Market Update
Tsys trading slightly higher, prices near the bottom of o/n range, strong volume (470k TY futures), 10Y 2.71%, curve steeper with short end outperforming. Equities lower, USD index higher. Limited data due to shutdown (claims, Wholesale sales), multiple Fed speakers including chairman Powell. In Canada are higher, in line with tsys after cheapening yesterday despite a dovish BOC. 2Y auction today – reopening of the 2.25% Feb 2021s for $3bln (issue size now $12bln or benchmark size). With the curve inverted beyond 2s the 2Y may see some support despite absolute levels not looking that enticing after the rally and vs 1.75% overnite.
News headlines
U.S. weekly jobless claims fall more than expected (Reuters) The number of Americans filing applications for jobless benefits fell more than expected last week, pointing to a strengthening labor market that could further ease concerns about the economy’s health.
Stock futures snap four-day rally as trade talks, retailers disappoint (Reuters) U.S. stock index futures dipped on Thursday, after a solid four-day rally, as lack of details on U.S.-China trade talks gave investors pause, while retailers came under pressure after a couple of disappointing holiday-season reports.
U.S. buyback market support may wane in 2019 (Reuters) U.S. companies’ shopping spree for their own shares helped put a floor on market declines in 2018. Don’t look for the same level of support in 2019.
Bank of Canada holds interest rate as oil slump dims economy’s outlook (National Post) Stephen Poloz’s creative energy appears to have been restored by the holiday break. Canada’s central bank governor, a noted lover of metaphors and similes, introduced a new array of literary descriptions of how monetary policy works at his first public appearance of 2019.
Trudeau touts controversial pipeline project in speech to supporters in B.C. (Globe and Mail) Prime Minister Justin Trudeau touted the benefits of a liquefied natural gas project that’s at the centre of an impasse with First Nations in a speech to supporters in Kamloops, B.C., on Wednesday. RCMP arrested 14 people Monday in northwestern British Columbia over a protest against construction of a natural gas pipeline by Coastal GasLink, a key part of the $40-billion LNG Canada project.
At China port, tariff drop a salve for hard-hit traders of American cars (Reuters) In the Chinese port city of Tianjin, gray market traders of American-made cars, badly stung by a scything trade war and punitive tit-for-tat tariffs, are scrambling to take advantage of an opportunity they fear may prove only temporary.
Brexit: Theresa May considering Labour MP’s demands on workers rights (BBC) The government is considering giving extra protections to workers and the environment in order to win support for its Brexit withdrawal agreement. The proposals have been put forward by Labour Leave supporter John Mann. Business Secretary Greg Clark said the amendment showed “Parliament coming together” behind the PM’s deal.
Overnight markets
Overview: US 10yr note futures are up 0.103% at 121-27, S&P 500 futures are down -0.51% at 2569.25, Crude oil futures are down -0.74% at $51.97, Gold futures are up 0.06% at $1292.8, DXY is up 0.06% at 95.278, CAD/USD is up 0.12% at 0.7561.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.897% | 2 Year | 2.541% |
| 5 Year | 1.9% | 5 Year | 2.537% |
| 10 Year | 1.962% | 10 Year | 2.708% |
| 30 Year | 2.164% | 30 Year | 3.019% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Jan 5th 216k est 226k (231k prior Revised: 233k) |
| Continuing Claims, Dec 29th 1722k est 1740k (1740k prior Revised: 1750k) | |
| 9:45 AM | Bloomberg Consumer Comfort, Jan 6th (59.6 prior) |
Canadian Economic Data
| 8:30 AM | Building Permits MoM, Nov 2.6% est -0.5% (-0.2% prior Revised: -0.4%) |
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