Market Update

Tsy futures trading firmer, top end of narrow range on light volume (TYH<180k); yld curves unwinding portion of Friday’s steepening w/2s10s -0.284 at 50.952, 2s30s -.450 at 84.207, 5s30s -.217 at 51.809. Equities little weaker after making new all-time highs Fri (emini -5.75, 2736.75), gold little weaker (XAU -0.16, 1319.19), West Texas crude firmer but still off last week’s 2.5yr highs (WTI +.19, 61.63). Data this week with focus on CPI Friday (0.1% est vs. 0.4% prior), 3-, 10- and 30Y Tsy auctions two re-opening), and several Fed speakers through week (blackout period begins on Saturday, Jan 20). SF Fed pres Williams and Boston Fed pres Rosengren will touch on monetary policy and ecomic outlook at separate events Mon. Annual meeting of American Economic Assn Sat, Reuters quoted Fed president Williams that three hikes in 2018 « makes sense » while the U.S. economy « will be ‘in a very positive place two years from now: I think we’ll be at 2 percent inflation and around 4 percent unemployment' ». Minn Fed pres Kashkari speaks Tuesday, Chi Fed pres Evans and StL Fed pres Bullard at separate events on Wed. NY Fed pres Dudley will address the 2018 economic outlook Thu at a SIFMA event in NY Thursday while Bost Fed pres Rosengren rounds out wk touching on Money/Models/Innovation at an event in La Jolla, California Friday evening.

News headlines 

Trump Warns Democrats Again: No Mexican Border Wall, No DACA (Bloomberg) President Donald Trump said Congress should enact a measure to provide legal status to young, undocumented immigrants, provided other proposals, including funding for a wall on the U.S. border with Mexico, are also adopted — a compromise Democratic lawmakers have already rejected.

Stronger May Finally Ready for U.K. Cabinet Reshuffle (Bloomberg) Theresa May bid farewell to 2017 by firing her deputy and is starting the new year with a Cabinet reshuffle, a sign the British prime minister is intent on seeing Brexit to completion and fighting another election.

Euro-Area Economic Confidence Soars to Nearly Two-Decade High (Bloomberg)  Confidence in the euro area continued its advance at the end of 2017, capping what was probably the strongest year for the economy in a decade. The European Commission’s measure of sentiment touched its highest since late 2000 in December. The reading of 116 was above the median forecast of 114.8 in a Bloomberg survey and was based on an improvement in the outlook for industry and services.

Stocks Extend Rally Before Earnings; Dollar Climbs: Markets Wrap (Bloomberg) Global stocks advanced before the start of an earnings season that’s expected to produce strong enough profit outlooks to support near-record-high equity prices. The dollar strengthened against the euro and the pound.

U.S. Added Fewer Jobs Than Expected in December (Bloomberg) U.S. payroll gains slowed by more than forecast in December, wages picked up slightly and the jobless rate held at the lowest level since 2000, adding to signs of a full-employment economy.

Montreal’s real estate market sizzles in 2017, sales hit 10-year high (Globe and Mail) Montreal was one of Canada’s hottest real estate markets last year as low unemployment and economic growth translated into the area’s best sales growth in a decade.

Lululemon shares climb as it hikes forecasts on strong holiday sales (Globe and Mail) Lululemon Athletica Inc said on Monday the holiday shopping season was even better that it had expected and raised its profit and revenue forecasts for the fourth quarter, sending the Canadian yoga and leisure apparel maker’s shares up.

Oil approaches 2015 highs on fewer U.S. rigs, OPEC (Reuters) Oil prices rose on Monday, coming close to new three-year highs on a slight decline in the number of U.S. rigs drilling for new production and sustained OPEC output cuts.

Overnight markets

Overview: US 10yr note futures are up 0.063% at 123-19, S&P 500 futures are down -0.13% at 2739, Crude oil futures are up 0.37% at $61.67, Gold futures are down -0.11% at $1320.8, DXY is up 0.37% at 92.29, CAD/USD is up 0.07% at 0.805. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.778% 2 Year 1.952%
5 Year 1.965% 5 Year 2.275%
10 Year 2.145% 10 Year 2.465%
30 Year 2.351% 30 Year 2.796%

US Economic Data

15:00 PM Consumer Credit, Nov est 18.000b (20.519b prior)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Jan 5th (62.2 prior)
10:30 AM Business Outlook Future Sales, 4Q (19.00 prior)
10:30 AM BoC Senior Loan Officer Survey, 4Q (-0.5 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