Market Update Tsys trading lower, narrow range in TY futures overnite on avg volume (225k), market focus on Trump Iran announcement at 2:00ET. USD index setting new highs , DXY 93.08 (+0.36%), euro setting new lows, equities weaker (S&P fut -6.5), crude -1.0%. Core EGBs lower, German 10Y bund 1.5bps higher @ 0.54% after better than exp March Ind Prod. EU peripherals weaker led by Italy – 10Y BTP/bund +9bps @ 132 the widest since March 28th , Italy looks to be heading into another election in July. GOCs slightly lower, in line with tsys, 10Y 2.33%, April Housing Starts 214k vs 220k exp. Provis opening unch after closing 0.5bps tighter yest, Ontario credit curve continuing to steepen , Ont48/27 14.7bps new wides +2bps since mid April, as underlying 10/30 GOC curve is ~9bps flatter over the period.
News headlines
Trump to Announce Iran Deal Decision on Tuesday (Bloomberg) President Donald Trump will announce on Tuesday whether the U.S. will leave the 2015 Iran nuclear agreement, a signature achievement by his predecessor that he’s long derided as “the worst deal ever.” Foreign leaders and analysts say the president is likely to exit, casting the future of an accord widely seen as reining in Iran’s nuclear program into doubt. Trump has said the deal doesn’t do enough to address threats from the Islamic Republic’s ballistic missile program and the country’s involvement in regional conflicts.
U.S., China Set for Trade Brawl in Geneva (Bloomberg) The U.S. and China are set to clash in Geneva on Tuesday as envoys from the world’s two largest economies address the World Trade Organization amid threats of a trade war. Chinese Ambassador Zhang Xiangchen will criticize Washington’s proposed tariffs on $150 billion of Chinese goods as well as levies on steel and aluminum that went into effect in March, according to an agenda of the meeting. Zhang’s U.S. counterpart, Dennis Shea, is expected to defend the measures and find fault with Beijing’s retaliation.
Trump, Republicans Raise Alarms About West Virginia Primary Race (Bloomberg) Republican officials were thrown into a panic on the cusp of Tuesday’s three crucial Senate primaries as they confronted a late surge by controversial and confrontational candidate Don Blankenship in West Virginia. There’s a high level of concern among party leaders that Blankenship, a former coal executive who served prison time and has launched racially tinged attacks on Senate Majority Leader Mitch McConnell’s wife, could win the three-way Republican primary, said one GOP strategist familiar with the race. That could damage Republican chances of ousting Democratic Senator Joe Manchin in November.
Dollar Advances, Oil Declines Before Iran Decision: Markets Wrap (Bloomberg) The dollar extended its winning streak while oil dropped as traders braced themselves for President Donald Trump’s decision on the Iran nuclear deal. Lingering uncertainty weighed on risk sentiment, and U.S. futures fell alongside European stocks. The greenback shook off a slow start to climb higher for a third consecutive session, given a boost as Fed Chairman Jerome Powell stuck with the central bank’s message of gradual tightening. U.S equity futures followed the Stoxx Europe 600 Index lower, with Italian stocks the worst performers in that region as the country looks set for fresh elections. Shares in Asia advanced. West Texas crude traded around $70 a barrel, paring a rally that had brought it to the highest since 2014. Treasuries were steady.
TSX futures little changed ahead of Trump’s Iran decision (Reuters) Futures for Canada’s main stock exchange were little changed on Tuesday, as investors awaited an announcement by U.S. President Donald Trump later in the day on whether the United States will reimpose sanctions on Iran. Trump will announce whether he will pull out of the Iran nuclear deal or stay in and work with European allies who have struggled to persuade him that it has successfully halted Iran’s nuclear ambitions.
Tech sector gains keep world shares near one-week high (Reuters) Oil prices eased on Tuesday from 3-1/2-year highs they hit on worries the United States may be set to pull out of a key nuclear accord with Iran, but robust tech sector gains in Asia helped support world stocks near one-week highs. U.S. President Donald Trump will announce at 1800 GMT whether Washington will withdraw from a deal that eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program. A decision to leave the accord could give another boost to this year’s 13 percent oil rally, by constraining Iranian crude exports.
Canadian business confidence plunges to lowest since 2016 (BNN) Canadian business confidence has plunged to the lowest level in 18 months amid increasing concerns about the impact of U.S. tax cuts, a weak loonie and NAFTA uncertainty, according to a report released Monday by the Conference Board of Canada. The Conference Board’s Index of Business Confidence fell 6.9 points to 93.1 in the first quarter, with business leaders saying they do not expect last year’s sales momentum to continue in 2018, the report said
Overnight markets
Overview: US 10yr note futures are down -0.039% at 119-21, S&P 500 futures are down -0.3% at 2662, Crude oil futures are down -0.95% at $70.06, Gold futures are down -0.2% at $1311.5, DXY is up 0.36% at 93.083, CAD/USD is up 0.62% at 0.7715.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.923% | 2 Year | 2.501% |
| 5 Year | 2.155% | 5 Year | 2.791% |
| 10 Year | 2.332% | 10 Year | 2.954% |
| 30 Year | 2.414% | 30 Year | 3.123% |
US Economic Data
| 6:00 AM | NFIB Small Business Optimism, Apr 104.8 est 104.5 (104.7 prior) |
| 10:00 AM | JOLTS Job Opening, Mar est 6100 (6052 prior) |
Canadian Economic Data
| 8:15 AM | Housing Starts, Apr est 220.0k (225.2k 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