Market Update

Tsys opening NY lower, US 10Y 2.197 (+2.4bps), curve 1bp steeper before Comey testimony later this morning. Core EGBs lower – the ECB dropped a reference to further interest rate cuts as expected – press conference at 9:00ET. Bunds were already trading weaker prior to ECB, Bund-BTP spread 7bps tighter as early election seems less likely after law failed to pass in parliament, also Reuters reported that Italian banks are combining to inject E1.2bln into Venetian banks. Gilts weaker led by 10Y 1.03% (+3bps) – latest polls showed Tories actually increasing their lead ahead of today’s vote.  Crude continuing lower, down 0.50% after yesterday’s 5% plunge on DOE data which showed both gasoline and crude inventories rising. GOCs opening lower, curve slightly steeper – longs experiencing  buyer fatigue yest after 10s30s traded below 60bps and long Alberta deal.

 News headlines 

Investors Avoid Big Moves as Key Events Draw Near: Markets Wrap (Bloomberg) Financial markets were mostly steady as investors avoided adding big positions ahead of key events in Europe and the U.S. As British voters head to polls in a general election, the pound and government bonds weakened as the risks of shock outcomes weighed on sentiment.

Oil crawls off one-month lows, but supply gloom caps gains (Reuters) Oil edged up on Thursday, having hit one-month lows the previous day after an unexpected surge in U.S. inventories and the return of more Nigerian crude to an already oversupplied market. The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing output cut of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories.

ECB to keep taps open as economic outlook uncertain (Reuters) The European Central Bank is likely to keep the money taps fully open at its meeting on Thursday as inflation remains below its target despite stronger economic growth in the euro zone. The currency bloc’s economy has been on its best run for a decade but ECB President Mario Draghi is yet to be convinced that the recent rebound in inflation is durable because wage growth remains sluggish.

Euro zone growth revised up to highest rate in a year in first quarter (Reuters) The euro zone economy grew by more than previously estimated in the first quarter and at its fastest rate in a year, EU statistics agency Eurostat said on Thursday, ahead of a European Central Bank meeting likely to keep policy unchanged.

Canadian non-mortgage debt hits $21,696 as Alberta consumers struggle (TheGlobeAndMail) A new report from credit-monitoring agency TransUnion has found that Canadians are taking on consumer debt in a healthy way – except in Alberta and other oil-dependent regions.

Quebec’s strategy on electric vehicles is too expensive, Ecofiscal says (TheGlobeAndMail) Quebec’s subsidy for consumer purchases of electric vehicles is an extremely expensive way of reducing greenhouse gas emissions, with the cost calculated at $395 per tonne of carbon dioxide eliminated, Ecofiscal Commission says in a report to be released on Thursday.

Overnight markets 

Overview: US 10yr note futures are down -0.111% at 126-13, S&P 500 futures are up 0.07% at 2431.5, Crude oil futures are down -0.98% at $45.27, Gold futures are down -0.62% at $1285.2, DXY is up 0.2% at 96.943, CAD/USD is down -0.01% at 0.7404.

US Economic Data

8:30 AM Initial Jobless Claims, Jun 3, 245k, est. 240k (prior 248k, revised 255k)
Continuing Claims, May 27, 1917k, est. 1920k (prior 1915k, revised 1919k)
9:45 AM Bloomberg Consumer Comfort Index, Jun 4, (prior 51.2)
12:00 PM Household Change in Net Worth, 1Q, (prior $2043b)

Canadian Economic Data

8:15 AM Housing Starts, May, 194.7k, est. 202.0k (prior 214.1k, revised 213.5k)
8:30 AM New Housing Price Index, m/m, Apr, 0.8%,  est. 0.2% (prior 0.2%)
New Housing Price Index, y/y, Apr, 3.9%, est. 3.3% (prior 3.3%)
10:30 AM Bank of Canada Releases Financial System Review


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