Market Update
Tsys weaker, prices moving lower after stronger ADP (253k vs 180k exp) yields 2bps higher across the curve, 10Y 2.218% . Core Euro bonds lower, gilt yields 2bps higher in 10s 2s unch. Once again gilt underperformance attributed to latest polls showing dwindling lead for conservatives, this time from YouGov. GOCs lower in line with tsys, provis 0.5bps tighter after closing unch yest.
News headlines
Stocks in Upbeat Mood as Oil Rises, Havens Slip: Markets Wrap (Bloomberg) European stocks were poised to snap a five-day losing streak amid a broad-based rally. The pound declined as better-than-expected manufacturing data failed to offset political risk before the impending election, and crude bounced.
China’s Caixin PMI Dips Below 50 for First Time in 11 Months (Bloomberg) A private gauge of Chinese manufacturing fell back into contractionary territory in May, adding to recent evidence that the economy’s strong start to 2017 is leveling off. Caixin Media and Markit Economics manufacturing purchasing managers’ index fell to 49.6 from 50.3 in April, the lowest reading since June 2016 and below the 50.1 median estimate
Oil Trades Near Two-Week Low Before U.S. Crude Inventory Data (Bloomberg) Oil traded near the lowest level in two weeks as traders waited to see if U.S. government data would confirm industry reports of another drop in crude stockpiles. Futures were little changed in New York, paring an earlier advance of as much as 1.6 percent. U.S. inventories fell by 8.67 million barrels last week, the American Petroleum Institute was said to report. Government data Thursday is forecast to show a slide of 3 million barrels, the eighth straight drop. Output from Libya, exempt from OPEC’s deal to reduce supply, rose to the highest since October 2014 as production from its biggest field increased.
Reuters poll: Conservative win would give UK strongest hand in Brexit talks – analysts (Reuters) A Conservative victory in June 8’s election would give Britain the strongest hand in EU divorce talks and lift sterling, economists polled by Reuters said, although nearly as many felt a coalition government would secure the best Brexit deal. Britons voted nearly a year ago to leave the European Union and Prime Minister Theresa May triggered Article 50 in March, starting a two-year countdown. After earlier saying she would not do so, May then called a snap national election to try to cement her position.
IMF warns of ‘significant’ risks from Canada’s housing market (TheGlobeAndMail) The International Monetary Fund is urging Canada to take further action in order to address rising household debt levels and the risks of a sharp correction in the housing market.
Trump to announce decision on global climate deal on Thursday (Reuters) President Donald Trump said he would announce on Thursday his decision whether to keep the United States in a global pact to fight climate change, as a source close to the matter said he was preparing to pull out of the Paris accord.
Overnight markets
Overview: US 10yr note futures are down -0.186% at 126-02, S&P 500 futures are up 0.13% at 2414.25, Crude oil futures are up 0.21% at $48.42, Gold futures are down -0.74% at $1266, DXY is up 0.32% at 97.23, CAD/USD is down 0% at 0.7407.
US Economic Data
| 7:30 AM | Challenger Job Cuts, y/y, May, est. 71.4% (prior -42.9%) |
| 8:15 AM | ADP Employment Change, May, 253k, est. 180k (prior 177k, revised 174k) |
| 8:30 AM | Initial Jobless Claims, May 27, 248k, est. 238k (prior 234k, revised 235k) |
| Continuing Claims, May 20, 1915k, est. 1920k (prior 1923k, revised 1924k) | |
| 9:45 AM | Markit US Manufacturing PMI, May F, est.52.5 (prior 52.5) |
| 10:00 AM | ISM Manufacturing, May, est. 54.7 (prior 54.8) |
| ISM Price Paid, May, est. 67.0 (prior 68.5) | |
| Construction Spending, m/m, Apr, est. 0.5% (prior -0.2%) |
Canadian Economic Data
| 7:00 AM | MLI Leading Indicator, m/m, Apr, 0.4% (prior 0.5%, revised 0.5%) |
| 9:30 AM | Markit Canada Manufacturing, May, (prior 55.9) |
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230