Market Update Tsys yields 1-2 bps higher on very light volume (223k TY fut), 10Y 2.954 (+1.5bps), S&P futures higher (+5.25) as Chinese stocks rose 1.5% after the S&P rose back to the Jan highs yest. USD index lower, USD/JPY at one-week lows as BOJ is considering raising rates this year according to BB. The GBP rose off the lows, concerns over no Brexit deal continue to weigh on the xcy while the Turkish lira is stronger. The US auctions $34bln in 3Y notes this aft, ahead of $44bln in 10Y & 30Y supply tomorrow and Thursday. GOCs lower in line with tsys, 1bp tighter in 10s, very little movement in provis despite higher GOC yields, no supply.
News headlines
Saudi Blowback Over Women’s Rights Gives Trudeau a Rare Boost (Bloomberg) Justin Trudeau’s attempts to export his “sunny” progressive ways have hit another roadblock, this time with Saudi Arabia. Yet unlike in recent spats with China and India, Canada’s prime minister may get a slight boost at home for his support of women’s rights. Saudi Arabia suspended diplomatic ties and halted new trade dealings late Sunday following comments by Canadian Foreign Minister Chrystia Freeland criticizing the kingdom for arrests of women’s rights activists. The standoff pits Trudeau, an outspoken champion of women’s advancement, against a Saudi government that’s taking a harder line more recently after making some reforms to help women.
Banks After Tax Cuts: Loan Growth Slows and 3,200 Jobs Disappear (Bloomberg) Banks were among the top beneficiaries when Republicans slashed corporate taxes in December to stoke the U.S. economy. So how are the nation’s largest financial institutions treating employees, customers and investors? Twenty-three firms deemed most important by the Federal Reserve saved, on average, $388 million each in the first half of this year, based on declines in their reported tax rates. Over the same period, members of the group said they collectively eliminated 3,200 jobs.
Trump’s Iran Sanctions Spook Europe as Daimler Halts Investments (Bloomberg) U.S. President Donald Trump’s desire to isolate the Iranian economy seems to be working. Within hours of Washington unveiling its first round of restrictions, German carmaker Daimler AG dropped plans to expand sales of Mercedes Benz vehicles in the Islamic republic. That even after the European Union, trying to salvage the Iran nuclear deal, introduced measures to protect firms from Trump’s assault.
Stocks Jump as Focus Turns to Results; Dollar Dips: Markets Wrap (Bloomberg) Most major stocks gauges advanced on Tuesday as earnings season continued, helping buoy investor sentiment against a backdrop of trade angst and geopolitical noise. The dollar slipped and Treasuries edged lower. Futures on the Dow, S&P and Nasdaq all pointed to a higher open, while miners were among the big winners in the Stoxx Europe 600 Index as commodities climbed. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment. The greenback headed for the largest drop in more than a week while the British pound trimmed some of its recent losses. The lira — which has been rocked by a diplomatic spat between Turkey and the U.S. — clawed its way back from a record low, only to later give up most gains. The country’s 10-year bonds touched a record high yield.
Futures gain on higher oil prices (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices rose with renewed U.S. sanctions against Iran that are expected to tighten global crude supply. The new sanctions took effect on Tuesday, and U.S. President Donald Trump, who defied Washington’s allies to impose them, pledged that firms doing business with Tehran would be barred from doing business with the United States. September futures on the S&P/TSX index SXFc1 were up 0.33 percent at 7:15 a.m. ET. Ivey PMI data for July is due at 10:00 a.m. ET. Canada’s main stock index edged lower on Friday, dragged by losses in financial names and as China’s retaliatory tariffs on U.S. goods revived trade war concerns.
‘Realm of ridiculousness’: Top Aimia shareholder slams Air Canada’s Aeroplan offer (BNN) Aimia Inc.’s top shareholder has picked apart Air Canada’s attempt to buy its loyalty program Aeroplan as « blatantly inadequate. » Christopher Mittleman, chief investment officer of Mittleman Brothers – which holds 17.6 per cent of Aimia’s shares – made his argument in an open letter to Aimia’s board less than a week after it rejected the approach by Canada’s largest airline and its buyout partners. « The offer for Aeroplan from the Air Canada-TD-CIBC-Visa consortium was misleading, coercive, and blatantly inadequate, » Mittleman wrote in the letter. « I applaud the board for note acquiescing and continuing negotiations. »
Why China may be Tim Hortons’ most challenging global expansion yet (BNN). Tim Hortons wants to transport “the best of Canada” to China with its aggressive expansion plan, but with many players already jockeying for a bigger share of the Chinese coffee market, the Canadian coffee-and-doughnut chain may be facing its most challenging global expansion yet. The Oakville, Ont.-based company said in July it will partner with Cartesian Capital Group in a joint venture that aims to open 1,500 Tim Hortons restaurants in China over the next decade. The expansion into the world’s second-largest economy is part of a global strategy that has seen Tim Hortons open more than 4,700 restaurants around the world, entering Spain, Philippines, the U.K. and Mexico last year.
Overnight markets
Overview: US 10yr note futures are down -0.117% at 119-19, S&P 500 futures are up 0.21% at 2856, Crude oil futures are up 1.09% at $69.76, Gold futures are up 0.38% at $1222.3, DXY is down -0.31% at 95.063, CAD/USD is down -0.3% at 0.7713.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.114% | 2 Year | 2.658% |
| 5 Year | 2.267% | 5 Year | 2.824% |
| 10 Year | 2.364% | 10 Year | 2.956% |
| 30 Year | 2.376% | 30 Year | 3.102% |
US Economic Data
| 10:00 AM | JOLTS Job Openings, Jun est 6625 (6638 prior) |
| 15:00 PM | Consumer Credit, Jun est 15.000b (24.559b prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Aug 3rd (54.7 prior) |
| Ivey Purchasing Managers Index SA, Jul (63.1 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230