Market Update

US tsys higher on rising trade tensions between the US & China, after Trump said China ‘broke the deal’ last nite, 10Y 2.45% (-3.5bps). Risk-off with US equities lower, S&P futures -21,  European equities  -1.0%, while the MSCI Asia Pacific index fell for a third day to the lowest since March 29th. C ore EGBs higher, lagging tsys, yields 1-2bps lower, quiet day for European data. In the US April PPI & jobless claims, as well as $19bln 30Y US t-bond auction at 1:00ET – Yesterday’s $27bln 10Y auction saw the second tail in a row, awarded at 2.479% 2.465% WI.  Competition from US corporate issuance – IBM issuing $20bln bringing the weekly total to $44.5bln the largest in eight months.  GOCs higher,  1bp wider vs tsys, GOC curve 1bp flatter 2s10s, the narrowest in five weeks, 10s30s bucking the flattening trend over the last week, ~3bps steeper.

News headlines

As tariff hike looms, China asks U.S. to meet it halfway, denies backtracking (Reuters) China appealed to the United States to meet it halfway to salvage a deal that could end their trade war, with its chief negotiator in Washington for two days of talks hoping to stave off U.S. tariff increases set to be triggered on Friday.

Trump says Beijing ‘broke’ trade talk deals, pledges to keep tariffs on Chinese goods (Reuters) U.S. President Donald Trump said on Wednesday that China “broke the deal” it had reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing “stops cheating our workers.”

Stocks Drop, Treasuries Gain as Fresh Tariffs Loom: Markets Wrap (Bloomberg) Stocks dropped globally and U.S. equity futures retreated on Thursday as a deadline approached for America and China to raise reciprocal tariffs. The yen climbed with gold and Treasuries as investors sought havens, while the yuan fell to its weakest since January.

CANADA STOCKS-Futures down ahead of crucial U.S.-China trade talks (Reuters) Futures for Canada’s main stock index dipped on Thursday ahead of crucial trade talks between the United States and China, with investors waiting to see if the world’s largest economies can avoid further worsening of the trade war.

Oil Drops as Trump’s Battle With China Offsets Iranian Tensions (Bloomberg) Oil fell as flaring trade tensions between the world’s two biggest economies overshadowed concerns over supply disruptions from Iran to Venezuela.

New Colorado environmental law stalls oil investment (Reuters) New environmental regulations in Colorado have chilled investment in the state’s oil and gas fields as companies grapple with how local officials will respond to a law giving them more power to restrict energy production.

China to bid on D.C. Metro rail deal as national security hawks circle (Reuters) China’s CRRC plans to bid on a big Washington D.C. subway project as it doubles down on a charm campaign in the United States to quash a rising chorus of critics who have cast the rail car maker as a threat to cyber security and U.S. industry.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.578% 2 Year 2.264%
5 Year 1.543% 5 Year 2.247%
10 Year 1.672% 10 Year 2.446%
30 Year 1.931% 30 Year 2.865%

US Economic Data

08:30 AM PPI Final Demand MoM, Apr Survey 0.30% Prior 0.60%
     PPI Ex Food and Energy MoM, Apr Survey 0.20% Prior 0.30%
     PPI Final Demand YoY, Apr Survey 2.30% Prior 2.20%
     PPI Ex Food and Energy YoY, Apr Survey 2.50% Prior 2.40%
     Trade Balance, Mar Survey -$50.1b Prior -$49.4b
     Initial Jobless Claims, May 4 Survey 220k Prior 230k
     Continuing Claims, Apr 27 Survey 1670k Prior 1671k
09:45 AM     Bloomberg Consumer Comfort, May 5 Survey — Prior 60.4
10:00 AM Wholesale Inventories MoM, Mar F Survey 0.00% Prior 0.00%

Canadian Economic Data

08:30 AM Int’l Merchandise Trade, Mar Survey -2.40b Prior -2.90b
     New Housing Price Index MoM, Mar Survey 0.00% Prior 0.00%

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230