Market Update Tsys lower, near low end of narrow range on below avg volume on TY futures (272k), US 10Y 2.88% (+2bps) Feb Employment on tap with 200k increase exp and the unemployment rate expected to fall to 4.0% from 4.1%. There is likely to be more focus on AHE, which spiked to 2.9% in Jan and contributed to the recent uptick in financial mkt volatility. GOCs lower, in line with tsys before Feb employment forecast to show a 21k rebound from the 88k drop in Jan. BOC gov Lane relatively upbeat yesterday, attributing the Q4 slowdown in GDP to a surge in imports. The April meeting pricing in ~40% chance of a 25bp hike, from 33% a week ago and 53% pre GDP.
News headlines
Trump Hails ‘Great Progress’ With Plan to Meet Kim Jong Un (Bloomberg) U.S. President Donald Trump hailed “great progress” in talks with North Korea after agreeing to meet Kim Jong Un in what would be an unprecedented summit. “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze,” Trump said on Twitter late Thursday in Washington. “Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”
Trump Launches Global Race for Exclusion From Steel Tariffs (Bloomberg) With the stroke of a pen, President Donald Trump has set off a race among nations and companies to win relief from his steel and aluminum tariffs. As expected, Trump slapped a 25 percent tariff on steel imports and 10 percent on aluminum on Thursday. But he showed more leniency than initially thought. The U.S. excluded Mexico and Canada, a concession that will remain in place as long as they reach agreement on a new North American Free Trade Agreement that meets U.S. satisfaction.
Fed Top Brass Is Keenly Watching These Jobs Day Data Points (Bloomberg) New Federal Reserve Chairman Jerome Powell feels good about the U.S. labor market, based on his recent congressional testimony. It’s been adding jobs at a steady clip, it’s drawn people back from the sidelines, and unemployment has plunged. Still, there are a few details he and his colleagues at the U.S. central bank might be watching carefully as they assess whether it makes sense to upgrade their outlook, which currently predicts three interest-rate increases in 2018.
Bonds Fall, Stocks Drift as U.S. Jobs Data Looms: Markets Wrap (Bloomberg) Bonds declined and a lull settled over European stocks before key jobs data in the U.S., where exceptions to import tariffs and surprise plans for North Korea talks have traders weighing the outlook for a range of assets. The dollar edged higher and gold fell. The Stoxx Europe 600 Index nudged higher along with U.S. equity-index futures, capping a week in which shares globally were roiled by President Donald Trump’s protectionist trade agenda. Asian stocks rose earlier on news of an agreement for an unprecedented summit between the leaders of the U.S. and North Korea. The yen fell and bond yields rose as investors ditched some safer assets. Crude advanced, but was still headed for a second week of declines as U.S. shale output climbed.
No Brexit Deal Until Next Year, U.K. Officials Say Privately (Bloomberg) U.K. officials don’t expect to clinch a Brexit deal until two months before exit day, increasing the chances of chaos for executives and lawmakers. European Union chief negotiator Michel Barnier has long said he wants the withdrawal agreement done by October so that there’s time for it to go to the European and U.K. parliaments for approval before Britain leaves in March 2019. Brexit Secretary David Davis has indicated in public that the timetable could slip a bit. But speaking privately, U.K. officials say the real deadline is January.
Canada hails tariffs exemption, says to keep lobbying Washington (Reuters) Canada on Thursday hailed the news it would not immediately be subject to U.S. tariffs on steel and aluminum while promising to continue lobbying Washington until the threat of duties had disappeared. President Donald Trump announced the imposition of 25 percent tariffs on steel imports and 10 percent for aluminum on Thursday but said Canada and Mexico would be exempt as long as talks to update the NAFTA trade deal progressed.
Canada would lose 91,000 jobs if NAFTA ends: Conference Board (BNN) Canada’s economy could lose close to 100,000 jobs over a two-year span if U.S. President Donald Trump makes good on his threat to terminate the North American Free Trade Agreement, according to a new report by the Conference Board of Canada. The report estimates the end of NAFTA would shave at least half a percentage point off Canada’s economic growth and result in 85,000 lost jobs in the first year after termination, with job losses rising to 91,000 by the second year of the post-NAFTA reality.
Overnight markets
Overview: US 10yr note futures are down -0.039% at 120-04, S&P 500 futures are down -0.18% at 2739.25, Crude oil futures are up 0.8% at $60.6, Gold futures are down -0.49% at $1315.2, DXY is up 0.11% at 90.278, CAD/USD is down -0.12% at 0.7763.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.797% | 2 Year | 2.262% |
| 5 Year | 2.05% | 5 Year | 2.644% |
| 10 Year | 2.236% | 10 Year | 2.872% |
| 30 Year | 2.411% | 30 Year | 3.141% |
US Economic Data
| 8:30 AM | Change in Nonfarm Payrolls, Feb est 205k (200k prior) |
| Two-Month Payroll Net Revision | |
| Change in Private Payrolls, Feb est 205k (196k prior) | |
| Change in Manufact. Payrolls, Feb est 15k (15k prior) | |
| Unemployment Rate, Feb est 4.0% (4.1% prior) | |
| Average Hourly Earnings MoM, Feb est 0.2% (0.3% prior) | |
| Average Hourly Earnings YoY, Feb est 2.8% (2.9% prior) | |
| 10:00 AM | Wholesale Trade Sales MoM, Jan (1.2% prior) |
| Wholesale Inventories MoM, Jan est 0.7% (0.7% prior) |
Canadian Economic Data
| 8:30 AM | Capacity Utilization Rate, 4Q est 85.2% (85% prior) |
| Net Change in Employment, Feb est 21.0k (-88.0k prior) | |
| Unemployment Rate, Feb est 5.9% (5.9% prior) | |
| Hourly Earnings Permanent Employees, Feb (3.3% prior) | |
| Full Time Employment Change, Feb (49.0 prior) | |
| Part Time Employment Change, Feb (-137.0 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