Market Update US tsys trading lower, below avg volume in TY futures (265k), 10Y 2.79 (+1.8bps), trade tensions the focus with China said to be weighing depreciation of the yuan. US equity futures rebounding (S&P +15), USD index firmer, crude higher 62.75. US eco data week highlighted by PPI Tuesday & CPI Wednesday. Chicago Fed Pres Evans said the Fed should raise rates again in June if inflation reaches 2%. In Canada, GOCs are lower , outperforming tsys across the curve. BOC Q1 Senior Loan Officer Survey & Business Outlook scheduled for later this morn – Q4 BOS revealed the tightest capacity pressures in 10 yrs, while labor shortage intensity was ‘elevated’. Provincial spreads widened 2-4bps last week driven by ‘risk off’ and a resumption in issuance with $1,55bln sold including a new 10Y Sep 2028 from Quebec @ 65.5 (67.5/66.5).
News headlines
China Is Studying Yuan Devaluation as a Tool in Trade Spat (Bloomberg) China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat with U.S. President Donald Trump that has roiled financial markets worldwide. Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part looks at the effect of using the currency as a tool in trade negotiations with the U.S., while a second part examines what would happen if China devalues the yuan to offset the impact of any trade deal that curbs exports.
Stocks Tumble More Than 2% on Trump Trade Jabs: Markets Wrap (Bloomberg) U.S. stocks ended the week with a deep selloff, leaving them lower for the five days as the White House’s latest trade bluster rattled global financial markets. The S&P 500 Index plunged more than 2 percent and all 30 members of the Dow Jones Industrial Average retreated as President Donald Trump ordered a review of additional tariffs that prompted an aggressive response from China. Fresh attempts by White House officials to tone down the bluster failed to calm nerves, with the Cboe Volatility Index back above 21. Treasury Secretary Steven Mnuchin added to the anxiety by saying there’s a “level of risk” the spat could worsen.
Britons Back Holding a Vote on May’s Brexit Deal (Bloomberg) A majority of Britons support holding a vote on the final Brexit deal secured by Prime Minister Theresa May, according to a YouGov poll conducted for the pro-remain group Best for Britain. Those saying the public should have the final say on whether to accept the Brexit deal or remain in the European Union exceeded opponents by 8 percentage points, according to the poll results released on Monday by the group, whose funders include billionaire investor George Soros. Respondents said they would opt to remain in the bloc if given a second referendum.
What to Watch in Commodities: Aluminum, Trump Vs Xi, Copper, Soy (Bloomberg) We live in interesting times. Just as investors weigh up the U.S.-China trade punch-up, markets need to adjust to a whole new front. U.S. sanctions against Russian companies and oligarchs are upending aluminum. The metal’s surging, while shares in United Co. Rusal are in the grinder. What should we expect this week? And what does it mean for Glencore Plc?
No NAFTA deal in principle to be announced at Lima summit (Reuters) Talks to rework the North American Free Trade Agreement (NAFTA) are not advanced enough for the United States, Mexico and Canada to announce a deal “in principle” at this month’s Summit of the Americas in Lima, according to two people familiar with matter. The ministers responsible for NAFTA met on Friday in Washington, and said progress had been made on reworking the accord. But there was still too much to do unveil an agreement at the April 13-14 summit, the sources said, speaking on condition of anonymity due to the sensitivity of the matter.
Futures rise on oil gains, U.S. soothes trade fears (Reuters) Futures for Canada’s main stock index pointed to a higher opening on Monday after oil prices rose and officials in U.S. President Donald Trump’s administration played down fears of a trade war with China. Trump’s chief economic adviser, National Economic Council Director Larry Kudlow said in an interview on Sunday the ongoing spat “might turn out to be very benign”. June futures on the S&P TSX index SXFc1 were up 0.73 percent at 7:15 a.m. ET. Canada’s main stock index fell on Friday in a broad-based decline led by energy and financial shares as renewed U.S.-China trade tensions stoked investors’ worries. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.66 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were up 0.57 percent and Nasdaq 100 e-mini futures NQc1 were up 0.77 percent.
Canadian Tire expands loyalty program to cover more retail brands (BNN) Canadian Tire Corp. says it’s expanding its loyalty program to allow customers to collect and redeem Canadian Tire Money across its various retail brands. The company says starting later this spring, customers will be able to collect points at Sport Chek, Mark’s, Atmosphere and Gas+ locations in addition to Canadian Tire itself, as well as redeem them at locations other than Gas+ stations. Canadian Tire says the revamped program will be called Triangle and include both loyalty points and two new MasterCards issued under the program. The program will allow customers to collect points either through an app or a loyalty card that will also offer personalized content and offers, while purchases with the branded MasterCards gives additional points.
Overnight markets
Overview: US 10yr note futures are down -0.103% at 120-29, S&P 500 futures are up 0.42% at 2616.75, Crude oil futures are up 0.81% at $62.56, Gold futures are down -0.11% at $1334.6, DXY is up 0.01% at 90.114, CAD/USD is down 0% at 0.7823.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.797% | 2 Year | 2.278% |
| 5 Year | 2.007% | 5 Year | 2.604% |
| 10 Year | 2.154% | 10 Year | 2.79% |
| 30 Year | 2.317% | 30 Year | 3.03% |
US Economic Data
There is no US economic data for today.
Canadian Economic Data
| 8:15 AM | Housing Starts, Mar est 218.0k (229.7k prior) |
| 10:00 AM | Bloomberg Nanos Confidence, Apr 6th (56.8 prior) |
| 10:30 AM | BoC Business Outlook Future Sales, 1Q (8.00 prior) |
| BoC Senior Loan Officer Survey, 1Q (-6.4 prior) | |
| BoC Overall Business Outlook Survey, 1Q (2.5 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