Market Update
US tsys rallying after weak ADP (27k vs 185k exp), short end leading the rally with the 2Y 6bps lower @ 1.82%, breaking below Monday’s low with the 10Y 2.08%. US equity futures coming off after the data, S&P +6 (from +15 pre data). GOCs outperforming tsys in the rally 1-2bps, 10Y 1.41% (-6bps). 2Y auction in Canada today – $3.0bln in reopened Can 1.5 August 21s with eh Aug 21/May 21 inverted at -1.2bps, just off the lows of -1.9bps of late May. With benchmark 2Y yields ~1.34% there is little value outright in our opinion , yet relative to other rolls in the sector (i.e. the 2Y roll May/Feb21 -3.2bps) the August 21s look fairly cheap.
News headlines
Chinese importers to apply for tariff waivers on U.S. goods (Reuters) Chinese importers are preparing applications for waivers on import tariffs levied on more than 700 U.S. goods in the Sino-U.S trade war, after the finance ministry said it would start taking submissions.
Fed’s slipstream leaves stocks beaming, dollar subdued (Reuters) Global stocks gained for a third straight day on Wednesday, bolstered by investors’ growing hopes that the Federal Reserve might cut interest rates this year to boost a slowing global economy, while the dollar languished near seven-week lows.
Mexican officials hope to avert U.S. tariffs in last-ditch talks (Reuters) Mexican officials will seek to persuade the White House in talks hosted by U.S. Vice President Mike Pence on Wednesday that their government has done enough to stem immigration and avoid looming tariffs.
Canada says China will increase examination of meat imports (FP) Concerns over swine fever, smuggling and ‘non-compliance of pork shipments’ cited. China’s customs agency plans to increase inspections of Canadian meat and meat product imports, a move that could seriously damage the Canadian industry, officials said Tuesday. A Canadian agriculture ministry notice to industry seen by Reuters said the embassy in Beijing had been told the Chinese would open all containers of Canadian meat and meat products and in some cases 100 per cent of the contents will be inspected.
Enbridge’s Line 3 setback in Minnesota is more bad news for oil workers, group CEO says (BNN) A court ruling in Minnesota that could further delay Enbridge Inc.’s Line 3 oil pipeline replacement project spells more bad news for Canadian oil field workers, says the CEO of the Petroleum Services Association of Canada. Investor confidence in Western Canada’s oil industry is at a low ebb and that has resulted in less producer spending on exploration and production, said Gary Mar. « Whenever there is a delay or some impediment to takeaway capacity, that has a direct affect on the interest of producers in committing capital to projects, » he said.
Trump just banned US cruise ships, yachts, and private planes from traveling to Cuba (BI) President Donald Trump’s administration is restricting travel to Cuba, the US State Department said on Tuesday. The Trump Administration is ending an educational travel program and banning « passenger and recreational vessels » — which include cruise ships and yachts, as well as private and corporate planes — from traveling to Cuba. The State Department cited as reasons for the ban the Cuban government’s repression of its citizens and support of Venezuelan president Nicolas Maduro, who faces a challenge to his tenure from opposition leader Juan Guaido amid a spiraling economic crisis.
Mitsubishi Heavy in talks to buy Bombardier’s regional jets in industry shake-up (Reuters) Japan’s Mitsubishi Heavy Industries Ltd said on Wednesday it is holding talks to buy Bombardier Inc’s CRJ program, in a deal that would shake up the market for regional jets with fewer than 100 seats.
Overview markets: US 10yr note futures are up 0.172% at 127-06, S&P 500 futures are up 0.38% at 2815.75, Crude oil futures are down -1.01% at $52.94, Gold futures are up 1.08% at $1343.1, DXY is up 0.04% at 97.115, CAD/USD is down -0.01% at 0.7467.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.344% | 2 Year | 1.819% |
| 5 Year | 1.3% | 5 Year | 1.84% |
| 10 Year | 1.436% | 10 Year | 2.099% |
| 30 Year | 1.727% | 30 Year | 2.606% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, 1.5% Prior: 3.30% |
| 08:15 AM | ADP Employment Change, May Actual: 185k Prior: 275k |
| 09:45 AM | Markit US Services PMI, May F Survey: 50.9 Prior: 50.90 |
| Markit US Composite PMI, May F — Prior: 50.9 | |
| 10:00 AM | ISM Non-Manufacturing Index, May 55.40 Prior: 55.5 |
Canadian Economic Data
| 08:30 AM | Labor Productivity QoQ, 1Q Survey: 0.40% – Prior: 0.40% |
mso-sty
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230