Market Update

US tsys higher, before ADP payrolls and Dec trade balance, 10Y 2.71% (-1bp). German bunds followed tsys higher in Asia as Aussie bonds surged on Q4 GDP miss (0.2% vs 0.3%). The OECD cuts its forecast for global growth this year for the second time, while warning that a no-deal Brexit would plunge the UK into recession with GDP falling below 1.0% for the first time in a decade. US equity futures lower, even as Chinese stocks rose for a 4th day to nine-month highs, crude -1.0% $56.  GOCs higher led by the 10Y @1.84% (-3bps), Can/US another 1-2bps tighter before BOC decision. Short end  yields trading at three month lows, 2Y 1.71% starting to price in rate cuts  with the o/n target rate is expected to remain at 1.75%.  Expect a dovish tilt to the statement, particularly after last week’s huge miss on Q4 GDP.

News headlines

Chinese stock surge fails to ignite broader markets rally (Reuters) Chinese shares surged to a nine-month high on Wednesday bolstered by hopes of more stimulus measures from Beijing, but the rally failed to fuel broader gains in global markets as investors waited for fresh central bank cues.

Stocks future subdued due to lack of fresh catalysts (Reuters) U.S. stock futures were subdued on Wednesday in the absence of fresh developments on trade, with investors taking a step back after a strong run in equities since the start of the year.

UK reaches ‘basic agreement’ on no-deal Brexit tariffs, tough choices remain (Reuters) Britain’s government has reached a general agreement on import tariffs if it leaves the European Union without a deal, trade minister Liam Fox said on Wednesday, but the business minister warned that tough choices remained.

CANADA STOCKS-TSX futures flat as investors await interest rate decision (Reuters) Stock futures pointed to a flat opening for Canada’s main stock index on Wednesday, ahead of the Bank of Canada’s interest rate decision.

Economic slump prompts rethink of Bank of Canada’s rate path (BNN) The Canadian economy’s sudden slowdown at the end of last year is set to keep the Bank of Canada from raising interest rates Wednesday, with investors looking for clues as to whether it pushes Governor Stephen Poloz off his hiking path altogether.

OECD cuts global outlook again and warns worse may be ahead (BNN) The global economy is suffering more than expected from trade tensions and political uncertainty which are clouding prospects particularly in Europe, according to a gloomy report from the OECD.

Oil Falls After Industry Report Shows Jump in Crude Stockpiles (Bloomberg) Oil declined after an industry report showed a massive increase in U.S. crude stockpiles, ahead of more comprehensive data from the government.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.715% 2 Year 2.539%
5 Year 1.729% 5 Year 2.518%
10 Year 1.848% 10 Year 2.706%
30 Year 2.135% 30 Year 3.075%

US Economic Data

7:00 AM MBA Mortgage Applications, Mar 1 Actual -2.5% Prior 5.3%
8:15 AM ADP Employment Change, Feb Surv 190k Actual 183k Prior 213k
8:30 AM Trade Balance, Dec Surv -$57.9b Prior -$49.3b

Canadian Economic Data

8:30 AM Int’l Merchandise Trade, Dec Surv -2.06b Prior -2.06b
     Labor Productivity QoQ, 4Q Surv -0.3% Prior 0.3%
10:00 AM    Bank of Canada Rate Decision, Mar 6 Surv 1.75% Prior 1.75%
    Ivey Purchasing Managers Index SA, Feb Prior 54.7

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