Market Update

US tsys futures and GoC moving higher supported by risk-off tone following news of a successful North Korean missile launch. Initially, bonds had benefited from a flight to quality trade as a result of another North Korean missile launch. However, equity markets have recovered from a poor start but bond prices continued moving higher. Current levels: GoC 10yr 1.817 (+0.055) US10yr 2.35 (Closed).

News headlines 

Asian shares stumble as North Korea fires missile into Japanese waters (Reuters) Asian shares turned lower on Tuesday as earlier gains were quashed by tensions on the Korean peninsula after North Korea fired a missile that landed in Japanese waters, deepening concerns over the isolated nation’s nuclear capabilities.

Oil eases on U.S. holiday after eight days of gains (Reuters) Oil prices fell on Tuesday, as investors booked profits on an eight-day rally that was triggered by tentative signs that a persistent rise in U.S. crude production may be slowing. Brent crude futures LCOc1 fell by 15 cents to $49.53 per barrel by 1138 GMT.

China Warns Against ‘Negative’ U.S. Turn as Trump Raises Heat (Bloomberg) President Xi Jinping’s complaint about a “negative” turn in China’s relationship with the U.S. showed the challenge facing Donald Trump when the two leaders meet in Germany this week.

German new car sales down 3 percent in June on fewer selling days – VDA (Reuters) German new car sales declined 3 percent last month to 327,800 vehicles, auto industry association VDA said on Tuesday, citing two fewer selling days. Year-to-date registrations in Europe’s largest auto market were still up 3 percent on year-earlier levels at 1.79 million vehicles, VDA said, confirming a Reuters story.

China central bank will maintain prudent and neutral monetary policy (Reuters) China’s central bank said on Tuesday that it would continue to implement a prudent and neutral monetary policy, and keep liquidity in the country’s financial system basically stable. The People’s Bank of China switched to a modest tightening stance at the start of this year to help cool explosive growth in debt, but it injected substantial liquidity last month to avoid a quarter-end cash crunch, market participants said.

Who wins and who loses when the Bank of Canada raises rates (Financial Post) Another month of solid growth for the Canadian economy in April and upbeat survey results from the Bank of Canada have strengthened expectations that the central bank will soon begin increasing interest rates for the first time in seven years.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 125-06, S&P 500 futures are up 0.19% at 2429.5, Crude oil futures are down -0.28% at $46.94, Gold futures are up 0.39% at $1223.9, DXY is up 0.04% at 96.252, CAD/USD is down -0.29% at 0.771.

US Economic Data

There is no major economic news release for today.

Canadian Economic Data 

7:00 AM MLI Leading Indicator, m/m, 0.1% (prior 0.4%, revised 0.4%)
9:30 AM Markit Canada Manufacturing, Jun, (prior 55.1)
10:00 AM Bloomberg Nanos Confidence Index, Jun 30, (prior 57.7)


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