Market Update Tsys trading higher, yields 2-3bps lower on moderate volume in TY futures, the 10Y 2.93% (-3bps), USD index slightly higher, crude unch @ 67.90. Data in the US includes ISM Non-Man & Factory Orders, yet mkt focus on April payrolls (185k est) tomorrow. Core EGBs higher, June bund future at a two-week high 159.03 (+0.44 ticks) – Eurozone core inflation fell to 0.7% in April from 1.0%, yet timing of the Easter holiday (prior to measurement period) likely responsible for some of the shortfall. GOCs higher in line with tsys, 10Y 2.336%. After closing 0.5bps wider yest, Ontarios are opening 0.5 bps wider in longs, (Ont 49s 79/78.5) with Ont 28s unch (69/68.5).
News headlines
Ahead of Trade Talks, China Says It Won’t Submit to U.S. ‘Threats’ (Bloomberg) The Trump administration’s top economic officials arrived for trade talks in Beijing Thursday as China said it’s not willing to back down on key issues or submit to any U.S. threats. China’s government won’t accept any U.S. preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100 billion, a senior government official, who asked not to be named, said late Wednesday.
Fed Calm Over 2% Inflation Underlines Gradual Rate-Hike Outlook (Bloomberg) Federal Reserve officials made doubly sure to convey a relaxed attitude toward inflation rising above 2 percent, mentioning the “symmetric” nature of their target twice in a statement Wednesday that signaled no shift to a faster pace of monetary policy tightening.
Cabinet Brexiters Outgun May on Her Customs Plan (Bloomberg) Theresa May is facing a crisis after pro-Brexit ministers paired up with Conservative hardliners to demand a clean break from the European Union’s customs system, rejecting her plea for a compromise solution.
Dollar Drops as Focus Turns to Trade; Stocks Slip: Markets Wrap (Bloomberg) The dollar gave back some of its recent gains on Thursday as investors began to switch their attention away from the Federal Reserve and toward the outlook for global trade. U.S. equity futures pared an advance while stocks in Europe followed Asian peers lower.
North Korea’s Kim tells China he is committed to denuclearization (Reuters) North Korean leader Kim Jong Un told a visiting Chinese diplomat on Thursday that he is committed to denuclearization, China’s foreign ministry said, as diplomatic efforts to bring lasting peace to the Korean peninsula gather pace.
Bombardier sells Toronto assembly site in major makeover (Reuters) Canadian plane and train maker Bombardier Inc (BBDb.TO) has agreed to sell its Toronto aircraft assembly site to a pension fund as it strives to raise extra cash under a five-year recovery plan. The company, which reported a 16-percent rise in its favored measure of profit on Thursday but is only bouncing back after considering bankruptcy in 2015, will make $635 million gross from the sale to the Public Sector Pension Investment Board.
TSX futures up with earnings in focus (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday as gold prices rose, while investors focused on a host of earnings from companies including Bombardier. June futures on the S&P TSX index SXFc1 were up 0.15 percent at 7:15 a.m. ET. Trade data for March is due at 8:30 a.m. ET Canada’s main stock index edged higher on Wednesday, although paring some earlier gains, as resource shares climbed, while financials and Maple Leaf Foods Inc (MFI.TO) lost ground.
Canada loses NAFTA court challenge, reviving environmental concerns (BNN) The federal government has lost a court bid to overturn a NAFTA ruling involving a Nova Scotia quarry and marine terminal project, sparking renewed concerns about the trade deal’s effects on Canada’s environmental regime. The U.S. firm that backed the proposed project welcomed the Federal Court of Canada decision, while environmental groups said it highlights how the North American Free Trade Agreement hamstrings Canada’s ability to protect its ecology.
Overnight markets
Overview: US 10yr note futures are up 0.183% at 119-24, S&P 500 futures are down -0.35% at 2618.25, Crude oil futures are down -0.07% at $67.88, Gold futures are up 0.9% at $1317.3, DXY is down -0.03% at 92.485, CAD/USD is down -0.32% at 0.7787.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.919% | 2 Year | 2.472% |
| 5 Year | 2.149% | 5 Year | 2.772% |
| 10 Year | 2.332% | 10 Year | 2.938% |
| 30 Year | 2.408% | 30 Year | 3.116% |
US Economic Data
| 7:30 AM | Challenger Job Cuts YoY, Apr -1.4% (39.4% prior) |
| 8:30 AM | Nonfarm Productivity, 1Q est 0.9% (0.0% prior) |
| Unit Labor Cost, 1Q est 3.0% (2.5% prior) | |
| Initial Jobless Claims, Apr 28th est 225k (209k prior) | |
| Continuing Claims, Apr 21st est 1835k (1837k prior) | |
| Trade Balance, Mar est -50.0b (-57.6b prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Apr 29th (57.5 prior) |
| Markit US Services PMI, Apr est 54.5 (54.4 prior) | |
| Markit US Composite PMI, Apr (54.8 prior) | |
| 10:00 AM | ISM Non-Manf. Composite, Apr est 58.0 (58.8 prior) |
| Factory Orders, Mar est 1.4% (1.2% prior) | |
| Factory Orders Ex Trans, Mar (0.1% prior) | |
| Durable Goods Orders, Mar (2.6% prior) | |
| Durable Ex Transportation, Mar (0.0% prior) | |
| Cap Goods Orders Nondef Ex Air, Mar (-0.1% prior) | |
| Cap Goods Ship Nondef Ex Air, Mar (-0.7% prior) |
Canadian Economic Data
| 8:30 AM | Int’l Merchandise Trade, Mar est -2.25b (-2.69b 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