Market Update Tsys weaker across the curve, 5Y above 2.55, 10Y 2.75%, futures near o/n lows on heavy volume (600k TY). Tsys lower with EGBs as Spanish & French supply weighed, 10Y bund above 0.73% . Stocks in Europe reversing gains unable to recover after a three day selloff, S&P futures -3.5, the USD also reversing post FOMC rally to trade close to low 88.96.  GOCs lower in line with tsys, 10s leading with 2s10s 2bps steeper, CGBS breaking Monday’s low below 132. Provis opening unch, MP long deal yest @ Onts +8, well received, now 7.5 bid.  Central One (AH) priced an 3Y FRN @ CDOR+35 which looked cheap vs DOLCN (BBB) 3Y @27 . BNS 10Y deposit note @ 80 traded slightly tighter in secondary. 

News headlines

Janet Yellen’s Fed Era Ends With Unanimous Vote of No Rate Hike (Bloomberg) Federal Reserve officials, meeting for the last time under Chair Janet Yellen, left borrowing costs unchanged while adding emphasis to their plan for more hikes, setting the stage for an increase in March under her successor Jerome Powell.

Euro-Area Manufacturers Start Year With Near-Record Momentum (Bloomberg) Manufacturing in the euro area grew at one of the fastest paces on record in January, with high demand fueling inflationary pressures. A Purchasing Managers’ Index for the sector slipped to 59.6 — matching a previous flash estimate — from 60.6 in December, IHS Markit said on Thursday. Companies raised selling prices by the most in almost seven years, partially due to a steep increase in energy costs, the London-based company said.

America Winning ‘Cold Currency War’ to Weaken Dollar, Pimco Says (Bloomberg) The U.S. is fighting — and winning — a “cold currency war” as it seeks to weaken the dollar, according to Pacific Investment Management Co. The greenback’s nearly 12 percent plunge since the start of 2017 is being fueled by fiscal and monetary policies as well as rhetoric intended to debase the U.S. currency, Pimco global economic adviser Joachim Fels wrote in a blog post. Central banks from Japan to Europe have refrained from pushing back too hard amid fears over increased protectionism from the Trump administration.

Europe Stocks Advance as Treasuries Lead Bond Drop: Markets Wrap (Bloomberg) Stocks in Europe and Asia kicked off February with gains, as investors decided the outlook for growth and corporate earnings was strong enough to quell concerns about the recent jump up in bond yields. Treasuries resumed a slide and the dollar edged higher.

Top iPhone Suppliers Warn of Slower Sales Ahead of Apple Results (Bloomberg) Qualcomm Inc. and Broadcom Ltd., key suppliers to Apple Inc., have implied that orders related to the iPhone tailed off more than normal at this time of year. Some of Apple’s iPhones are built with Qualcomm’s modems, which are chips for connecting to cellular networks. The San Diego-based chipmaker said Wednesday that orders from a large “thin modem” customer tailed off at worse-than-typical levels in the quarter. It was widely interpreted that the customer is Apple.

Canada PM says doesn’t think Trump will pull U.S. out of NAFTA (Reuters) Canadian Prime Minister Justin Trudeau on Wednesday said he did not think U.S. President Donald Trump would pull out of NAFTA, despite slow progress at negotiations to update the $1.2 trillion trade pact.

Canada economy picks up in Nov with broad-based growth (Reuters) The Canadian economy accelerated in November by the most in six months, with activity broad-based across a number of sectors including manufacturing and keeping the Bank of Canada on track to raise interest rates again before long.

Bitcoin skids to lowest since November after worst month in three years (Reuters) Bitcoin, the world’s largest cryptocurrency, skidded 9 percent on Thursday to its lowest level since late November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market rattled investors.

Overnight markets

Overview: US 10yr note futures are down -0.141% at 121-13, S&P 500 futures are down -0.21% at 2819.75, Crude oil futures are up 1.13% at $65.46, Gold futures are down -0.01% at $1343, DXY is down -0.15% at 89, CAD/USD is up 0.06% at 0.8116.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.846% 2 Year 2.153%
5 Year 2.101% 5 Year 2.543%
10 Year 2.321% 10 Year 2.741%
30 Year 2.383% 30 Year 2.965%

US Economic Data

7:30 AM Challenger Job Cuts YoY, Jan -2.8% (-3.6% prior)
8:30 AM Nonfarm Productivity, 4Q -0.1% est 0.7% (0.3% prior)
  Unit Labor Costs, 4Q 2.0% est 0.9% (-0.2% prior)
  Initial Jobless Claims, Jan 27th 230k est 235k (233k prior)
  Continuing Claims, Jan 20th 1953k est 1929k (1937k prior)
9:45 AM Bloomberg Consumer Comfort, Jan 28th (53.7 prior)
  Markit US Manufacturing PMI, Jan est 55.5 (55.5 prior)
10:00 AM ISM Manufacturing, Jan est 58.6 (59.7 prior)
  ISM Employment, Jan (57.0 prior)
  ISM Prices Paid, Jan est 68.8 (69.0 prior)
  ISM New Orders, Jan (69.4 prior)
02/01 Wards Domestic Vehicle Sales, Jan est 13.45m (13.72m prior)
  Wards Total Vehicle Sales, Jan est 17.20m (17.76m prior)

Canadian Economic Data

7:00 AM MLI Leading Indicator MoM, Dec 0.5% (0.5% prior)
9:30 AM Markit Canada Manufacturing PMI, Jan (54.7 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