Market Update

US tsys moving higher with equities lower (S&P -13), US 10Y 2.64% (-0.5bps) as weakness in global stocks continues with the Nikkei -2.05, 4th day down, CSI Comp -4.0%, Europe -1.0%.  GOCs continuing to outperform tsys in the global bond rally, Can/US at new narrows across the curve -88bps in 2s with   2Y yields now 15bps below the o/n rate.  US employment forecast to have risen 180k last month from 304k in Jan with the unemployment rate back below 4.0%.  Cdn emp growth also expected to have decelerated in Feb to 1.2k from 67k In Jan. BOC Deputy Patterson said Q4 growth slowdown was sharper than expected, while economic weakness will likely extend into the first half of the year.  Provi spds wider, yest Ont 29s 79.5/ from 77.5 at issue yest. CMB 5y next week.

News headlines

U.S. economy creates paltry 20,000 jobs in February (Reuters) U.S. job growth almost stalled in February, with the economy creating only 20,000 jobs amid a contraction in payrolls in construction and several other sectors, which could raise concerns about a sharp slowdown in economic activity.

Stock Slide Worsens on Growth Woes as Jobs Loom: Markets Wrap (Bloomberg) U.S. stock futures retreated alongside European equities amid renewed concerns about global growth after a plunge in Chinese stocks set the tone for global markets on Friday. The dollar slipped and Treasuries were steady ahead of American jobs data.

Bank of Canada sees longer economic ‘detour’ than expected (BNN) Canada’s economic slump may end up lasting longer than first thought amid surprising signs of weakness in household spending and investment, though policy makers still expect a rebound to take place, a central bank official said.

China February exports tumble the most in three years, spur fears of ‘trade recession’ (Reuters) China’s exports tumbled the most in three years in February while imports fell for a third straight month, pointing to a further slowdown in the economy and stirring talk of a “trade recession”, despite a spate of support measures.

Growth fears, China equity plunge haunts world stocks (Reuters) Deepening fears for the health of the global economy pushed world stocks to three week lows on Friday after China exports contracted by a fifth, sending shares in some of the country’s key indexes more than 4 percent lower.

Key Fed gauge flashes warning signal for second time this year (BNNBloomberg) A gauge of U.S. economic health closely watched by the Federal Reserve is flashing warning signs for the second time this year. The near-term forward spread, which reflects the difference between the forward rate implied by Treasury bills six quarters from now and the current three-month yield, fell back below zero on Friday for the first time since January. A negative reading shows the market expects monetary policy easing during the next 12 to 18 months.

ECB Officials Defend Stimulus as Move Needed to Arrest Slowdown (Bloomberg) Euro-area officials set out to defend their latest monetary-policy action, stressing their package of new long-term loans and revised guidance was an appropriate response to the region’s economic slowdown.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.599% 2 Year 2.467%
5 Year 1.604% 5 Year 2.432%
10 Year 1.737% 10 Year 2.634%
30 Year 2.048% 30 Year 3.023%

US Economic Data

8:30 AM Housing Starts, Jan Surv 1195k Prior 1078k
   Building Permits, Jan Surv 1287k Prior 1326k
   Change in Nonfarm Payrolls, Feb Surv 180k  Prior 304k
         Change in Manufact. Payrolls, Feb Surv 12k Prior 13k
        Unemployment Rate, Feb Surv 3.9% Prior 4.0%
    Average Hourly Earnings MoM, Feb Surv 0.3% Prior 0.1%
    Average Hourly Earnings YoY, Surv 3.3% Prior 3.2%

Canadian Economic Data

8:15 AM Housing Starts, Feb Surv 205.0k Actual 173.2k Prior 208.0k
8:30 AM Net Change in Employment, Feb Surv 1.2k Prior 66.8k
Unemployment Rate, Feb Surv 5.8% Prior 5.8%
Capacity Utilization Rate, 4Q Surv 82.0% Prior 82.6%

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