Market Update

Tsys slightly lower in NA trading with the 10Y 2.505%, curve ~0.5bps flatter in a narrow range .  EGBs higher outperforming on weaker data bund curve steeper on long end supply. Tsys still pressured by huge IG supply – $22bln yest with 11 issues. Meanwhile expectations for March rate hike weighing on the front end of the curve.  GOCs lower in line with tsys, 10Y 1.72%, 10s30s flatter for second day @ 69.2. Husky (Alow/BBB+) in the mkt with a 10Y @~183 which looks fair with Husky 25s trading in the ~150 area.

News headlines

Trump signs revised travel ban in bid to overcome legal challenges (Reuters) President Donald Trump signed a revised executive order on Monday banning citizens from six Muslim-majority nations from traveling to the United States but removing Iraq from the list, after his controversial first attempt was blocked in the courts. The new order, which takes effect on March 16, keeps a 90-day ban on travel to the United States by citizens of Iran, Libya, Syria, Somalia, Sudan and Yemen. It applies only to new visa applicants, meaning some 60,000 people whose visas were revoked under the previous order will now be permitted to enter.

Euro-Area Growth Boosted by Domestic Demand as Trade Dragged (Bloomberg) Domestic spending drove euro-area growth in the fourth quarter of 2016, with trade damping output. Gross domestic product rose 0.4 percent, matching earlier estimates and the rate of expansion in the previous quarter. Household consumption added 0.2 percent point to growth, while government spending and investment contributed 0.1 point each, the European Union’s statistics office said on Tuesday.

China FX reserves rebound above $3 trillion in February, first rise in eight months (Reuters) China’s foreign exchange reserves unexpectedly rose for the first time in eight months in February, rebounding above $3 trillion as a regulatory crackdown and a steadying yuan helped staunch capital outflows. The rebound in reserves could ease fears in global markets that China will engineer another sharp one-off devaluation of the yuan, which would run the risk of inflaming trade tensions with the new U.S. administration under President Donald Trump. Reserves rose $6.92 billion during February to total $3.005 trillion, their first increase since June 2016, central bank data showed. That compared with a drop of $12.3 billion in January, when reserves fell to $2.998 trillion.

House Republicans reveal bill to repeal and replace Obama’s healthcare law (The Guardian) After weeks of promises, Republicans unveiled a bill to repeal the Affordable Care Act (ACA) with a plan that shrinks the government’s role in healthcare, and could leave more Americans without health insurance. Called the American Health Care Act, the bill would eliminate the individual mandate, which required Americans to have health insurance or pay a fine; cut the number of people insured under Medicaid; and allow insurance companies to charge the elderly up to five times more than the young. The bill would require insurers to cover so-called pre-existing conditions, but would allow them to add a 30% surcharge to premiums if people go without insurance for too long.

Iraq, Angola Signal Willingness to Extend OPEC Oil Output Cuts (Bloomberg) The Middle East producer cut the pricing for some of its April oil sales to Asia, surprising customers who were expecting an increase that was signaled by the structure of the market. That shows it’s trying to lure buyers toward its lighter and less sulfurous crude varieties at a time when similar-quality grades are rushing to the region from the Americas, Europe and Africa.

Australia Holds Rates as Sydney Housing Poses Stability Risk (Bloomberg) Australia kept interest rates unchanged Tuesday as risks from Sydney’s soaring property prices outweighed subdued inflation. Reserve Bank of Australia Governor Philip Lowe and his board left the cash rate at 1.5 percent following strong growth and trade performances in the final three months of last year. The decision was expected by all 29 economists surveyed by Bloomberg.

Overnight markets 

Overview: US 10yr note futures are down -0.088% at 123-16, S&P 500 futures are down -0.16% at 2371.75, Crude oil futures are up 0.79% at $53.62, Gold futures are down -0.41% at $1220.5, DXY is up 0.17% at 101.81, CAD/USD is down -0.03%at.7458.

US Economic Data

8:30 AM Trade Balance, Jan, -$48.5b, est. -$48.5b (prior -$44.3b)
15:00 AM Consumer Credit, Jan, est. $17.25b (prior  $14.16b)

Canadian Economic Data

8:30 AM Int’l Merchandise Trade, Jan, 0.81b, est. 0.75b, (prior 0.92b,  revised 0.45b)
10:00 AM Ivey Purchasing Managers Index, Feb, est. 58.5 (prior 57.2.8)


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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230