Market Update Tsys trading lower, limited reaction to lower than exp ADP (177k vs 190k), 10Y 2.85%, above avg volume in TY futures (422k). ‘Risk on’ rally in stocks(S&P futures +21, Nasdaq fut +62) as EU officials are considering reducing tariffs on imported cars from the US, despite tomorrows scheduled implementation of $34bln in tariffs on Chinese goods.  ISM Non-Manufacturing and FOMC Minutes still on deck. GOCs recovering earlier losses along with the bounce in tsys, spds 1-2bps tighter vs US. The BOC auctions $3.0bln in reopened 2% Sep 1 2023s with the roll vs current 5s 3.0/2.8 -fairly steady over the last few weeks despite 20bp flattening in the underlying 2s10s curve since the last 5Y auction May 17th. 

News headlines

Toronto Home Sales Post Biggest Jump Since 2004 (Bloomberg) Toronto home sales jumped the most in more than a decade last month, a sign that Canada’s biggest housing market is rebounding from the chill brought on by tighter lending regulations and higher borrowing costs in the past few months. Sales in June rose 2.4 percent from the same period a year ago, according to data released Thursday from the Toronto Real Estate Board. Seasonally adjusted sales climbed 18 percent from May, the biggest monthly gain since 2004.

The China-U.S. Power Struggle Is Just Beginning (Bloomberg) Chinese President Xi Jinping has an ambitious master plan for his country’s transformation into a wealthy, technology-driven global economic power. And U.S. companies need not apply. That’s why the current trade rumble between the U.S. and China, in which the Trump administration is threatening to slap tariffs on $34 billion of Chinese imports and Beijing promises to respond in kind, is far more than just a spat over market restrictions, intellectual property rights and the epic U.S. deficit.

May Fights for Brexit Plan as Austria Raises Idea of Extension (Bloomberg) As U.K. Prime Minister Theresa May fights to win Cabinet backing for her Brexit plan with the clock ticking down to exit day, Austria raised the prospect than an extension to the negotiating deadline could be considered. Austria holds the European Union’s rotating presidency, a role it will keep through the end of the year — a crucial period in Brexit talks. Chancellor Sebastian Kurz said on Thursday a no-deal Brexit must be avoided at all costs. Asked if that meant extending the March 2019 deadline for negotiations, he said: « We will see. »

U.S. Stock Futures Follow Europe Jump; Euro Rises: Markets Wrap (Bloomberg) U.S. equity futures rallied alongside European peers, while Asian shares dropped to a nine-month low as traders prepare for the implementation of fresh trade restrictions between America and China. The euro advanced on the prospect of earlier-than-anticipated monetary tightening. Futures on the S&P 500, Nasdaq and Dow all jumped, while European automakers headed for the biggest gain in two years on hopes of a cross-Atlantic tariff deal. That helped spur the Stoxx Europe 600 Index after gauges in Tokyo, China and Hong Kong all fell. The dollar and Treasuries both dropped, while the yuan held steady. Commodities, heavily exposed to international trade, edged lower. Iron ore futures in Singapore hit the lowest since November.

TSX futures rise on higher oil prices (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Thursday as oil prices rose due to potential disruptions to flows from Iran and the Middle East. Crude prices had earlier dropped after U.S President Donald Trump demanded OPEC to cut prices. However, an Iranian threat to block shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf, supported prices.

Canadians ‘ready to go to war’ with U.S. over tariff fight (BNN) A majority of Canadians are ready to boycott the U.S. in response to the Trump administration’s recent trade actions, according to a new poll. The Nanos Research survey, conducted for CTV News, reveals the majority of Canadians are likely to cut back on travel to the U.S. (73 per cent) and boycott goods made south of the border (72 per cent). Furthermore, 68 per cent of respondents said they’re likely to avoid U.S. retailers in Canada. Canadians are “ready to go to war,” Nik Nanos, one of the country’s top public opinion pollsters, told CTV News’ Melanie Nagy.

New finance minister declares Ontario is ‘open for business’ (BNN) Ontario’s new finance minister wants to get the message out that the province is open for business. In his first television interview since being appointed Ontario’s finance minister, Vic Fedeli told BNN Bloomberg on Wednesday that he expects his new government to create a better investment environment in the province. “We are lowering corporate taxes, we are lowering small business taxes, we are lowering hydro costs, eliminating cap-and-trade,” Fedeli told BNN Bloomberg. “Those are all key signals to the business community that Ontario is open for business.”

Overnight markets

Overview: US 10yr note futures are down -0.117% at 120-06, S&P 500 futures are up 0.76% at 2734, Crude oil futures are up 0.12% at $74.23, Gold futures are up 0.21% at $1256.1, DXY is down -0.27% at 94.273, CAD/USD is down -0.13% at 0.7618.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.919% 2 Year 2.545%
5 Year 2.076% 5 Year 2.745%
10 Year 2.17% 10 Year 2.857%
30 Year 2.21% 30 Year 2.981%

US Economic Data

7:30 AM Challenger Job Cuts YoY, Jun 19.6% (-4.8% prior)
8:15 AM ADP Employment Change, Jun 177k est 190k (178k prior)
8:30 AM Initial Jobless Claims, Jun 30th 231k est 225k (227k prior)
  Continuing Claims, June 23rd 1739k est 1718k (1705k prior)
9:45 AM Bloomberg Consumer Comfort, Jul 1st (57.3 prior)
  Markit US Services PMI, Jun est 56.5 (56.5 prior)
  Markit US Composite PMI, Jun (56.0 prior)
10:00 AM ISM Non-Manf. Composite, Jun est 58.3 (58.6 prior)
14:00 PM FOMC Meeting Minutes, Jun 13th

Canadian Economic Data

There is no Canadian economic data for today.



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