Market Update Tsys trading lower, yields 0.5-2bps higher with the US 10Y 2.91%(+0.7bps), equities higher (S&P fut +9.5), EU peripheral yields rallying, Italy 2Y -36bps @0.59% from 2.64% last Tuesday. German bund yields higher, thou well of early European highs, 10Y bund 0.38% after reaching 0.42% as Italy bond rally has faded somewhat. AUD up sharply (+1.2% highest since Apr 23rd) on stronger Aus retail sales data, with RBA meeting tomorrow. GOCs lower, outperforming tsys in the short end, curve unch , 10Y 2.244%. Friday late afternoon saw profit taking/outright selling in GOCs, mostly longs, in what appeared to be flattener unwinds with 10s30s widening 2bps after 3:00pm and the long end ~$1.00 lower. Poloz over the weekend said the BOC is ‘data dependent’ at the G7 fin min meeting in Whistler, but also pointed to strengthening capex. Provis another 0.5bps tighter after closing 2bps narrower Friday, bouyed by index buying, risk on and a marked slowing in corp issuance due to hightened volatility.
News headlines
Trump and Allies Set for Showdown Over Trade (Bloomberg) President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week in Quebec, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies. China, while open to talks to resolve the dispute, is warning it will withdraw commitments it made on trade if the president carries out a separate threat to impose tariffs on the Asian country. While China doesn’t want an escalation in trade tensions, it will defend its core interests, according to a commentary published Monday by the state-run Economic Daily.
Turkey Inflation Accelerates in May on Weak Currency (Bloomberg) Turkey’s consumer inflation accelerated to the highest level in six months ahead of a landmark presidential election, fueled by a slump in the lira that triggered an emergency hike in interest rates. The annual inflation rate rose to 12.2 percent in May from 10.9 percent the previous month, matching the median estimate in a Bloomberg survey. Turkey’s state statistics office said monthly inflation was 1.6 percent, in line with the median estimate in a separate survey. The lira gained.
Stocks Extend Gain on Growth Outlook; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures and European stocks advanced on Monday, tracking peers in Asia as optimism over the world’s largest economy helped investors put protectionist fears to one side. Treasuries edged lower, the dollar fell, and the pound and euro rose. The Stoxx Europe 600 Index climbed as almost every industry group traded in the green, with utility companies leading the way. S&P 500 contracts pointed to the U.S. benchmark extending Friday’s advance, while the MSCI Asia Pacific Index surged even as China warned it will withdraw from commitments it made on trade if President Donald Trump carries out a separate threat to impose tariffs on the Asian country. The dollar pulled back after completing a seventh week of gains. The 10-year Treasury yields traded above 2.90 percent.
Ontario premier concedes defeat ahead of next week’s polls (Reuters) The premier of Canada’s most populous province, Ontario, conceded defeat on Saturday ahead of next week’s election, but called on voters to vote for her party anyway to keep the next government in check. Kathleen Wynne, who has been premier since 2013 and whose Liberal Party has governed for 15 years, told reporters she will not be premier after the June 7 election. “This is a hard thing to do,” 64-year-old Wynne told reporters tearfully, while urging party followers to vote for as many Liberals as possible to prevent the other two parties from forming a majority government.
Global shares shrug off trade tensions as U.S. data reassures (Reuters) The MSCI world equity index, which tracks shares in 47 countries, rose 0.4 percent, while European stocks enjoyed a positive start to the day’s trading as tensions calmed in Italy and Spain. “The mood is mainly positive due to better U.S. job creation seen in (Friday’s) NFP data, which has carried stocks higher despite headwinds such as escalating trade disputes,” analysts at FX Pro Insights said. “The risk is that sentiment shifts and catches traders off balance as volatility increases.”
TSX futures up as global trade war concerns ease (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday, tracking gains in Asian and European markets, after last week’s strong U.S. jobs report helped ease investor jitters over a potential global trade. June futures on the S&P/TSX index SXFc1 were up 0.19 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE fell 17.96 points, or 0.11 percent, to 16,043.54.
Trudeau: U.S. metals tariffs in the name of national security ‘insulting’ (BNN) Prime Minister Justin Trudeau says it is “insulting” that President Donald Trump says Canada’s steel industry poses a national security risk to the United States. Speaking on NBC’s Sunday morning news show Meet the Press, Trudeau said he wants to make sure Americans, and more specifically Trump supporters, hear the message that they are going to feel financial strain and pain from the steel tariffs Trump imposed on Canada last week. “The fact that the president has moved forward with these tariffs is not just going to hurt Canadian jobs, it’s going to hurt U.S. jobs as well and neither of those things is something Canada wants to see,” Trudeau said.
Toronto home prices climb for fifth straight month in May (BNN) There was further sign of stabilization in Canada’s largest housing market in May, with the average selling price rising for a fifth consecutive month as the region’s real estate board warned competition is intensifying among buyers. Selling activity plunged 22.2 per cent year-over-year across the Greater Toronto Area in May as 7,834 properties traded hands. However, that was a slight uptick from the previous month when 7,792 sales were recorded in the GTA.
Overnight markets
Overview: US 10yr note futures are down -0.117% at 119-23, S&P 500 futures are up 0.34% at 2743, Crude oil futures are down -0.52% at $65.47, Gold futures are up 0.11% at $1300.7, DXY is down -0.5% at 93.684, CAD/USD is down -0.37% at 0.7749.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.921% | 2 Year | 2.488% |
| 5 Year | 2.119% | 5 Year | 2.76% |
| 10 Year | 2.246% | 10 Year | 2.908% |
| 30 Year | 2.279% | 30 Year | 3.055% |
US Economic Data
| 10:00 AM | Factory Orders, Apr est -0.5% (1.6% prior) |
| Factory Orders Ex Trans, Apr (0.3% prior) | |
| Durable Goods Orders, Apr (-1.7% prior) | |
| Durables Ex Transportation, Apr (0.9% prior) | |
| Cap Goods Orders Nondef Ex Air, Apr (1.0% prior) | |
| Cap Goods Ship Nondef Ex Air, Apr (0.8% prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Jun 1st (57.2 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