Market Update

Tsys higher, near top of o/n range on above avg volume (405k), 10Y 2.82(-1.1bps), curve 0.5bps flatter – key Jan CPI data expected at 8:30 – 0.3% vs 0.1% in Dec with the core forecast to rise 1.7% vs 1.8% in Dec. The release takes on more importance given the selloff in equity markets last week attributed in part to Jan’s 2.9% rise in avg hourly earnings.  Equity futures higher (S&P +9.5), USD index steady, JPY stronger for 3rd day, reaching below 107 for the first time since Nov 2016. Core EGBs higher, gilts/bunds ~2bps lower outperforming tsys by 1bp.   Eurozone GAP 0.6% as expected, Dec Ind Prod 0.4% vs 0.1% exp, 5.2% y/y the highest since Aug 2011. GOCs higher, in line with tsys, 10Y 2.311 (-1bp). Provis closed yest unch , 10Y CMB expected to price in the context of 36bps, also 5Y FRN reopoening 2/15/23  ~100.33. 

News headlines

U.S. Futures Extend Gains Ahead of Key Inflation Data Release (Bloomberg) U.S. stock-index futures extended gains, hitting a session high in early London trading as investors await a key inflation report Wednesday. March contracts on the S&P 500 rose 0.5 percent at 8:24 a.m. in London after fluctuating during Asian trading hours. Futures on the Dow Jones Industrial Average added 0.6 percent, while the Nasdaq 100 Index was up 0.6 percent.

Any Hint of Faster Inflation in Data Could Knock Markets All Over Again (Bloomberg) Wednesday’s report on the U.S. consumer price index will be the most closely watched in recent memory, with investors seeking to understand the recent plunge in the stock and bond markets. They’ll probably need to look beyond the main numbers for the full story.

Netanyahu Clings to Power After Police Recommend Indictment (Bloomberg) Israeli Prime Minister Benjamin Netanyahu declared he has no plan to go to early elections, as his coalition closed ranks around a leader who police say should stand trial for bribery. Coalition members denounced the police recommendations, saying the prime minister should continue to govern while Attorney General Avihai Mandelblit reviews the case and decides whether to press charges. Netanyahu and his allies said the fact that police relied on testimony from his political rival Yair Lapid shows the investigation was biased.

Zuma Has Next Move in ANC Power Battle as Gupta Home Raided (Bloomberg) The noose tightened on South African President Jacob Zuma as the police went after key allies while leaders of the ruling African National Congress vowed to force him from office. Police raided the Johannesburg home of the Gupta family, who are in business with Zuma’s son, Duduzane, early Wednesday as the nation awaited the president’s next move in his struggle for power with Cyril Ramaphosa.

TSX futures fall on lower oil prices (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Wednesday, as oil prices fell pressured by rising U.S. crude production. March futures on the S&P TSX index were down 0.23 percent at 7:15 a.m. ET. The Thomson Reuters/Ipsos Primary Consumer Sentiment Index is due at 11:00 a.m. ET. Canada’s main stock index fell modestly on Tuesday, pausing after racking up a hefty gain in the previous session, as industrial and energy shares fell along with the price of oil. Dow Jones Industrial Average e-mini futures were up 0.45 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were up 0.44 percent and Nasdaq 100 e-mini futures were up 0.46 percent.

Canada, U.S. exchange barbs over NAFTA talks as stresses rise (Reuters) Canada and the United States exchanged barbs on Tuesday over sluggish negotiations to update NAFTA, reflecting mounting tensions over trade talks that appear unlikely to conclude on schedule. The talks have effectively stalled as Canada and Mexico seek to address wide-ranging U.S. demands for changes to the North American Free Trade Agreement. The early March deadline for wrapping up the talks has been extended to at least early April, officials said. But participants have said privately it could take months longer than that.

Morneau to deliver next federal budget on Feb. 27 (BNN) Finance Minister Bill Morneau will introduce the federal government’s next budget on Feb. 27 as the country faces persistent uncertainty around trade and competitiveness. With the future clouded by such unknowns, private-sector experts will press Morneau to keep his fiscal powder dry when they gather later this week for their annual pre-budget meeting. Morneau, who announced the budget date Tuesday in the House of Commons, sits down Friday in Toronto with leading economists at a roundtable that typically includes about a dozen experts from commercial banks, think tanks and trade associations.

Overnight markets

Overview: US 10yr note futures are up 0.09% at 121-04, S&P 500 futures are up 0.39% at 2672, Crude oil futures are down -0.84% at $58.69, Gold futures are up 0.22% at $1333.3, DXY is down -0.02% at 89.684, CAD/USD is down -0.1% at 0.795. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.779% 2 Year 2.106%
5 Year 2.051% 5 Year 2.539%
10 Year 2.318% 10 Year 2.819%
30 Year 2.47% 30 Year 3.103%

US Economic Data

7:00 AM MBA Mortgage Applications, Feb 9th -4.1% (0.7% prior)
8:30 AM CPI MoM, Jan est 0.3% (0.1% prior)
  CPI Ex Food and Energy MoM, Jan est 0.2% (0.3% prior)
  CPI YoY, Jan est 1.9% (2.1% prior)
  CPI Ex Food and Energy YoY, Jan est 1.7% (1.8% prior)
  CPI Index NSA, Jan est 247.599 (246.524 prior)
  CPI Core Index SA, Jan (254.426 prior)
  Retail Sales Advance MoM, Jan est 0.2% (0.4% prior)
  Retail Sales Ex Auto MoM, Jan est 0.5% (0.4% prior)
  Retail Sales Ex Auto and Gas, Jan est 0.3% (0.4% prior)
  Real Avg Weekly Earnings YoY, Jan (0.7% prior)
  Real Avg Hourly Earnings YoY, Jan (0.4% prior)
10:00 AM Business Inventories, Dec est 0.3% (0.4% prior)

Canadian Economic Data

8:30 AM Teranet/National Bank HP Index, Jan (217.49 prior)
  Teranet/National Bank HPI MoM, Jan (0.2% prior)
  Teranet/National Bank HPI YoY, Jan (9.1% prior)



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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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