Market Update Tsys trading slightly lower on a tight range and low volume, curves slightly steeper; The calendar is light this week following last weeks Fed, BoJ, and BoE meetings. US Treasuries are trading mixed in what has been a rather subdued trading session with limited data or official comments seen to direct markets. US 10-yr note is little changed from Friday closing level at 2.9469% with yield curve slightly steepening as 2-yr yield raises by 0.6bps. US Treasuries operated in a limited range during Asia with little in the way of fresh catalysts to generate any notable trading impetus, with the cash curve undergoing some minor bear flattening.
News headlines
China Meets Trump’s Tariff Hardball With Pledge to Endure (Bloomberg) After a weekend of claims by U.S. President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout. China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests, according to an editorial in the nationalist Global Times on Sunday evening. “Considering the unreasonable U.S. demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a U.S. economic vassal.”
Italy Builds Defenses Against Speculators Amid Budget Talks (Bloomberg) Matteo Salvini’s message: investors are welcome in Italy but speculators better take a hike. “The Italian economy is sound, so we will block” speculative attempts to influence growth trends, the country’s outspoken deputy premier said in an interview with newspapers including La Repubblica and La Stampa, without elaborating further. The next budget law will include measures aimed at easing fiscal pressure, which will attract foreign investments, Salvini said.
China’s Current Account Returns to Surplus on Trade Rebound (Bloomberg) China’s current account returned to a surplus in the second quarter of the year, with a rebound in the goods trade making up for the continued deficit in services trade and income from overseas. The current-account balance stood at $5.8 billion in the second quarter, according to a State Administration of Foreign Exchange report on Monday. The growing services trade deficit, which includes outbound tourism, education, entertainment as well as purchases of foreign technologies and patents, highlights the changing nature of China’s economy, even as it remains the world’s largest exporter.
Dollar Rises as Trade Gloom Lingers; Stocks Climb: Markets Wrap (Bloomberg) The dollar climbed against most of its major peers as China signaled it won’t flinch in a trade war. U.S. equity futures pointed towards gains and European shares edged higher in choppy, thin trading. The Bloomberg Dollar Spot Index climbed for the fourth day in five sessions, and the yuan reversed its gains following a rally that was triggered after China’s central bank on Friday made it more costly to short the currency. Sterling weakened against most major peers as Britain’s International Trade Secretary Liam Fox said a no-deal outcome for Brexit was more likely. The euro slipped after German manufacturers took a hit in June.
Canada ‘very keen’ on wrapping up year-old NAFTA talks (Reuters) Canada is “very keen” on concluding negotiations to renew the North American Free Trade Agreement as soon as possible, Foreign Minister Chrystia Freeland said on Saturday, amid signs of progress after months of delays. Talks to modernize the 1994 trade pact started in August 2017 but have dragged on much longer than expected as Canada and Mexico pushed back against far-reaching U.S. demands for reform. President Donald Trump has said he will walk away from NAFTA unless major changes are made.
Saudi Arabia freezes new trade with Canada for urging activists’ release (Reuters) Saudi Arabia froze new trade and investment with Canada after Ottawa urged Riyadh to free arrested civil society activists, in the top oil exporter’s latest retort to Western criticism of its human rights record. The Gulf Arab kingdom also recalled its ambassador and gave the Canadian ambassador 24 hours to leave the country, a Saudi foreign ministry statement said late on Sunday, adding it retained “its rights to take further action.”
‘Fantastically good’ Canadian economy shifts focus to rate hike (BNN) Canada’s economy is gaining strength instead of buckling amid a trade fight with the U.S. Exports rose to a record high in June even as President Donald Trump slapped tariffs on steel and aluminum, and gross domestic product expanded in May at its fastest clip in a year, according to data released this week by Statistics Canada. That has economists predicting second-quarter growth of more than 3 per cent and talking about the possibility of a second-straight rate increase from the Bank of Canada. Another move from the central bank next month was considered a long shot until now, as trade threats continue to cloud Prime Minister Justin Trudeau’s economic agenda.
Overnight markets
Overview: US 10yr note futures are down -0.026% at 119-19, S&P 500 futures are up 0.03% at 2840.25, Crude oil futures are up 1.36% at $69.42, Gold futures are down -0.59% at $1216, DXY is up 0.32% at 95.465, CAD/USD is up 0.26% at 0.7678.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.098% | 2 Year | 2.651% |
| 5 Year | 2.255% | 5 Year | 2.823% |
| 10 Year | 2.353% | 10 Year | 2.956% |
| 30 Year | 2.365% | 30 Year | 3.097% |
US Economic Data
There is no US economic data for today
Canadian Economic Data
There is no Canadian economic data 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, Hugues Savard
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