Market Update

US tsys trading slightly higher, yields ~0.5bps lower across the curve on avg volume in TY futures (300k), 10Y 2.69%.  European equities flat, US futures slightly lower, crude lower for at third day (53.58).  Core EGBs mixed – bunds unch despite weaker Factory Orders and construction data. 10Y gilt yields at weekly lows 1.225%, Brexit related headlines with talk of an extension to the deadline and EU Donald Tusk reiterating the Eu will not make a new offer on Brexit. GOCs outperforming tsys by 0.5bps, 10Y 1.92% before Building Permits & Jan Ivey PMI.  In corps, CNR issued $800mm 2 tranche deal – $350mm 10Y @ 109 & $450mm 30Y @ 145 –  bonds tightened 1bp initially before closing unch. Provis opening 1bp wider, long supply expected (HQ, Alta).

News headlines

Futures dip after key Trump speech (Reuters) U.S. stock futures edged lower on Wednesday after President Donald Trump at his State of the Union speech raised the prospect of another shutdown should his demand for border wall funding not be met.

Stocks Drift as Dollar Advances; Iron Ore Rises: Markets Wrap (Bloomberg) U.S. equity futures and European stocks struggled for direction on Wednesday amid mixed reports from corporate heavyweights and after a drop in German factory orders added to signs that the euro area’s economy is losing momentum. The dollar extended its advance as Treasuries edged higher.

Huawei Likely Faces 5G Ban in Canada, Security Experts Say (Bloomberg) Canada will probably ban Huawei Technologies Co. from its 5G network, analysts and security experts say, though Prime Minister Justin Trudeau may delay the decision as long as possible to avoid jeopardizing three Canadians detained in China.

Trump calls again on Congress to act on aging infrastructure needs (Reuters) President Donald Trump asked U.S. Congress in his State of the Union address on Tuesday to pass legislation to boost the nation’s aging infrastructure, without providing details on how to go about paying for it or how much it would cost.

TSX futures little changed as oil prices dip (Reuters) Stock futures pointed to a flat opening for Canada’s main stock index on Wednesday, with oil prices dipping on a surprise rise in U.S. crude inventories.

U.S.’ Mnuchin, Lighthizer to hold talks next week in China: sources (Reuters) Senior U.S. and Chinese officials are poised to start another round of trade talks in Beijing next week to push for a deal to protect American intellectual property and avert a March 2 increase in U.S. tariffs on Chinese goods, two people familiar with the plans said on Tuesday.

Fed’s Kaplan urges no further rate action until outlook is clearer (BNN) Federal Reserve Bank of Dallas President Robert Kaplan said he’s waiting on clarity about the U.S. economic outlook before supporting further moves on interest rates, but he expects the picture might start to clear up in coming months.

China says U.S. report on its WTO compliance lacks factual basis (Reuters) China opposes a report by the U.S. Trade Representative’s office on its World Trade Organization (WTO) compliance, the commerce ministry said, saying it is inconsistent with the facts.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.815% 2 Year 2.52%
5 Year 1.841% 5 Year 2.507%
10 Year 1.926% 10 Year 2.693%
30 Year 2.17% 30 Year 3.028%

US Economic Data

7:00 AM MBA Mortgage Applications, Feb 1 Actual -2.5% Prior -3.0%
8:30 AM Trade Balance, Nov Surv -$54.0b Prior -$55.5b

Canadian Economic Data

8:30 AM Building Permits MoM, Dec Surv -1.0% Prior 2.6%
10:00 AM Ivey  Purchasing Managers Index SA, Jan Prior 59.7

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