Market Update
US tsys trading higher, reversing losses after Powell testimony released pointing to July rate cut after opening after steep declines in European bonds, 10Y 2.05% (-1.5bps). Bunds & gilts paring losses on after better than expected France & Italian IP data, as well as a weak German 10Y auction. In Canada, GOCs lower lagging the recovery in tsys, 10Y 1.59% close to a six-week high. GOC curve steepening yesterday the main theme, 2s10s closed at -6bps after dipping below -11bps in the morning. BOC decision at 10:00am & MPR – Poloz expected to point to resiliency in the Cdn economy, Q2 growth outlook much impoved since April, full year growth should be revised higher as well.
News headlines
Fed’s Powell says trade, global growth concerns continue to weigh on U.S. economy (Reuters) Concerns about trade policy and a weak global economy “continue to weigh on the U.S. economic outlook” and the Federal Reserve stands ready to “act as appropriate” to sustain a decade-long expansion, Fed Chairman Jerome Powell said on Wednesday in remarks that could bolster expectations of an interest rate cut later this month.
TSX futures lower ahead of BoC rate decision, Powell testimony (Reuters) Canada’s main stock index futures edged lower on Wednesday ahead of Bank of Canada’s interest rate decision and U.S. Federal Reserve Chairman Jerome Powell’s congressional testimony.
U.S. Futures Rise With Gold, Bonds on Rate Bets: Markets Wrap (Bloomberg) U.S. stock futures turned higher with Treasuries after Jerome Powell signaled an openness to rate cuts amid ongoing uncertainty in the economy. Gold rose and the dollar fell.
Oil Jumps on Report of Falling U.S. Stockpiles and Iran Tension (Bloomberg) Oil jumped to the highest in a week as an industry report showing a continued draw-down in U.S. crude inventories tightened a supply outlook that’s being threatened by rising tension in the Middle East.
China to reduce tariffs, improve export tax rebate policies (Reuters) China will stabilize trade by reducing tariffs, improving export tax rebate policies and cutting insurance fees for export companies, state television reported on Wednesday, citing a state council meeting chaired by Premier Li Keqiang.
China warns meat exporters to comply with rules: sources (Reuters) China’s customs administration warned meat exporting nations this week to comply with its rules on imports, following a series of problems it identified in Canadian pork shipments.
China’s Looming Deflation Fears Strengthen Policy Easing Case (Bloomberg) The case for Chinese policy makers to ramp up stimulus grew stronger, as tepid domestic demand and falling commodity prices increase the risk of a return to factory deflation.
Bank of Canada’s Poloz likely to rebuff global easing trend (BNN) A strong run of economic data is affording the Bank of Canada an opportunity Wednesday to resist any dovish turn in global monetary policy.
Market Overview: US 10yr note futures are down -0.233% at 127-00, S&P 500 futures are down -0.23% at 2975.25, Crude oil futures are up 2.28% at $59.15, Gold futures are down -0.34% at $1395.8, DXY is down -0.05% at 97.437, CAD/USD is down -0.12% at 0.7626.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.661% | 2 Year | 1.919% |
| 5 Year | 1.594% | 5 Year | 1.901% |
| 10 Year | 1.622% | 10 Year | 2.096% |
| 30 Year | 1.765% | 30 Year | 2.577% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, Jul 5 Survey: — Actual: -2.40% Prior: -0.10% |
| 10:00 AM | Wholesale Inventories MoM, May F Survey: 0.40% Prior: 0.40% |
| Wholesale Trade Sales MoM, May Survey: 0.30% Prior: -0.40% | |
| 02:00 PM | FOMC Meeting Minutes, Jun 19 |
Canadian Economic Data
| 10:00 AM | Bank of Canada Rate Decision, Jul 10 Survey: 1.75% Prior: 1.75% |
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