Market Update
Tsys trading lower, curve 0.5bps steeper, US 10Y 2.171 (+1.2bps) , 3bps off the post non-farm low, on low volume in TY1 futs (221K). German bunds, UK gilts also lower despite weekend terror attack, ECB & UK election risks. Crude off 0.30 @ 47.37, giving up earlier gains inspired by Arab states severing ties with Qatar. ECB meting Thursday – no change in policy expected despite firmer data of late, euro/bund volatility remain low as forward guidance not expected to change much. GOCs lower, long end outperforming in continuation from Friday – 5s/30s flattest since mid Oct – index buying a factor supporting longs & longer term provis – Ont 48/27 trading up @ 9.5 this morn.
News headlines
Europe Stocks Slip With Metals; Pound Erases Drop: Markets Wrap (Bloomberg) European stocks headed for the first drop in three days as a selloff in industrial metals weighed on mining shares. The weekend’s terror attack in London couldn’t hold back the pound, which erased a loss to strengthen ahead of the U.K. election. Miners were the biggest losers as the Stoxx Europe 600 Index retreated, while zinc and tin led base metals lower. Treasury yields increased from the lowest since November.
Oil prices dip on fears Middle East spat could harm OPEC cuts (Reuters) Oil prices reversed gains to trade down on Monday on concerns that the cutting of ties with Qatar by top crude exporter Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.
China May data to show stable growth as exports stay solid (Reuters) China’s economy is likely to have remained on a stable footing in May, buoyed by solid gains in trade and investment as economic ties with the United States take a positive turn and infrastructure spending cushions domestic growth.
Election jitters and consumer squeeze hit UK services, PMI shows (Reuters) Britain’s services grew more slowly than expected last month as businesses put off investment decisions before this week’s national election and higher inflation squeezed households, a survey showed on Monday.
Macron factor set to leap from presidency to parliament (Reuters) Bastions are crumbling and loyalties shifting ahead of France’s parliamentary elections. Emmanuel Macron, fresh from becoming the youngest French leader since Napoleon, now looks set to redraw the political map with a party he only formed a year ago.
Don’t Bet the House on Poloz Busting Toronto and Vancouver Bubbles (Bloomberg) The old debate about whether central banks should raise rates to counteract housing bubbles is finding new life in Canada as the country copes with runaway prices in its two biggest real estate markets.
Toronto home sales drop most since recession as new rules put brakes on market (FinancialPost) Sales of existing homes across the Greater Toronto Area dropped a whopping 20.3 per cent in May from a year ago, while the average home price in the region fell about six per cent from April, results based on the first full month of data following a major initiative by the Ontario government to cool Canada’s biggest housing market.
Overnight markets
Overview: US 10yr note futures are down -0.185% at 126-13, S&P 500 futures are down -0.09% at 2435.5, Crude oil futures are down -0.82% at $47.27, Gold futures are up 0.27% at $1283.7, DXY is up 0.2% at 96.912, CAD/USD is up 0.07% at 0.7412.
US Economic Data
| 8:30 AM | Nonfarm Productivity, 1Q F, 0.0%, est. -0.2% (prior -0.6%) |
| Unit Labor Costs, 1Q F, -2.2%, est. 2.4% (prior 3.0%) | |
| 9:45 AM | Markit US Services PMI, May F, (prior 54.0) |
| Markit US Composite PMI, May F, (prior 53.9) | |
| 10:00 AM | ISM Non-Manufacturing Composite, May, 57.1 (prior 57.5) |
| Labor Market Condition Index, May, est. 3.0 (prior 3.5) | |
| Factory Orders, Apr, est. -0.2% (prior 0.2%) | |
| Factory Orders Ex Transportation, Apr, (prior -0.3%) | |
| Durable Goods Orders, Apr F, est. -0.5% (prior -0.7%) | |
| Durables Ex Transportation, Apr F, est. 0.1% (prior 0.0%) | |
| Cap Goods Orders Nondef Ex Air, Apr F, est. 0.1% (prior 0.0%) | |
| Cap Goods Ship Nondef Ex Air, Apr F, (prior -0.1%) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, June 2, (prior 58.5) |
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
Fax: (514)-861-3230