Market Update Tsys higher, yields 2-4bps lower with the 10Y below 2.90% (2.89 -3.5bps) before CPI on safe haven flows after the Turkish lira spiked to a new low and global equity markets weaken on contagion fears, S&P futures -13, Nasdaq -44.  Core EGBs also higher in line with tsys, Sep bunds rising to a three-week high 163.15. GOCs higher before July employment data (17k exp vs 31.8k June, AHE 3.6% exp vs 3.5%). 

News headlines

Trump Stays Quiet While Saudi Arabia-Canada Tensions Rise (Bloomberg) The Trump administration is privately trying to coax Saudi Arabia to dial back hostilities with Canada even as the U.S. maintains a hands-off public approach to the escalating dispute between the two key allies, a senior U.S. official said. The U.S. is now trying to do behind-the-scenes damage control after being caught off guard by Saudi Arabia Crown Prince Mohammad bin Salman’s move this week to expel the Canadian ambassador, freeze new trade deals and cancel direct flights to Toronto on its state airline, according to the official, who spoke on condition of anonymity.

Ontario Goes Dark in Bond Market, Setting Up Slew of Fall Sales (Bloomberg) One of the world’s biggest non-sovereign borrowers has gone quiet in the debt market. The province of Ontario hasn’t sold bonds since June 1, a few days ahead of an election that ended 15 years of Liberal Party rule. This 70-day drought is almost a month longer than the pause that followed Ontario’s prior change in 2003, according to National Bank of Canada. The result will be a flood of sales from Ontario in the fall that may weigh on performance, said Ryan Goulding, a fixed-income analyst at Vancouver-based asset manager Leith Wheeler Investment Counsel Ltd.

Canada Sees Return to Nafta Talks as U.S.-Mexico Near Auto Deal (Bloomberg) Canada could soon be returning to the Nafta talks as the U.S. and Mexico approach agreement on a deal over cars, according to one of Canada’s top diplomats. The U.S. and Mexico, which have been in bilateral negotiations for about three weeks, appear to be “getting close” to agreement over auto manufacturing, David MacNaughton, Canada’s ambassador to the U.S., said in an interview.

Stocks Fall With Euro on Turkey Contagion Concern: Markets Wrap (Bloomberg) European stocks fell the most in almost a month and U.S. equity futures slipped as investors awaited a speech from Turkey’s president that they hope will address concerns about the country’s financial ills spilling over into the euro zone and emerging markets. The common currency sank, while the dollar advanced alongside Treasuries. The Stoxx Europe 600 Index slid, dragged down by banks, after a news report said the ECB was concerned about the exposure of European lenders to Turkey. Investors are now looking to President Recep Tayyip Erdogan to calm their nerves when he speaks Friday for the first time since the latest sell-off began. Contracts on the S&P 500, Dow and Nasdaq declined alongside shares in Asia. The euro dropped to the weakest level in a year, while the dollar rallied with Treasuries and core European bonds. Turkey’s lira sunk to a fresh record low amid the diplomatic spat with the U.S.

TSX futures lower as Turkey turmoil roils global markets (Reuters) Canada’s main stock index futures edged lower on Friday as global stock markets tumbled following a slump in Turkey’s currency due to the country’s deepening rift with the United States. Investors scurried for safer assets such as dollar, yen and U.S. government bonds. The dollar index .DXY, which measures the greenback’s strength against a group of six major currencies, touched its highest level since July 2017. September futures on the S&P/TSX index SXFc1 were down 0.51 percent at 7:15 a.m. ET. Employment data for July is due at 8:30 a.m. ET. Canada’s main stock index rose on Thursday.

Big credit card firms agree to cut fees they charge merchants (BNN) Major credit card companies have struck an agreement with the federal government to trim the fees they charge to merchants in a move Ottawa hopes will provide a boost to small businesses. Ottawa announced Thursday it has reached voluntary, five-year deals with Visa, MasterCard and American Express to cut fees by about 10 basis points. Finance Minister Bill Morneau, who unveiled the deal at an Ottawa grocery store, said he expects the agreements to help small and medium-sized businesses save a total of $250 million per year. “That’s a big difference for companies,” said Morneau, who billed the change as part of his department’s effort to listen to the concerns of Canadian business owners about staying competitive. 

Overnight markets

Overview: US 10yr note futures are up 0.287% at 120-02, S&P 500 futures are down -0.45% at 2841, Crude oil futures are up 0.73% at $67.3, Gold futures are up 0.11% at $1221.2, DXY is up 0.64% at 96.12, CAD/USD is up 0.27% at 0.7642.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 2.107% 2 Year 2.625%
5 Year 2.228% 5 Year 2.77%
10 Year 2.314% 10 Year 2.891%
30 Year 2.326% 30 Year 3.044%

US Economic Data

8:30 AM CPI MoM, Jul 0.2% est 0.2% (0.1% prior)
  CPI Ex Food and Energy MoM, Jul 0.2% est 0.2% (0.2% prior)
  CPI YoY, Jul 2.9% est 2.9% (2.9% prior)
  CPI Ex Food and Energy YoY, Jul 2.4% est 2.3% (2.3% prior)
  Real Avg Weekly Earnings YoY, Jul 0.1% (0.2% prior)
  Real Avg Hourly Earnings YoY, Jul -0.2% (0.0% prior)
14:00 PM Monthly Budget Statement, Jul -76.0b (-42.9b prior)

Canadian Economic Data

8:30 AM Net Change in Employment, Jul 54.1k est 17.0k (31.8k prior)
  Unemployment Rate, Jul 5.8% est 5.9% (6.0% prior)
  Hourly Earnings Permanent Empl YoY, Jul 3.0% est 3.6% (3.5% prior)
  Full Time Employment Change, Jul -28.0 (9.1 prior)
  Part Time Employment Change, Jul 82.0 (22.7 prior)
  Participation Rate, Jul est 65.4 (65.5 prior)


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, Hugues Savard

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