Market Update

Tsys higher at upper end of o/n range on above avg volume in TY futures , US 10Y 2.38 (-1bp) – ‘risk off’ bid on reports of explosion in St Petersburg and before key ISM Man data at 10:00am and March FOMC minutes Wednesday and March Employment Friday. Latest CFTC COT report for March 28th showed large specs extending shorts in the short end – record short Eurodollars , yet paring back on shorts in 2s, 10s and longs. In the long end specs cur net shorts in the 30Y bond by 30k contracts to -20k. Core Euro bonds higher – bull steepener in Germany/flattener in UK.  Strong bid in German , Italy & Spain short end as the new quarter sees long vol trades being unwound and before ECB meeting on Thursday. Gilts higher on weaker UK PMI, 10Y gilt at one month low 1.10%. GOCs are slightly higher in line with tsys, before Markit Man Survey for March and BOC Business Outlook Survey for Q1.  The Q4 survey saw showed strong increases in all three key measures of hiring, sales and investment intentions with both future sales and investment intentions at 2 yr highs. Provis – little changed on the week,  Ont 26/48 roll steeper as buyign led by 10s last week. PQ 10Y 76.5/ from 77 at n.i. last Thurs.

News headlines 

Europe Stocks Rise Fifth Day, Pound Falls on Data: Markets Wrap (Bloomberg) European shares advanced for a fifth day and the pound retreated at the start of a busy week that includes a meeting between Xi Jinping and Donald Trump and culminates in the monthly U.S. jobs report.

Euro-Area Unemployment Declines to Lowest Level in Eight Years (Bloomberg) Euro-area unemployment fell to the lowest level in almost eight years in February, in a sign that the region’s economy is strengthening. Joblessness decreased to 9.5 percent, the European Union’s statistics office in Luxembourg said on Monday. That’s the lowest since May 2009 and matches the median estimate of economists in a Bloomberg survey.

Sterling slips after UK manufacturing loses momentum (Reuters) Sterling slipped on Monday after data showed British manufacturing lost momentum last month, the latest sign the economy may be running out of steam after its surprising resilience in the wake of last year’s Brexit vote.

Japan business mood brightens as recovery broadens: BOJ tankan (Reuters) Japanese big manufacturers’ business confidence improved for a second straight quarter to hit a one-and-a-half year high in March, a closely watched central bank survey showed, a sign the benefits of an export-driven economic recovery were broadening.

Canadian Stocks Need Oil’s Secret Sauce to Revive Former Glory (Bloomberg) Canadian stocks ranked 21st among the world’s developed markets in the first quarter, an ignominious performance that investors don’t expect to improve much for the rest of the year — unless oil bolts higher again. Strategists and portfolio managers are betting the S&P/TSX Composite Index will only rise about 3.3 percent to 16,066 by the end of 2017 from Friday’s close, according to the average of eight forecasts compiled by Bloomberg News. The full-year forecast gain of 5 percent contrasts with the benchmark’s 18 percent return in 2016.

OPEC’s Barkindo Sees Progress in Oil Cuts as Stockpiles Drop (Bloomberg) Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC’s Secretary-General Mohammad Barkindo.

Overnight markets 

Overview: US 10yr note futures are up 0.151% at 124-24, S&P 500 futures are up 0.02% at 2359.75, Crude oil futures are up 0.2% at $50.7, Gold futures are down -0.18% at $1248.9, DXY is up 0.19% at 100.54, CAD/USD is up 0.27% at 0.7489.

US Economic Data

9:45 AM Markit US Manufacturing PMI, Mar F, est. 53.5 (prior 53.4)
ISM Manufacturing, Mar,  est. 57.2 (prior 57.7)
ISM Prices Paid, Mar, est. 66.0 (prior 68.0)
ISM New Orders, Mar, (prior 65.1)
ISM Employment Mar, (prior 54.2)
10:00 AM Construction Spending, m/m, Feb, est. 1.0% (prior -1.0%)
Wards Total Vehicle Sales, Mar, est. 17.30m (prior 17.47m)
Wards domestic Vehicle Sales, Mar, est. 13.65m (prior 13.65m)

Canadian Economic Data

7:00 AM MLI leading Indicator, m/m, Feb, 0.4% (prior 0.6%)
9:30 AM Markit Canada Manufacturing PMI, Mar, (prior24.7)
10:00 AM Bloomberg Nanos Confidence Index, (prior 58.5)
10:30 AM Business Outlook Future Survey, 1Q, (prior 26.00)
BoC Senior Loan Officer Survey, 1Q,  (prior -2.6)


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