Market Update
US tsys trading higher on ‘risk off’ tone with EGBs, concerns over US-China trade and Iran nuclear tensions, US 10Y 2.435% (-2.2bps). Core EGBs higher led by 10Y UK gilts, Brexit talks between the govt and opposition ‘close to being terminated’ according to ITV. US equity futures lower yet off the lows of the session, S&P -14.75. The US auctions $27bln in 10Y notes at 1:00. GOCs slightly lower, lagging the rally in tsys by 1-1.5bps – Housing Starts coming in above exp for April 235k vs 195k. At noon the BOC $4bln in reopened Can 1.5 Sep 2024s , the 5Y sector having underperformed 5bps over the past two weeks.
News headlines
Exclusive: China backtracked on nearly all aspects of U.S. trade deal – sources (Reuters) The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.
Stocks Extend Global Slide as Trade Worries Simmer: Markets Wrap (Bloomberg) The global stock selloff triggered by worries over the outlook for trade extended into a third day, with U.S. equity-index futures and European shares tracking declines across Asia. The pound slipped as hopes for a Brexit breakthrough faded.
TSX futures slip on U.S.-China trade concerns (Reuters) Futures for Canada’s main stock index edged lower on Wednesday, as deepening U.S.-China trade tensions and global economy slowdown fears drove investors away from risky assets.
Oil Slips Near Five-Week Low as Trade Angst Counters Supply Risk (Bloomberg) Oil traded near a five-week low as concern over supply losses from Iran to Russia were offset by high American stockpiles and fears that if U.S.-China trade talks fail it could dent global demand.
TREASURIES-Worries about U.S.-China trade talks push U.S. yields to 5-week lows (Reuters) U.S. Treasury yields fell on Wednesday with longer-dated yields hitting five-week lows as investors piled more money into low-risk government debt on worries about upcoming trade negotiations between China and the United States.
Huawei CFO Meng set to appear in Canada court (Reuters) Huawei Chief Financial Officer Meng Wanzhou is set to appear in a Canadian court on Wednesday to begin what is expected to be a long legal battle against the United States’ request that she be extradited to face fraud charges.
Dollar slips as trade tensions raise rate cut expectations (Reuters) The dollar weakened across the board on Wednesday as growing concerns about the escalating trade dispute between China and the United States prompted investors to raise their expectations of a U.S. rate cut later in the year.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.572% | 2 Year | 2.26% |
| 5 Year | 1.539% | 5 Year | 2.237% |
| 10 Year | 1.669% | 10 Year | 2.433% |
| 30 Year | 1.935% | 30 Year | 2.847% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, May 3 Actual 2.7% Prior -4.3% |
Canadian Economic Data
| 08:15 AM | Housing Starts, Apr Survey 195.5k Actual 235.5k Prior 192.5k |
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