Market Update

US tsys lower, yields 1.5bps higher led by the 10Y at 2.332% (1.6bps), volumes in TY fuutres closer to avg (236k) as Europe/Asia back from vac.  Equities lower( emini -1.25), crude higher (49.30 + 0.30), USD up vs Yen for 4th day. Latest JPM Client Survey showed all clients at highest ner short since Feb 21st while active clients are net long for 3rd week. EGBs lower, gilts lower steeper after beter than exp Markit PMI. GOCs slightly lower, curve unch after big steepening move yest driven by US on Mnuchin ultra long bond comments – GOC 2s10s +4bps with 10s30s unch. Provis unch after closing 1bp tighter yest led by longs. In corps Pepsico Inc issued C$ 750mln 7Y @ 87 which ended up being well oversubscribed , and the bonds broke 3-4bps tighter. We are still buyers of HCG 18s – 88bid for up to 500k.

News headlines 

Global Stocks Climb Amid Earnings as Yen Weakens: Markets Wrap (Bloomberg) Global stocks headed for a fresh high as many markets reopened with investors focusing on stronger corporate earnings. The yen extended losses while Treasuries maintained declines. The MSCI All-Country World Index was poised for a record close, while European shares advanced. U.S. stock futures pointed to a lower opening. European government bonds fell across the board. Treasury yields climbed after Steven Mnuchin said it “could absolutely make sense” for the U.S. to sell ultra-long bonds.

Trump Weighs Breaking Up Wall Street Banks, Raising Gas Tax (Bloomberg) President Donald Trump said he’s actively considering a breakup of giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer and investment banking.

China’s factory output slows to 7-month low (Market Watch) China’s nationwide factory activity expanded at a slower pace in April, with a private gauge falling to a seven-month low. The Caixin China manufacturing purchasing managers’ index dropped to 50.3 in April from 51.2 in March, indicating a slower expansion of activity, Caixin Media Co. and research firm Markit said Tuesday.

China banks hike lending rates for Beijing home buyers: sources (Reuters) The Beijing branches of at least six major Chinese banks have raised interest rates on housing loans for first- and second-home buyers, effective from May 1, six sources with direct knowledge of the hikes told Reuters.

U.K. Manufacturing Growth Surges to Fastest in Three Years (Bloomberg) U.K. manufacturing unexpectedly grew at the fastest pace in three years in April as the domestic market strengthened and the pound’s depreciation boosted exports. A measure of factory conditions rose to 57.3 from 54.2 in March, according to IHS Markit’s Purchasing Managers’ Index. That’s far better than the 54 forecast by economists in a Bloomberg survey and above the 50 level dividing expansion from contraction. Growth in new orders and exports also gathered pace.

Greek Debt-Relief Talks Move Closer After Late-Night Deal (Bloomberg) Greece resolved the latest impasse over the terms of its bailout program with international creditors in the early hours of Tuesday, unlocking the way for debt-relief talks and the disbursement of the next tranche of emergency loans.

Will Home Capital Dent Canada’s ‘Boring-but-Stable’ Reputation? (Bloomberg) As Home Capital Group Inc. spiraled downward last week, a group of Canadian real estate brokers relaxing in Mexico brooded over whether the mortgage lender’s woes would seep into the housing market and trigger the kind of crisis the country averted in 2008.

Overnight markets 

Overview: US 10yr note futures are down -0.075% at 125-12, S&P 500 futures are down -0.01% at 2386.75, Crude oil futures are up 0.37% at $49.02, Gold futures are down -0.14% at $1253.7, DXY is up 0.01% at 99.083, CAD/USD is up 0.15% at 0.7298.

US Economic Data

8:30 AM Wards Total Vehicle Sales, Apr, est. 17.10m (prior 16.53m)
Wards Domestic Vehicle Sales, Apr, est. 13.10m (prior 12.97m)

Canadian Economic Data

There is no major economic news release.


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