Market Update

Tsys slightly weaker on avg volume in TY futures, 10Y above 2.40%.  Tsys weighed by weaker German bunds/ UK gilts on a wave of sovereign supply from Austria, Netherlands & German 30Y linker sales. European stocks higher, USD higher for 2nd day at highest level in a month, S&P futures slightly higher. Gilt yields 5-6 bps higher out the curve – concerns of a hawkish slant at this week’s BOE The US sells $24bln in 3Y notes as part of monthly refunding, to be followed by 10Y supply tomorrow and 30Y on Thurs.  PIMCO sees the US 10Y going to 3.0% in the medium term as the Fed hikes at least twice this yr, the Fed reduces the size of its b.s. and the term premium will have to rise to build in higher inflation risk due to tax cuts. GOCs lower led by 10s, curve 2bps steeper. Provis unch yest on no supply, BC election today, long BC/Ont roll moving wider , rumours of Ont, Sask supply.  New $2bln ABIBB 2-tranche yest 7Y (132) & 30Y (212) both well received considering the size  and pricing 3bps below guidance trading 5-6bps tighter on the break.  We saw demand for the longs on the break.

News headlines 

Dollar Advance Saps Commodity Gain; Stocks Rise: Markets Wrap (Bloomberg) The dollar gained a second day as bets increased for a hike in U.S. borrowing costs next month. That took the shine off a bounce in commodities, though mining stocks still spurred European equities to the highest since 2015.

Oil steadies but rattled by concern about OPEC’s clout (Reuters) Oil rose on Tuesday but faced headwinds from concern over slowing demand and the rise in U.S. crude output that has shaken investors’ faith in the ability of OPEC to rebalance the market. Brent crude futures were up 9 cents at $49.43 per barrel at 1110 GMT (7.10 a.m. ET), above a session low of $49.18, while U.S. West Texas Intermediate futures were up 11 cents at $46.54 per barrel.

UK shoppers seek bargains, employers hunt staff as Brexit bites – surveys (Reuters) British shoppers are increasingly seeking bargains to offset rising inflation and employers are finding it harder to recruit migrant workers, according to surveys published on Tuesday which reflected the impact of last year’s Brexit vote. Total retail sales showed their strongest year-on-year growth in six years in April, but the jump largely reflected the timing of the Easter holiday which fell in March last year but in April in 2017, the British Retail Consortium said.

Valeant posts first-quarter profit on tax benefit, raises full-year EBITDA forecast (Reuters) Canada’s Valeant Pharmaceuticals International Inc (VRX.N) (VRX.TO) reported a first-quarter profit, compared with a year-ago loss, due to an income tax benefit, and the drugmaker also raised its full-year adjusted EBITDA forecast.

German job vacancies hit record high in first quarter (Reuters) Job vacancies in Germany hit an all-time high in the first three months of 2017, data showed on Tuesday, climbing above one million as Europe’s biggest economy expands faster than its workforce.

George Weston hikes dividend as improvements at Loblaw boost profit (TheGlobeAndMail) George Weston Ltd. is reporting a 189 per cent increase to its first-quarter profit, mostly because of improved results from its stake in Loblaw. The Toronto-based company, which also owns the Weston Foods bakery business, had $107-million or 83 cents per share of net income for common shareholders in the quarter ended March 25.

Overnight markets 

Overview: US 10yr note futures are down -0.162% at 124-28, S&P 500 futures are up 0.08% at 2397, Crude oil futures are down -0.47% at $46.21, Gold futures are down -0.53% at $1220.6, DXY is up 0.51% at 99.564, CAD/USD is up 0.32% at 0.7281.

US Economic Data

6:00 AM NFIB Small Business Optimism, Apr, 104.5, est. 104.0 (prior 104.7)
10:00 AM JOLTS Job Openings, Mar, est. 5725 (prior 5743)
Wholesale Inventories, m/m, Mar F, est. -0.1% (prior -0.1%)
Wholesale Trade Sales, m/m, (prior 0.6%)

Canadian Economic Data 

8:30 AM Building Permits, m/m, Mar, -5.8%, est. 2.8% (prior -2.5%, 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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