Market Update Tsys weaker, off the lows on moderate volume (380k TY futures), 10Y 2.815 (+1.1bps), long end underperforming. Risk on tone follow thru to yest rebound in US equities, S&P futures +11.25, Nasdaq +49. News that the Trump admin is ready to negotiate with China over trade helping to support positive tone in stocks, Euro Stoxx +2% trading at two week high. Core EGBs lower, 10Y gilts +2.6bps @ 1.39%. GOCs lower in line with tsys, 10Y CAD 2.185%. Trade data in the US & Cda before key employment data tomorrow. Provis unch despite positive tone, after closing 1bp wider again yest. Supply from Alberta/MP rumoured, new Ontario 28 yest @ 73.5 well received, now 72.5.
News headlines
Stocks Bounce Back From Trade Tremors, Bonds Fall: Markets Wrap (Bloomberg) U.S. equities stormed back from deep losses sparked by trade tensions as investors speculated the Trump administration won’t enact the most protectionist proposals and risk derailing economic growth. The S&P 500 Index saw the biggest two-day gain in five weeks as representatives from China and the Trump administration left the door open for a negotiated solution to avoid tariff proposals that wouldn’t take effect for months. Treasury yields turned higher to trade near 2.79 percent. The dollar fell as the Mexican peso strengthened after the U.S. president was said to have softened on his car-parts demand in North American Free Trade Agreement negotiations.
Republicans Warn Trump a Trade War Risks Party’s Chances in November (Bloomberg) Republicans are warning President Donald Trump that a trade war with China would deal an economic blow to politically important areas of the country that will cost the party in November’s congressional elections. The president’s proposed tariffs on a variety of imports are aimed at fulfilling a campaign promise to protect domestic industries slammed by globalization. But the impact of retaliation by China could drown out the GOP message that tax cuts are delivering prosperity, which the party is counting on to save their majorities in the House and Senate in what’s already a tough election year.
Facebook Says Data on Most of Its 2 Billion Users Is Vulnerable (Bloomberg) Facebook Inc. said data on most of its 2 billion users could have been accessed improperly, giving fresh evidence of the ways the social-media giant failed to protect people’s privacy while generating billions of dollars in revenue from the information. The company said it removed a feature that let users enter phone numbers or email addresses into Facebook’s search tool to find other people. That was being used by malicious actors to scrape public profile information, it said.
Euro-Area Economy Cools Further in Sign Peak Growth Has Passed (Bloomberg) Euro-area economic momentum slowed to the weakest level in more than a year, adding to warning signs that the region’s upswing has passed its peak. A composite Purchasing Managers’ Index dropped nearly two points in March, the most since 2012, when the 19-nation bloc was mired in recession. Growth in manufacturing cooled to an eight-month low last month, and sluggish orders in the region’s largest economy suggest there’s little additional strengthening in store.
TSX futures rise as trade war worries fade (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday, tracking gains in global equities as concerns over trade tensions between the U.S. and China receded. Canadian trade report for February is scheduled at 8:30 a.m. ET and is expected to show the trade deficit widened to C$2 billion from $1.91 billion the month before Canada’s main stock index pared earlier losses on Wednesday as investors grew less worried about trade tensions, but the TSX still posted its lowest close in nearly eight weeks as shares of financial and materials companies declined.
Canada reports progress on NAFTA, says ‘we’re not there yet’ (Reuters) Mexico, Canada and the United States have made good progress in their bid to modernize the NAFTA trade pact but still have work to do, Canadian Foreign Minister Chrystia Freeland said on Wednesday. Freeland also said she would be flying to Washington for a meeting on Thursday with U.S. Trade Representative Robert Lighthizer, who is pushing hard for a quick deal in principle to finish before a July 1 presidential election in Mexico.
China tariff plan seen a boon for Bombardier, others (BNN) China’s plan to slap tariffs on some U.S.-made planes will hit demand for Gulfstream and Boeing business jets but benefit Canada’s Bombardier () and other rivals seeking a larger share of Asia’s biggest market, jet brokers and analysts said. China’s Ministry of Commerce announced plans on Wednesday to place a 25 per cent tariff on U.S. aircraft with an “empty weight” of between 15,000 kilograms and 45,000 kilograms amid a trade spat between the nations. That category would include General Dynamics Corp’s () popular Gulfstream G550 and G650s and the larger Boeing () Business Jet 1 that competes against models from European rival Airbus SE (AIR.PA).
Overnight markets
Overview: US 10yr note futures are down -0.168% at 120-20, S&P 500 futures are up 0.55% at 2661.5, Crude oil futures are down -0.22% at $63.23, Gold futures are down -0.8% at $1329.5, DXY is up 0.19% at 90.312, CAD/USD is up 0.19% at 0.7816.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.822% | 2 Year | 2.299% |
| 5 Year | 2.042% | 5 Year | 2.628% |
| 10 Year | 2.191% | 10 Year | 2.817% |
| 30 Year | 2.345% | 30 Year | 3.062% |
US Economic Data
| 7:30 AM | Challenger Job Cuts YoY, Mar 39.4% (-4.3% prior) |
| 8:30 AM | Initial Jobless Claims, Mar 31st 242k est 225k (215k prior) |
| Continuing Claims, Mar 24th 1808k est 1843k (1871k prior) | |
| Trade Balance, Feb -57.6b est -56.8b (-56.6b prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Apr 1st (56.8 prior) |
Canadian Economic Data
| 8:30 AM | Int’l Merchandise Trade, Feb -2.69b est -2.10b (-1.91b 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