Market Update

US tsys higher, yields ~1bp lower with the 10Y outperforming. Tsy prices rose in Asia in safe haven bid on continued fallout from North Korea missile launch, but then faded on Europe on supply & stronger Euro data, heavy selling at the lows in TY futures 125-02. Core Euro bonds lower led by UK gilts , hawkish comments from BOE Saunders who said households should prepare for higher rates. GOCs higher, outperforming tsys by 1-2bps after yesterday’s 6bp widening on more comments from Poloz  in a German newspaper.  The BOC auctions $3.9bln in 5Y bonds at noon – reopening of the 1% Sep 2022s with the Sep 22/5Y roll 5.6/5.2, towards the low of recent range.

News headlines 

Global stocks recover as eyes shift to Fed minutes (Reuters) Stock markets rode out the latest rise in tensions around North Korea on Wednesday, main markets in both Europe and Asia inching higher as attention moved to minutes from the U.S. Federal Reserve’s last meeting. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent, regaining half the losses it saw on Tuesday when North Korea fired a missile into Japanese waters.

Dollar rises as short bets unwound before data (Reuters) The dollar rose its highest levels in nearly two months against the Japanese yen on Wednesday as investors reduced bearish bets against the greenback before data this week sheds more light on the ongoing recovery in the U.S. economy.

Factbox: Trump talks tough on North Korea, but options limited (Reuters) U.S. President Donald Trump has employed tough rhetoric in response to North Korea’s missile tests, but his options appear limited in dealing with a challenge that has vexed his Oval Office predecessors.

North Korea says its ICBM can carry nuclear warhead; U.S. calls for global action (Reuters) North Korea said on Wednesday its newly developed intercontinental ballistic missile (ICBM) can carry a large nuclear warhead, triggering a call by Washington for global action to hold it accountable for pursuing nuclear weapons.

Monte Paschi to Reduce 5,500 Jobs, Assets in Rescue Plan (Bloomberg) Italian lender Banca Monte dei Paschi di Siena SpA laid out a five-year restructuring plan that includes cutting thousands of jobs and selling assets as part of an agreement with the European Union that lets the bank receive 5.4 billion euros ($6.1 billion) in state aid.

Ontario economy too dependent on housing ‘bubble,’ new study warns (Financial Post) Ontario, once the industrial powerhouse of Canada, has become precariously reliant on its booming housing market to fuel economic growth, warns a new report.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 125-03, S&P 500 futures are up 0.18% at 2429.25, Crude oil futures are down -1.25% at $46.48, Gold futures are down -0.08% at $1218.2, DXY is up 0.23% at 96.438, CAD/USD is up 0.19% at 0.7715.

US Economic Data 

10:00 AM Factory Orders, May, est. -0.5% (prior -0.2%)
Factory Orders Ex Trans, May, (prior 0.1%)
Durable Goods Orders, May F, est. -1.0% (prior -1.1%)
Durables Ex Transportation, May F, (prior 0.1%)
Cap Goods Orders Nondef, m/m, May F, (prior -0.2%)
Cap Goods Ship Nondef Ex air, m/m, May F, (prior -0.2%)
FOMC Meeting Minutes from June 13-14 meeting

 Canadian Economic Data

There is no major economic news release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230