Market Update Tsys trading mixed, slightly higher in the short end on strong volume in TY futures (520k), 10Y 2.81% (unch). Light data calendar with only Univ of Michigan Sentiment, so focus will remain on equities which are looking weaker with the Euro stoxx -1.9%, S&P futures extending yest losses, -20 pts. The USD index down for a second day, down ~1.0% since Trump announced steel & aluminum tariffs yest afternoon, USDJPY at a new low for the cycle , Kuroda said the BOJ is considering exiting its easy mon policy if target inflation is achieved by next yr. GOCs higher, outperforming tsys by 1bp before Dec GDP, CAD weaker 1.2876 approaching 1.29 support from late Dec. Provi spds another 1-2 bps wider yest on ‘risk off’ as well as competition from heavy corp supply.
News headlines
Trump Says Trade Wars Are ‘Good, and Easy to Win’ (Bloomberg) President Donald Trump pushed back against a wave of criticism against steel tariffs, telling the world that not only are trade wars good, they are easy to win. Trump is facing anger from manufacturers and trade partners in China and Europe after announcing tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.” The formal order is expected to be signed next week.
Stocks Sink, Bonds Rally on Trump’s Metals Duties: Markets Wrap (Bloomberg) U.S. stocks plunged and Treasuries climbed Thursday after U.S. President Donald Trump promised to impose substantial tariffs on foreign metals, drawing a rebuke from a manufacturing industry group and the European Commission.
Brexit Talks in Peril After May Rejects EU Draft Deal (Bloomberg) U.K. Prime Minister Theresa May vowed she will never accept a draft Brexit agreement published by the European Union on Wednesday, raising the prospect that the negotiations are heading for a breakdown. The pound fell. The EU commission set out in minute detail how it wanted to arrange Britain’s withdrawal, but key passages on avoiding new customs checks at the U.K.’s land border with Ireland made the 118-page draft impossible for May to support. It proposes keeping Northern Ireland in the bloc’s customs union, under the jurisdiction of the European Court of Justice — both of which May wants the whole of the U.K. to leave.
Four Possible Outcomes in Italy’s Election This Weekend (Bloomberg) Italy is long used to managing political instability, but giving birth to the country’s 65th government since World War II looks a particularly tough order. With Sunday’s election forecast to produce a hung parliament, weeks of political uncertainty could hang over an economy burdened with a feeble recovery and a public debt mountain.
Unhappy Canada vows to retaliate against any U.S. steel tariffs (Reuters) Canada will retaliate against any U.S. tariffs on steel and aluminum products, officials said on Thursday, as Ottawa faced what could be one of the biggest economic threats since Donald Trump became president. Trump unveiled the tariffs on Thursday but did not make clear whether they would apply to Canada and Mexico, which together with the United States are trying to renegotiate the 24-year-old North American Free Trade Agreement.
TSX futures down on trade war fears, lower oil prices (Reuters) A day after announcing steep tariffs on imports of steel and aluminum, U.S. President Donald Trump tweeted that“trade wars are good, and easy to win”. March futures on the S&P TSX index were down 0.31 percent at 7:15 a.m. ET. Canada’s gross domestic product report for the fourth quarter is due at 8:30 a.m. ET. The country’s economy likely cooled in the second half of last year, with analysts expecting the annualized report to come in below the Bank of Canada’s 2.5 percent forecast.
Canadian commercial real estate sees record investments in 2017: CBRE (BNN) The Canadian commercial real estate market set another record for investments in 2017 and was one of only four countries in the world to do so, according to a new report from CBRE Ltd. The report said there were more than $43.1 billion in investments last year, surpassing $34.7 billion in 2016, and CBRE predicts another record will be established in 2018. CBRE said strong tenant demand, coupled with declining vacancy rates which are at, or near, all-time lows in many Canadian markets, will lead to strong increases in rental rates.
Overnight markets
Overview: US 10yr note futures are down -0.039% at 120-18, S&P 500 futures are down -0.73% at 2658.75, Crude oil futures are down -0.64% at $60.6, Gold futures are up 1.33% at $1322.6, DXY is down -0.37% at 89.991, CAD/USD is up 0.28% at 0.7768.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.752% | 2 Year | 2.214% |
| 5 Year | 1.985% | 5 Year | 2.578% |
| 10 Year | 2.16% | 10 Year | 2.81% |
| 30 Year | 2.321% | 30 Year | 3.097% |
US Economic Data
| 10:00 AM | U. of Mich. Sentiment, Feb est 99.5 (99.9 prior) |
| U. of Mich. Current Conditions, Feb (115.1 prior) | |
| U. of Mich. Expectations, Feb (90.2 prior) | |
| U. of Mich. 1 Yr Inflation, Feb (2.7% prior) | |
| U. of Mich 5-10 Yr Inflation, Feb (2.5%) |
Canadian Economic Data
| 8:30 AM | GDP MoM, Dec est 0.1% (0.4% prior) |
| GDP YoY, Dec est 3.3% (3.5% prior) | |
| Quarterly GDP Annualized, 4Q est 2.0% (1.7% 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