Market Update US tsys trading higher, yields 0.5-1.5bps lower with the 10Y 2.815(-1.5), relatively muted rally on moderate volume in TY futures after Trump announced he is considering $100bln in additional tariffs on China.. US equity futures lower but off the lows, S&P -27 (-0.90%), Nasdaq -75 (-1.4%). German bunds higher in line with tsys, EZ stocks -0.73%. Employment data in the US at 8:30 , 185k forecast increase in payrolls after 313k in Feb, with AHE expected to at 2.7% last month. In Canada, GOCs opening higher in line with tsys ahead of March employment data (+20K vs 15.4k Feb). Focus on wages with the unemployment rate having fallen to a new low 5.8% in Feb, while wages for permanent workers above 3.0% in Jan/Feb.
News headlines
China Vows to Fight Trump Tariffs ‘to the End’ as Tension Rises (Bloomberg) China said it would counter U.S. protectionism “to the end, and at any cost,” as a war of words over President Donald Trump’s proposed tariffs on Chinese imports escalated. The statement from Beijing came after Trump ordered his administration to consider tariffs on an additional $100 billion in Chinese goods on Thursday, sending U.S. stock futures tumbling. The U.S. president cited “China’s unfair retaliation” in response to his list of proposed tariffs earlier this week covering $50 billion in Chinese products.
Bond Bears Renewing Attack on 3% May Find Ammo in Jobs Report (Bloomberg) Treasuries are back in selloff mode and some investors who remained bearish even in the face of trade-war angst and tumbling stocks say Friday’s U.S. jobs report may propel yields higher still.
Trade Tension Sinks Stocks; Treasuries Advance: Markets Wrap (Bloomberg) European shares fell with U.S. futures after President Donald Trump’s latest threat to target Chinese imports. Treasuries climbed and commodities fell. Carmakers and miners were the biggest losers in the Stocks Europe 600 Index after Trump ordered his administration to consider tariffs on an additional $100 billion worth of Chinese imports. The offshore yuan slid amid a holiday on the mainland as China responded saying it would counter U.S. protectionism “to the end, and at any cost.” Futures on the S&P 500 declined following three days of gains for the index. Gold and the Japanese yen handed back earlier gains, while the dollar headed for a second weekly advance.
Oil Thwarted by Trade War Fears as Trump Doubles Down on Tariffs (Bloomberg) Oil headed for its worst week in more than a month after U.S. President Donald Trump called for tariffs on more Chinese goods, souring investor optimism that tensions between the world’s two largest economies will ease with negotiations.
TSX futures dip on trade war fears after Trump’s threat (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday after U.S. President Donald Trump warned of more tariffs on China, fanning fears of a trade war between the two countries. China said it would fight back with fresh trade measures if the United States continues with protectionism, hours after Trump threatened to slap an additional $100 billion in tariffs on Chinese goods.
NAFTA nations ‘moving forward in significant way’: Canada’s Trudeau (Reuters) The United States, Mexico and Canada are “moving forward in a significant way” at talks to modernize the NAFTA trade pact, Canadian Prime Minister Justin Trudeau said on Thursday. Trudeau’s remarks to reporters in Quebec City were the latest in a series of upbeat comments by officials in the three countries about the chances of striking some kind of deal soon on the North American Free Trade Agreement. “I believe we’re in a moment where we’re moving forward in a significant way. Hopefully there will be some good news coming,” Trudeau said.
Canada’s trade deficit unexpectedly grows to $2.69B in February (BNN) Canada’s trade deficit unexpectedly rose to $2.69 billion in February from $1.94 billion in January as imports grew much faster than exports, Statistics Canada data indicated on Thursday. The deficit was larger than the $2.00 billion shortfall predicted by analysts in a Reuters poll. Canada has only recorded two monthly trade surpluses since October 2014. Imports rose by 1.9 per cent on a 15.4 per cent surge in shipments of energy products, pushed up by higher demand for crude oil and crude bitumen. Imports of motor vehicles and parts climbed by 1.7 per cent after unusual auto plant shutdowns had crimped demand in January.
Overnight markets
Overview: US 10yr note futures are up 0.078% at 120-21, S&P 500 futures are down -0.93% at 2637, Crude oil futures are down -0.88% at $62.98, Gold futures are down -0.18% at $1326.1, DXY is up 0.02% at 90.48, CAD/USD is up 0.32% at 0.7817.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.801% | 2 Year | 2.301% |
| 5 Year | 2.02% | 5 Year | 2.628% |
| 10 Year | 2.166% | 10 Year | 2.817% |
| 30 Year | 2.334% | 30 Year | 3.06% |
US Economic Data
| 8:30 AM | Change in Nonfarm Payrolls, Mar est 185k (313k prior) |
| Change in Private Payrolls, Mar est 190k (287k prior) | |
| Change in Manufact. Payrolls, Mar est 22k (31k prior) | |
| Unemployment Rate, Mar est 4.0% (4.1% prior) | |
| Underemployment Rate, Mar (8.2% prior) | |
| Average Hourly Earnings MoM, Mar est 0.3% (0.1% prior) | |
| Average Hourly Earnings YoY, Mar est 2.7% (2.6% prior) | |
| Average Weekly Hours All Employees, Mar est 34.5 (34.5 prior) | |
| Labor Force Participation Rate, Mar (63.0% prior) | |
| 15:00 PM | Consumer Credit, Feb est 15.500b (13.906b prior) |
Canadian Economic Data
| 8:30 AM | Net Change in Employment, Mar est 20.0k (15.4k prior) |
| Unemployment Rate, Mar est 5.8% (5.8% prior) | |
| Hourly Earnings Permanent Empl YoY, Mar est 3.4% (3.1% prior) | |
| Full Time Employment Change, Mar (-39.3 prior) | |
| Part Time Employment Change, Mar (54.7 prior) | |
| Participation Rate, Mar (65.5 prior) | |
| 10:00 AM | Ivey Purchasing Managers Index SA, Mar (59.6 prior) |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230