US tsys lower, US 10Y 1.796 (2bps), off the lows after Initial Claims rose to a five week high, avg volume in TY futures (275K) overnite. Commodities higher, crude up 3.0% at 45.15 as Alberta wildfire said to lower production by 1MM bbl/day. European equities slightly higher, core Euro bonds also higher led by 10Y UK gilts on weak Markit/CIPS Services PMI, light volumes given holiday in Europe 7 Japan, EU peripheral spds mixed – Portugal wider Greek yields lower as Eurozone fin ministers prepare to meet next Monday to discuss bailout terms. GOCs unch, slightly better offered vs tsys, steepening bias remains in tact, 5/30 12 bps steeper since Apr 26th. yest 2Y auction went well S18/2Y roll slighly flteer today provi spds unch after closing 1bp wider yest (~4bps on the week) . Manitoba long issue yest @132 (Ont + 16) mediocre reception MP46/Ont46 17/16. Ontario rumoured again today, so are BC & Q.
- European Stocks Rebound as Oil Extends Gain; Turkish Bonds Fall (Bloomberg) European stocks rose for the first time in a week and U.S. equity-index futures advanced, bolstered by a second day of gains in crude. Turkish equities and bonds tumbled amid a political showdown between the president and prime minister. Two shares advanced for every one that declined on the Stoxx Europe 600 Index, and Standard & Poor’s 500 Index futures signaled the gauge will rise from a three-week low. Crude rallied after U.S. output fell the most in eight months and as wildfires disrupted production in Canada. Turkey’s 10-year bond yields climbed to a one-month high amid speculation Prime Minister Ahmet Davutoglu will step down after losing a power struggle with President Recep Tayyip Erdogan.
- Oil rallies as Canada fire and Libya violence threaten supply (Reuters) A huge wildfire near Canada’s oil sands region and escalating tensions in Libya stoked concern among investors over a near-term supply shortage, driving crude prices up for the first time in a week on Thursday. Brent crude futures LCOc1 rose $1.11 on the day to $45.73 a barrel by 1105 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 gained $1.36 to $45.14.
- China April services sector expansion slows, employment rebounds: Caixin PMI (Reuters) Activity in China’s service sector expanded again in April, though the gains were slightly less robust than in March, a private survey showed on Thursday, as firms resumed adding staff after a rare decline the previous month. The Caixin/Markit services purchasing managers’ index (PMI) for April dropped to 51.8 from 52.2 in March, as new business increased at the fastest pace since January while business expectations remained unchanged.
- Look Out, Loonie, Canada May Have Just Peaked (Bloomberg) It looks like Canada’s surprisingly strong run of economic data is ending, if TD Securities is right, and that means one of the fiercest rallies on record for the Canadian dollar is poised to end as well. We may have passed « a point of peak optimism » on the Canadian economy, senior foreign-exchange strategist Mazen Issa wrote, after the release Wednesday of trade data for March in which America’s neighbor to the north recorded its biggest monthly deficit on record.
- Brexit Uncertainty Drags U.K. Economy to Near Stagnation (Bloomberg) U.K. companies are feeling the strain from the upcoming European Union referendum, with a gauge of services falling to its lowest level in more than three years in April. Markit Economics said its services Purchasing Managers Index dropped to 52.3 from 53.7. While that’s above the 50 level that divides expansion from contraction, it’s the weakest since February 2013 and below the 53.5 median forecast of economists.
- Manulife Financial Corp beats expectations with 45% jump in earnings on Asian sales (FinancialPost) Manulife Financial Corp, Canada’s biggest life insurer, reported a 45 per cent jump in first-quarter earnings, boosted by strong insurance sales in Asia and gains from interest rate movements. Net income attributable to shareholders rose to $1.05 billion, or 51 cents per share, in the quarter ended March 31, from $723 million, or 36 cents per share, a year ago.
- Tesla Accelerates Plans to Produce 500,000 Vehicles Annually (Bloomberg) Elon Musk, determined to turn his electric-car company into a great maker of things, said that he keeps a sleeping bag in a conference room adjacent to Tesla Motors Inc.’s production line in Fremont, California. He beseeched the best manufacturing people in the world to join the company, which is preparing to launch a Model 3 sedan that is designed for ease of manufacturing with fewer “bells and whistles” than the Model X sport utility vehicle. The SUV was recalled soon after deliveries began.
- Overview: US 10yr note futures are up 0.024% at 130-15, S&P 500 futures are up 0.28% at 2052.75, Crude oil futures are up 4.77% at $45.87, Gold futures are up 0.88% at $1285.6, DXY is up 0.38% at 93.529.
US Economic Data
- 8:30 AM : Initial Jobless Claims, April 30, 274k, est. 260k (prior 257k)
- Continuing Claims, April 23, 2121K, est. 2128k (prior 2130k)
Canadian Economic Data
- 8:30 AM : Building Permits MoM, March, -7.0%, est. -4.8% (prior 15.5%)
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