Market Update

Treasuries decline in morning NY action, cutting earlier opening gains, amid FX-tied pressure as US$/yen rose recently. US Treasuries prices opened NY higher after rising since about 2am ET after some initial give-back of safe-haven bid as France centrist Macron wins presidential race . Morning Fed speakers include StL Fed Bullard and Clev Fed Mester. Futures reversed gains before Fed Bullard statements aired, Bullard said he found in a recent study that much of that decline in the « natural » rate of interest could be attributed to strong demand for safe assets like U.S. Treasury securities. According to the analysis presented here, the natural rate of interest, and hence the appropriate policy rate, is low and unlikely to change very much over the forecast horizon,” Bullard said. In a speech that largely reinforced her upbeat view of the U.S. economy, Mester, a hawkish Fed policymaker, said that while risks are « roughly balanced » the central bank should not delay further policy tightening until its two key mandates are fully met.

News headlines 

Euro Slips With Stocks After Macron’s Expected Win: Markets Wrap (Bloomberg) Europe’s common currency weakened and equities dropped following a convincing defeat of populism in France’s presidential election that was already priced in by investors. Crude fluctuated as Saudi Arabia and Russia signaled output cuts will be extended.

Oil prices give up gains, U.S. output weighs against OPEC-led cuts (Reuters) Oil prices gave up early gains on Monday, as the market weighed news from OPEC and other producers about prolonging output cuts against data showing the recovery in U.S. drilling had extended for a year.

U.K. House Prices Post First Quarterly Decline Since 2012 (Bloomberg) U.K. house prices recorded their first quarterly decline in more than four years, adding to signs that the property market is cooling. In the three months to April, prices fell 0.2 percent compared with the previous three months, lender Halifax said in a report on Monday. In April alone, prices slipped 0.1 percent, meaning they haven’t risen for the past four months.

China fx reserves rise by $21 bln in April to $3.03 trillion (Reuters) China’s foreign exchange reserves rose in April for a third straight month, beating market expectations, as capital control measures and a pause in the dollar’s rally helped staunch capital outflows.

China’s April trade growth slows as commodities, electronics demand cools (Reuters) China’s import growth slowed faster than expected in April, as inbound shipments of commodities such as iron ore and copper weakened, while export growth more than halved, in line with a general cooling in demand for electronic gadgets.

Merkel vows to help Macron tackle unemployment (Reuters) Germany’s Chancellor Angela Merkel congratulated French President-elect Emmanuel Macron on his « spectacular » election success, pledging to help France tackle unemployment and to work together with him to promote European stability.

Spectre of empty houses haunt Canada’s two most expensive housing markets (Financial Post) Canada’s two most expensive cities for housing are seemingly haunted, not by ghosts but by the spectre of empty homes. Some believe vacant homes exist on a widespread basis, bought up by a stream of investors so consumed by speculation — or just a safe place to park their money — that they can’t even bother to rent out their properties in markets in where the going rate can easily top $3 a square foot.

Overnight markets 

Overview: US 10yr note futures are down 0% at 125-07, S&P 500 futures are down -0.16% at 2394, Crude oil futures are down -0.58% at $45.95, Gold futures are up 0.41% at $1231.9, DXY is up 0.28% at 98.929, CAD/USD is up 0.41% at 0.7296.

US Economic Data

8:15 AM Housing Starts, Apr, 214.1k, est. 215.0k, (prior 253.7k, revised 252.3k)
10:00 AM Labor Market Conditions Index, Apr, est. 1.0 (prior 0.4)

Canadian Economic Data 

10:00 AM Bloomberg Nanos Confidence Index, May 5, (prior 59.4)


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