Market Update US tsys trading higher, 10Y 2.84% (-2.5bps), heavy volume in TY futures (530k). The risk off move in tsys & bunds following the Italian election results has largely faded, with the German 10Y yield 2bps lower @ 0.623% after initially falling to 0.60% after news of a right wing coalition a and strong result from the 5-star movement. The USD index is higher, US equity futures -8.25. In Canada, GOCs are higher, outperforming tsys 1.5-2bps with the 10Y 2.15% (-4.5bps) and the CAD at a new 8 month low -74pps @ 1.2964 on stepped up Trump rhetoric on trade . Provis opening wider for a sixth day Ont 27s 63/62 , QC/Ont 48 -2/-2.5 unch. BOC rate decision Wednesday – BOC expected to be on hold this week while odds of a hike at the April meeting have fallen to ~35% from 53% a month ago. The CITI eco surprise index has seen a steep decline since the Jan 17th meeting, and this was before the threat of a trade war with the US.
News headlines
Trump Trade Crackdown Shows ‘America First’ Happening at Last (Bloomberg) President Donald Trump’s March 1 announcement that he’ll slap stiff tariffs on imported steel and aluminum roiled markets, spurred warnings of harsh economic and political ramifications from some Republican lawmakers, and provoked threats of retaliation from allies such as the European Union. Trump doesn’t intend to bow to pressure for exemptions for some nations when he signs the formal tariffs order as early as this week, according to two of his trade advisers, though there could be business exemptions in select cases.
Italy Populists Break Establishment Grip, Quest for Power Opens (Bloomberg) Italy’s anti-establishment groups surged in Sunday’s election as voters punished the mainstream parties for years of economic decline, rising taxes and a wave of immigration, casting doubt on the country’s future political direction.
China Turns Fiscal Screws While Maintaining 6.5% Red Line on GDP (Bloomberg) China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012 and setting a growth goal of around 6.5 percent that omitted last year’s aim for a faster pace if possible. The deficit target — released Monday as Premier Li Keqiang delivered his annual report to the National People’s Congress in Beijing — was lowered to 2.6 percent of gross domestic product from 3 percent in the past two years. The 6.5 percent goal is consistent with President Xi Jinping’s promise to deliver a “moderately prosperous” society by 2020.
Stocks Mixed as Trade War Looms; Italy Bonds Drop: Markets Wrap (Bloomberg) The threat of a global trade war loomed large over equities on Monday, with heavy losses across many Asian markets and U.S. futures trading lower even as European shares rose. The dollar edged higher and Treasuries gained, while Italian assets fell as the nation faced a hung parliament.
IEA Sees American Energy Dominance Squeezing OPEC Into 2020s (Bloomberg) The U.S. will dominate global oil markets for years to come, satisfying 80 percent of global demand growth to 2020 as the shale boom keeps OPEC under pressure, the International Energy Agency said.
Key U.S. lawmaker urges steel tariff exemptions for NAFTA allies (Reuters) An influential U.S. lawmaker said on Sunday all fairly traded steel and aluminum, especially from Canada and Mexico, should be excluded from President Donald Trump’s proposed tariffs, as he sought to calm tensions at major trade talks in Mexico.
TSX futures dip on trade war threat (Reuters) March futures on the S&P TSX index were down 0.19 percent at 7:15 a.m. ET. Canada’s main stock index slipped to a two-week low on Friday, ending the week with a 1.6 percent decline, as the trade war threat weighed on energy and industrial shares. Dow Jones Industrial Average e-mini futures were down 0.20 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were down 0.20 percent and Nasdaq 100 e-mini futures were up 0.12 percent.
CN launches search for new CEO after abrupt exit by Luc Jobin (BNN) CN Rail () is hunting for a new chief executive officer after the abrupt exit of Luc Jobin. The rail company announced Jobin’s departure early Monday morning, saying it’s effective immediately. Jobin is being replaced on an interim basis by Chief Marketing Officer Jean-Jacques Ruest until a permanent chief executive is selected.
Overnight markets
Overview: US 10yr note futures are up 0.143% at 120-12, S&P 500 futures are down -0.23% at 2684, Crude oil futures are up 0.03% at $61.27, Gold futures are up 0.05% at $1324.1, DXY is up 0.18% at 90.097, CAD/USD is up 0.39% at 0.7732.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.741% | 2 Year | 2.222% |
| 5 Year | 1.982% | 5 Year | 2.601% |
| 10 Year | 2.17% | 10 Year | 2.841% |
| 30 Year | 2.34% | 30 Year | 3.127% |
US Economic Data
| 9:45 AM | Markit US Services PMI, Feb est 55.9 (55.9 prior) |
| Markit US Composite PMI, Feb (55.9 prior) | |
| 10:00 AM | ISM Non-Manf. Composite, Feb est 59.0 (59.9 prior) |
Canadian Economic Data
| 7:00 AM | MLI Leading Indicator MoM, Jan 0.4% (0.5% prior) |
| 10:00 AM | Bloomberg Nanos Confidence, Mar 2nd (58.2 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