Market Update

US tsys rallying hard, 10Y below 2.50% (2.485% -4bps) on renewed US/China trade threats after Trump tweets, heavy volume in TY futures (~600k),  S&P futures  down 1.6%, 1900, off the lows of the session. Light data week with focus on April CPI Thursday, with the US auctions $84bln in 3, 10 & 30Y bonds.  Core Euro bonds opened strong, but yields have pushed higher, 10Y bund -1.5bps, 10Y gilt unch. GOCs higher, lagging the rally in tsys by 2bps in 2s and 5s, 0.5bps in 10s.  BOC Governor Poloz speaks in Montreal at 1:45PM on the mortgage market.

News headlines

Stocks Tumble as Trump’s Trade Threat Reverberates: Markets Wrap (Bloomberg) Equities slumped globally on Monday and Treasuries rallied with other haven assets after President Donald Trump’s threat to increase tariffs on Chinese imports called into question the chances of a resolution to the trade war. The yen rose while crude oil declined.

Oil Falls to Five-Week Low After Trump Jeopardizes Trade Talks (Bloomberg) Oil tumbled toward $60 a barrel as President Donald Trump threw trade talks between the world’s two largest economies into disarray with a threat to raise tariffs on Chinese imports, roiling global markets.

China trade team still preparing to go for talks after Trump cranks up pressure (Reuters) China said on Monday that a delegation is still preparing to go to the United States for trade talks, after U.S. President Donald Trump dramatically increased pressure on Beijing to reach a deal, saying he would hike tariffs on Chinese goods this week.

China gives modest boost to economy with RRR cut amid renewed trade tensions (Reuters) China’s central bank said on Monday it will cut reserve requirement ratios (RRRs) to release about 280 billion yuan ($41 billion) for some small and medium-sized banks, in a targeted move to help companies struggling amid an economic slowdown.

TSX futures fall after Trump vows China tariff hike (Reuters) Futures for Canada’s main stock index fell on Monday after U.S. President Donald Trump threatened to raise tariffs on China, triggering a global rout in risky assets.

Toronto home sales surge in April, climb near 17 per cent from last year’s sluggish level (GlobeandMail) Toronto home sales roared ahead in April, climbing almost 17 per cent from last year’s sluggish sales level as detached houses saw a sales leap. The Toronto Real Estate Board said 9,042 homes sold in the Greater Toronto Area last month, a 16.8-per-cent jump from April last year when sales were weak after the implementation of a new mortgage stress test. Sales rose 11.3 per cent on a month-over-month basis from March, based on TREB’s preliminary seasonal adjustment.

Strong Dollar Confronts Clashing Signs (FT) The ICE Dollar Index, which measures the dollar against a basket of six other currencies, stands just below its highest level since May 2017. The measure is up more than 5% over the last 12 months, boosted by comparatively high U.S. interest rates and expectations the U.S. will outperform other economies. Higher rates make the greenback more attractive to investors seeking yield. Determining the dollar’s path is important for companies and investors, as the currency’s movements ripple throughout the world and affect everything from corporate profits to commodity prices.

One Word Grips the Bond Market Before Crucial Inflation Update (Bloomberg) Bond traders will have one word on their minds as they gear up for the latest readings on inflation: “transitory.” That’s how Federal Reserve Chairman Jerome Powell characterized the factors behind muted price pressures after last week’s policy meeting, where officials kept interest rates unchanged. Markets whipsawed on his comments, with benchmark 10-year Treasury yields bouncing off their lowest levels in a month.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.62% 2 Year 2.286%
5 Year 1.588% 5 Year 2.27%
10 Year 1.724% 10 Year 2.48%
30 Year 1.972% 30 Year 2.886%

US Economic Data

There is no Canadian economic data for today.

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, May 3 Surv – Prior 54.9

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