Market Update Tsys trading lower, US 10Y back above 3.0% (3.01% high) , on heavy volume in TY futures (428k), crude up ~3.0% above 71 rebounding from yesterday’s post Iran announcement slump. Stocks higher (S&P fut +9.5). Core EGBs weaker, UK gilt yields 2-3bps higher weighed by UK/Euro bond supply including 10Y gilt auction, uncovered 30Y bund auction (b/c 0.71). Focus on April PPI – 0.2% vs 0.3% prev – headline PPI rose 3.0% y/y in March the highest since Nov while core prices rose at the fastest pace since Nov 2011. PPI is at risk of moving higher in the coming months from trade tariffs announced recently. The US auctions $25bln in 10Y notes at 1:00ET from $21bln in April, which saw the lowest indirect demand since Sept. GOCs weaker in line with tsys, 10Y approaching 2.40% high from Feb, long end well anchored on the curve 10s30s @ 6bps. BOC auctions $3bln in new August 2020 2Y bonds at noon with the WI roll (Aug/May) 3.9/3.6 , 2Y yields @ 1.95% same level as previous 2Y auction on April 19th. Provis well bid, Ont 28s&49s 0.5bps tighter, after closing tighter yest.
News headlines
Trump to Exit Iran Nuclear Deal and Reinstate U.S. Sanctions (Bloomberg) President Donald Trump said the U.S. will withdraw from the landmark 2015 accord to curb Iran’s nuclear program and reinstate financial sanctions on the Islamic Republic, opening an uncertain new chapter for the Middle East. His decision, widely anticipated by allies and analysts, was intended to force Iran to renegotiate an agreement the country’s leaders have said they will not revisit. Trump’s political opponents warned he could lead the U.S. into another Mideast war.
Europeans scramble to save Iran deal after Trump reneges (Reuters) Dismayed European allies sought to salvage the international nuclear pact with Iran on Wednesday after President Donald Trump pulled the United States out of the landmark accord, while Tehran poured scorn on the U.S. leader.
Oil soars above $71 and the dollar is on a tear after Trump dumps Iran deal (Reuters) Crude oil prices jumped back to 3-1/2-year highs on Wednesday after President Donald Trump pulled the United States out of an international nuclear deal with Iran, while the dollar continued its tireless ascent and world stocks held steady.
Argentina seeks IMF financial aid ‘to avoid crisis’ (BBC) Argentina is to start talks about a financing deal with the International Monetary Fund (IMF) on Wednesday amid reports it is seeking $30bn (£22bn). Finance minister Nicolas Dujovne is due to fly to the IMF’s Washington offices. After recent turmoil that saw interest rates hit 40%, President Mauricio Macri said IMF aid would « strengthen growth » and help avoid crises of the past. The talks come 17 years after Argentina defaulted on its debts and 12 years since it severed ties with IMF.
La Presse seeks not-for-profit structure, pending Quebec legislation changes (GlobalNews) Montreal-based La Presse news group plans to adopt a not-for-profit structure, if Quebec allows it to do so, the company announced Tuesday. The structural change requires the Quebec government to repeal a provision of a Private Act adopted in 1967, regarding La Presse’s ownership, the French-language publication said in a statement. Power Corporation of Canada, whose subsidiary Square Victoria Communications Group currently owns the 130-year-old publication, will grant $50 million to the venture.
Facebook shakes up its execs and adds new blockchain group (CNBC) Facebook will now operate under three divisions. The reorganization will reportedly include a new blockchain effort and aims to address privacy concerns.
Vodafone to pay $21.8 billion for Liberty assets to strengthen European presence (CNBC) The world’s second-largest mobile operator had held repeated talks with Liberty in recent years in a bid to broaden its offering and better compete in Europe. Vodafone will become Europe’s leading next generation network owner, serving the largest number of mobile customers and households across the EU, » Chief Executive Vittorio Colao said.
Crude soars, U.S. dollar dips as Trump dumps Iran nuclear deal (TheGlobeandMail) Crude oil prices hit 3-1/2-year highs on Wednesday after President Donald Trump pulled the United States out of an international nuclear deal with Iran, while the dollar touched a new high for the year and world stocks held steady. Trump’s move sparked fears of increased tension in the Middle East and uncertainty over global oil supplies.
Overnight markets
Overview: US 10yr note futures are down -0.222% at 119-08, S&P 500 futures are up 0.36% at 2679.75, Crude oil futures are up 2.43% at $70.74, Gold futures are down -0.06% at $1312.9, DXY is down -0.16% at 92.968, CAD/USD is down -0.52% at 0.7761.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.953% | 2 Year | 2.526% |
| 5 Year | 2.196% | 5 Year | 2.835% |
| 10 Year | 2.383% | 10 Year | 3.002% |
| 30 Year | 2.444% | 30 Year | 3.154% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, May 4th -0.4% (-2.5% prior) |
| 8:30 AM | PPI Final Demand MoM, Apr 0.1% est 0.2% (0.3% prior) |
| PPI Ex Food and Energy MoM, Apr 0.2% est 0.2% (0.3% prior) | |
| PPI Ex Food, Energy, Trade MoM, Apr 0.1% est 0.2% (0.4% prior) | |
| PPI Final Demand YoY, Apr 2.6% est 2.8% (3.0% prior) | |
| PPI Ex Food and Energy YoY, Apr 2.3% est 2.4% (2.7% prior) | |
| PPI Ex Food, Energy, Trade YoY, Apr 2.5% (2.9% prior) | |
| 10:00 AM | Wholesale Trade Sales MoM, Mar (1.0% prior) |
| Wholesale Inventories MoM, Mar F est 0.5% (0.5% prior) |
Canadian Economic Data
| 8:30 AM | Building Permits MoM, Mar 2.0% est 3.1% (-2.6% prior Revised -2.8%) |
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