Market Update

US tsys slightly trading slightly higher, 10Y 2.50% before ISM & Fed decision this aft, volume in TY futures running at ~50% of daily avg (115k) as Many European mkts are closed for May holiday. UK gilts higher after April Manuf PMI  matched estimates (53.1).  US equity  futures positive led by Nasdaq (+0.66%) after earnings from Apple (+5.3% pre mkt). Fed expected to leave rates unch at 2.5%, press conference expected to acknowledge latest weakness in core inflation, while growth accelerated at a much faster pace in the first quarter due to inventory build. In Canada, GOCs unch  in line with tsys, 10Y 1.70% narrow 3bp range over the past week, yesterday’s weak Feb GDP little impact on rates, 5s10s curve continues to steepen thou the J28/27 roll is at its narrowest in five months,possibly due to the upcoming roll in CGBs with June 28s becoming CTD.

News headlines

U.S. Futures Advance, Treasuries Steady Before Fed: Markets Wrap (Bloomberg) U.S. equity futures advanced on Wednesday following an upbeat forecast from Apple Inc. and as holidays in much of Asia and Europe weighed on trading. Treasuries and the dollar were in a holding pattern ahead of the Federal Reserve’s policy decision.

TSX futures rise on global cues (Reuters) Futures for Canada’s main stock index were higher on Wednesday, after global equity markets rose as investors cheered Apple’s strong results.

Oil Retreats as U.S. Stockpile Jump Counters Global Supply Fears (Bloomberg) Oil retreated amid signs of a sharp increase in U.S. crude inventories and concerns over the strength of economic growth in China.

Fed eyes inflation as Trump pushes rate cut (BNN) Federal Reserve policy makers may decide Wednesday that falling inflation reinforces a message of caution on interest-rate moves, rather than bowing to President Donald Trump’s demands for drastic action to boost the U.S. economy.

The debate behind Trump’s move to tighten Iran oil sanctions (Reuters) U.S. President Donald Trump’s unexpected decision to ban all Iranian oil purchases after May 1 – ending exemptions for eight nations – came after hawkish economic and security advisors allayed the president’s fears of an oil price hike, according to three sources familiar with the internal debate.

Fed likely to ignore Trump’s call to cut interest rates (Reuters) The U.S. Federal Reserve, leaning back against pressure from President Donald Trump to slash interest rates, is expected to leave borrowing costs unchanged on Wednesday as it maintains a ‘patient’ monetary policy stance amid strong economic growth.

China, U.S. hold ‘productive’ trade talks in Beijing (Reuters) China and the United States held “productive” trade talks in Beijing on Wednesday and will continue discussions in Washington next week, U.S. Treasury Secretary Steven Mnuchin said, as the two try to end their trade war.

Trump, Democrats agree to spend $2 trillion on U.S. infrastructure (Reuters) President Donald Trump and Democratic leaders agreed on Tuesday to spend $2 trillion on U.S. roads, bridges, power grids, water and broadband infrastructure, while leaving the thorny details of how to pay for it all to another meeting in three weeks.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.553% 2 Year 2.262%
5 Year 1.532% 5 Year 2.27%
10 Year 1.705% 10 Year 2.495%
30 Year 1.985% 30 Year 2.923%

US Economic Data

07:00 AM MBA Mortgage Applications, Apr 26 Survey – Actual -4.3% Prior -7.30%
08:15 AM ADP Employment Change, Apr Survey 180k Actual 275k Prior 129k Revised 151k
09:45 AM Markit US Manufacturing PMI, Apr F Survey 52.4 Prior 52.4
10:00 AM ISM Manufacturing, Apr Survey 55.0 Prior 55.3
       ISM Prices Paid, Apr Survey 55.0 Prior 54.3
       Construction Spending MoM, Mar Survey 0.00% Prior 1.00%
02:00 PM FOMC Rate Decision (Upper Bound), May 1 Survey 2.50% Prior 2.50%
       FOMC Rate Decision (Lower Bound), May 1 Survey 2.25% Prior 2.25%

Canadian Economic Data

à 09:30 AM Markit Canada Manufacturing PMI, Apr Survey — Prior 50.5

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