Market Update

Tsys off the lows after payrolls came in above exp 235k vs 200k exp yetaverage hourly earnings weaker 0.2% vs 0.3% and the unem rate unch 4.7% -the 10Y 2.576% vs 2.602% pre payrolls. Tsy prices slightly higher in Europe on weaker IP, Man Prod data out of the UK and France then fading close towards yest aft lows pre payrolls. GOCs lagging the recovery in tsys 2-4bps after blowout Feb Cdn employment – 15.3k vs -5.0k exp with the umeployment rate down to 6.6% from 6.8%, the lwoest since Jan 15. Another busy day for corp issuance yest with over $2bln priced including Central Credit Union $400mln 3y @ 90, Dollarama issued $225mln 3Y FRN @ CDOR+59 which was ~5x oversubscribed. CNQ bonds active with the oil sands acquisition from Shell, bonds initially wider on the news yet snapped back in as the deal looks to be accretive to cash flow/earnings as CNQ is seen to be acquiring oil sands assets on the cheap.

News headlines

Treasuries Slump Worsens Before Jobs as Oil Drops: Markets Wrap (Bloomberg) Oil’s lowest settlement since November added to concern that commodity-fueled inflation will wane. The selloff in Treasuries continued, while U.S. stocks finished little changed as European Central Bank optimism on global growth bolstered the euro.

U.S. job growth seen strong in February; wages to rebound (Reuters) U.S. employers likely maintained a brisk pace of hiring in February and boosted wages for workers, which is expected to give the Federal Reserve the green light to raise interest rates next week despite slowing economic growth. Nonfarm payrolls probably increased by 190,000 jobs last month, according to a Reuters survey of economists, in part as unseasonably mild weather buoyed employment in the construction sector. The economy created 227,000 jobs in January.

Japan bats away U.S. complaint on autos (Reuters) Japan rejected U.S. demands for more access to Japan’s car market on Friday, casting doubt over whether it can avoid friction over autos and agriculture imports at high level bilateral talks on economic relations next month.

Canada to make skilled-worker permits easier to get in wake of U.S. delays (TheGlobeAndMail) As the U.S. border tightens for both political and bureaucratic reasons, the federal government is launching a new stream of its temporary foreign worker program to entice highly skilled workers to come to Canada.

Canada Oil Dependence on U.S. Loosens in Age of Donald Trump (Bloomberg) The Canadian oil patch’s half-century bond to the U.S. market is loosening one tanker load at a time in Donald Trump’s “America First” era. Last month, a ship loaded oil off Newfoundland and set sail on a 10,000-plus nautical mile journey to China, following on the heels of an oil sands cargo shipped from the U.S. Gulf Coast. India-based Reliance Industries Ltd is set to receive the first shipment of heavy Canadian crude in April, a person familiar said last month.

Trump’s disputes with local governments could create fresh conflicts of interest (Reuters) The Trump National Golf Club in Westchester County, New York, has a magnificent course. Just ask its namesake, U.S. President Donald Trump, who until recently was quoted on its website saying the club “provides more than a membership – it’s a true luxury lifestyle.”

Overnight markets 

Overview: US 10yr note futures are up 0.038% at 122-28, S&P 500 futures are up 0.48% at 2374.5, Crude oil futures are up 0.59% at $49.57, Gold futures are down -0.42% at $1198.2, DXY is up 0.07% at 101.92, CAD/USD is down -0.51% at 0.7439.

US Economic Data


8:30 AM Change in Nonfarm Payrolls, Feb, 235k, est. 200k (prior 227k, revised 238k)
  Change in Private Payrolls, Feb, 227k, est. 215k (prior 237k)
  Change in Manufacturing Payrolls, Feb, 28k, est. 10k (prior 5k, revised 11k)
  Unemployment Rate, Feb, 4.7%, est. 4.7% (prior 4.8%)
  Average Hourly Earnings, m/m, Feb, 0.2%, est. 0.3% (prior 0.1%, revised 0.2%)
  Average Hourly Earnings, y/y, Feb, 2.8%, est. 2.8% (prior 2.5%, revised 2.8%)
  Labor Force Participation, Feb, 63.0% (prior 62.9%)
  Underemployment Rate, Feb, 9.2%, (prior 9.4%)
2:00 PM Monthly Budget Statement, Feb, est. -$190.0b (prior $51.3b)

Canadian Economic Data

8:30 AM Unemployment Rate, Feb, 6.6%, est. 6.8% (prior 6.8%)
  Net Change in Employment, Feb, 15.3k, est. -5.0k (prior 48.3k)
  Participation Rate, Feb, 65.8, (prior 65.9)

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