Market Update Tsys trading steady/mixed ahead July jobs report (+190k est), rate futures loosely mirroring swings in US$ overnight (latest drop as PBOC changes policy on FX reserve requirements for FX forwards from 0.0 to 0.2%, effective Aug 6). Moderate volume on two-way flow includes fast$ selling in 5s and 10s early overnight, spec buying 30s, otherwise quiet ahead headline data. Other data today includes Average Hourly Earnings estimated at +2.7 annual rate. BOE Governor Mark Carney stated that Britain faces « uncomfortable high » risks leaving the EU with no deal. 

News headlines

Buyers Return to Toronto’s Housing Market (Bloomberg) Toronto’s housing market showed signs of continued stabilization as sales surged amid a decline in benchmark prices. Sales rose 19 percent in July to 6,961, from 5,869 in the same period a year earlier, the Toronto Real Estate Board reported Friday. Seasonally adjusted sales climbed 6.6 percent from June, making July the strongest month this year for resales, though it was still below the historical average.

Fed Describes Economy as ‘Strong’ for the First Time Since 2006 (Bloomberg) So long, modest, moderate and solid. Strength is making a comeback. The Federal Reserve described economic activity as “strong” in Wednesday’s statement, the first time it’s done so since it called it “quite strong” in May 2006 — in the late stages of the last economic expansion, shortly before the housing market drove the economy into meltdown. Morgan Stanley highlighted the change in a research note.

Trump Fury Over Mueller ‘Conflicts’ Dates to Oval Office Meeting (Bloomberg) President Donald Trump sat with Robert Mueller in the Oval Office in May of last year to interview him for a job: director of the FBI. The next afternoon, Trump was in another Oval Office meeting when an aide interrupted with news that Mueller had taken a different post: special counsel to investigate Trump’s campaign.

U.S. Futures Pare Gain on Trade Talk; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures pared advances after China threatened to slap tariffs on more American goods, ratcheting up trade rhetoric after Trump administration moves earlier in the week. The dollar retreated after the Chinese central bank moved to shore up the country’s currency. Contracts on the S&P 500 Index were little changed on the news of Chinese retaliation as investors await the 8:30 a.m. U.S. jobs report. The dollar turned lower on news the PBOC is adjusting the reserve requirement on currency forwards, effectively raising the cost of shorting the yuan. Futures and European equities earlier rose on the weaker yuan. Italian bonds pared a large drop before a budget meeting between populist leaders and the finance minister. The yield on 10-year Treasuries climbed toward 3 percent.

Enbridge tops quarterly profit estimates on cost controls (Reuters) Canada’s top pipeline operator Enbridge Inc (ENB.TO) beat analysts’ estimates for quarterly profit on Friday by reining in costs, and said it completed 40 percent of its Line 3 pipeline replacement work. In June, a Minnesota regulator approved Enbridge’s plan to rebuild its aging, corroded Line 3 oil pipeline that runs from Alberta in western Canada to Wisconsin in the United States.

Telus meets profit estimates despite fewer postpaid additions (Reuters) Canadian telecom company Telus Corp (T.TO) met analysts’ quarterly profit estimates on Friday despite fewer postpaid subscriber additions, as users opted for costlier internet and data connections. The company, among the biggest telecom providers in the country, said average monthly wireless bill rose to C$67.24 in the second quarter from C$66.87, helped by customers streaming more videos online.

Aimia rejects Air Canada’s takeover bid after negotiations break off (BNN) Takeover negotiations between Aeroplan operator Aimia Inc. and Air Canada have broken off hours before the midnight deadline Thursday. Aimia said Air Canada and its three financial partners raised their initial bid for its loyalty plan to $325 million, but Aimia wants $450 million. « Aeroplan is committed to protecting our members’ miles, » Aimia CEO Jeremy Rabe said in a statement Thursday.

Walmart edges into Whole Foods territory with premium coffee brand (BNN) Walmart Inc. is ramping up a battle with Amazon.com Inc. and its grocery arm Whole Foods as it starts to sell a new line of organic coffee made by a roaster in Colorado. Mash-Up Coffee, produced by Boyer’s Coffee, will be offered exclusively at more than 1,200 Walmart stores or on the Mash-Up website. The coffee sells for about $7 a bag — roughly the same price as Starbucks sold at Walmart, which is typically at the high-end of coffee at the retailer. Walmart contacted Denver-based Boyer’s Coffee last year seeking to learn more about the so-called “third wave” of coffee.

Overnight markets

Overview: US 10yr note futures are up 0.026% at 119-12, S&P 500 futures are up 0.11% at 2831.5, Crude oil futures are down -0.33% at $68.73, Gold futures are up 0.02% at $1220.4, DXY is down -0.01% at 95.164, CAD/USD is down -0.04% at 0.7682.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 2.093% 2 Year 2.666%
5 Year 2.256% 5 Year 2.848%
10 Year 2.36% 10 Year 2.979%
30 Year 2.376% 30 Year 3.111%

US Economic Data

8:30 AM Trade Balance, Jun est -46.5b (-43.1b prior)
  Change in Nonfarm Payrolls, Jul est 193k (213k prior)
  Change in Private Payrolls, Jul est 190k (202k prior)
  Change in Manufact. Payrolls, Jul est 25k (36k prior)
  Unemployment Rate, Jul est 3.9% (4.0% prior)
  Average Hourly Earnings MoM, Jul est 0.3% (0.2% prior)
  Average Hourly Earnings YoY, Jul est 2.7% (2.7% prior)
  Average Weekly Hours All Employees, Jul est 34.5 (34.5 prior)
  Labor Force Participation Rate, Jul (62.9% prior)
9:45 AM Markit US Services PMI, Jul est 56.2 (56.2 prior)
  Markit US Composite PMI, Jul (55.9 prior)
10:00 AM ISM Non-Manf. Composite, Jul est 58.6 (59.1 prior)

Canadian Economic Data

8:30 AM Int’l Merchandise Trade, Jun est -2.30b (-2.77b 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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230