Market Update
Tsys opening weaker, US 10Y 2.204 (+1.6bps), narrow trading range on above avg volume (350K TY1) after surprise UK election result. UK election produced hung parliament with conservatives losing their majority and Brexit uncertainty. EGBs mixed with most of the vol seen in FX, UK gilt yields lower by 2bps, bunds slightly weaker. The GBP is off 1.5% rebounding somewhat, still the largest decline since early October. GOCs lower spds 1bo wider vs tsys after huge beat in Cdn employment 54.5K vs 15k exp- 77K in full time with the unemployment rate at 6.6% as exp. Provis opening unch after closing unch yest.
News headlines
Sterling Slides on U.K. Vote; Dollar, Oil Advance: Markets Wrap (Bloomberg) The pound tumbled as the U.K.’s ruling Conservative Party lost its parliamentary majority, plunging the country into uncertainty just days before Brexit negotiations were due to start. Crude advanced and the dollar strengthened.
China’s easing factory gate prices hint at broader economic slowdown (Reuters) China’s producer price inflation eased for the third straight month in May on tumbling prices of raw materials, signaling a broader cooling in economic activity as profits are squeezed by slackening domestic demand and rising financing costs.
May Digs In as U.K. Premier After Election Debacle (Bloomberg) Theresa May launched a desperate fightback to hold on to her premiership following a disastrous election that cost her party its parliamentary majority and with it the right to rule the U.K. on its own.
In China, some firms ask workers to buy shares in a bid to raise stock price (Reuters) Around two dozen mainly small listed Chinese companies have taken the unusual step of urging their employees to buy shares in a bid to prop up stock prices and help fend off collateral calls on stock-backed loans.
Hudson’s Bay Co is eliminating 2,000 positions to offset retail sector challenges (Financial Post) Hudson’s Bay Co. announced Thursday a major overhaul of its operational structure, laying off 2,000 employees as part of a plan to save $350 million per year by the end of fiscal 2018.
Enbridge Inc. expands oil and gas pipeline capacity as production surges (Financial Post) Enbridge Inc. plans to expand its main oil pipeline system and its newly acquired natural gas pipeline system in B.C. as production of both commodities continue to rise in Western Canada.
Overnight markets
Overview: US 10yr note futures are down -0.136% at 126-09, S&P 500 futures are up 0.11% at 2433, Crude oil futures are down -0.07% at $45.61, Gold futures are down -0.56% at $1272.3, DXY is up 0.53% at 97.428, CAD/USD is down -0.39% at 0.7432.
US Economic Data
| 10:00 AM | Wholesale Inventories, m/m, Apr F, est. -0.3% (prior -0.3%) |
| Wholesale Trade Sales, m/m, Apr, est. 0.2% (prior 0.0%) |
Canadian Economic Data
| 8:30 AM | Capacity Utilization Rate, 1Q, 83.3%, est. 83.5% (prior 82.2%, revised 81.8%) |
| Net Change in Employment, May, 54.5k, est. 15.0k (prior 3.2k) | |
| Unemployment Rate, May, 6.6%, est. 6.6% (prior 6.5%) | |
| Full Time Employment Change, May, 77.0 (prior -31.2) | |
| Part Time Employment Change, May, -22.3 (prior 34.3) | |
| Participation Rate, May, 65.8 (prior 65.6) |
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