SOMP highlighting the local calendar ahead of UK GBP, US CPI and Canadian employment later in the day."

"Italian risks have shifted back onto the radar screen again, and EUR has again recoupled with the BTP/Bund spread. We see little risk of Quitaly and believe Brussels is unlikely to fuss much about slippage on the budget target."

"We also think a lot of poor political/growth news is priced into the EUR while the US will have to cope with the midterms and a possible government shutdown.
The EUR remains attractive below 1.16 but for the rest of the G10, idiosyncratic news has been the focus."

"For CAD, we think the half-life of the Canada/Saudi story is shrinking, leaving us sellers of USDCAD towards 1.3050-80 into the data Treasuries will closely watch the US CPI report for direction ahead of the weekend. An on-consensus CPI reading could lead to a modest correction higher in yields and a widening in BEs."