Market Update
US tsys trading lower, US equity futures higher on the back of Trump postponing plans to impose tariffs on Mexico, tsy yields 4-6bps higher with the 10Y 2.14% (+6bps), above avg volume in TY futures (~400k). European govt bonds lower, German bund 2s30s curve ~8bps steeper, bund curve . Selling of E200mln of Spanish 30Y bonds (BN) related to Spanish Treasury planning to issue three new 30-Y linkers for E350mln. GOCs lower, 1bps wider vs tsys out to 10s, 10Y 1.52% (+5.5bps). May Housing Starts 202K vs 207k exp. Friday’s employment report strong – jobs rose 27.7k vs 5k exp with full-time up 28k and the unemployment rate down to 5.4% – lowest on record. Theme of the week was long outperforming on the curve and vs the US last week. even after the strong data and long provi supply, 10s30s ~3bps flatter , Can/US 10s30s BOX 5bps flatter. Provis 1-1.5bps tighter on ‘risk on’, Quebec reopened Dec 51s @ 79, now 78/77.
News headlines
Clear path ahead for new NAFTA as Mexico tariffs dropped: Morneau (BNNBloomberg) U.S. President Donald Trump’s decision not to slap tariffs on Mexico over migration clears the path for the U.S.-Mexico-Canada trade agreement to move forward, said Canadian Finance Minister Bill Morneau. The removal of that uncertainty and the U.S. cancellation of steel and aluminum tariffs on Canada have pushed the joint deal toward ratification, he said. Less clear is what’s ahead for world trade, and how any additional tariffs — or threats of them — will impact Canada and the global economy.
Manulife Bank out to poach millennials from the Big Five with targeted digital banking packages (FP) Canada’s biggest banks have a track record of swallowing up competitors – from upstart retail banks such as ING Direct to the Canadian credit card portfolios of U.S. banks including JP Morgan and Citigroup. But another giant on the domestic financial services landscape, Manulife Financial Corp., is taking aim at the big banks’ customers with the launch of a multi-product banking package by subsidiary Manulife Bank.
Delay the ‘dot plot’? Fed policymakers face communications quandary (Reuters) As Federal Reserve policymakers grapple with how to downplay their quarterly “dot plot” projection of interest rates without eliminating it altogether, some are looking at a compromise: delay its release to reduce the chances that analysts treat it as a sneak peek of where Fed policy is heading.
China exports grow despite U.S. tariffs, but import slump most in nearly three years (Reuters) China’s exports unexpectedly returned to growth in May despite higher U.S. tariffs, but imports fell the most in nearly three years in a further sign of weak domestic demand that could prompt Beijing to step up stimulus measures.
Trump threatens more tariffs on Mexico over part of immigration deal (Reuters) President Donald Trump said on Monday the United States had signed another portion of an immigration deal with Mexico that would need to be ratified by Mexican lawmakers.
China stays silent on G20 Xi-Trump meeting, but says door open for talks (Reuters) China is open for more trade talks with Washington but has nothing to announce about a possible meeting between the Chinese and U.S. leaders at this month’s G20 summit, the Foreign Ministry said on Monday.
Market Overview: US 10yr note futures are down -0.332% at 126-26, S&P 500 futures are up 0.49% at 2889, Crude oil futures are up 0.63% at $54.33, Gold futures are down -1.22% at $1329.7, DXY is up 0.37% at 96.903, CAD/USD is up 0.04% at 0.7533.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.459% | 2 Year | 1.892% |
| 5 Year | 1.403% | 5 Year | 1.904% |
| 10 Year | 1.523% | 10 Year | 2.138% |
| 30 Year | 1.775% | 30 Year | 2.623% |
US Economic Data
| 10:00 AM | JOLTS Job Openings, Apr Survey: 7496 Prior: 7488 |
Canadian Economic Data
| 08:15 AM | Housing Starts, May Survey: 207.5k Actual: 202.3k Prior: 235.5k |
| 08:30 AM | Building Permits MoM, Apr Survey: 1.80% Prior: 2.10% |
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