Market UpdateTsys higher in recent trade after Trump warned Russia of missile strikes in Syria, tsy yields 2-3bps lower, 10Y 2.77%. US stock futures seeing further declines on the news (S&P -22), USD index lower for a 4th day, crude extending yesterday’s 3.0% rally, up another 1.0% @ 66.25. Core Euro bonds higher led by 10Y gilts after weak IP data, 10Y bund yield at new low 0.49%, this despite a technically uncovered long auction (1.073bln bid/ 1.5bln offered). Attention turns to US Mar CPI & FOMC minutes for Mar 21 meeting. CPI expected to be unch after a 0.2% increase in Feb, with the core 0.2% vs 0.2% Feb or 2.2% the highest since last March. GOCs higher, in line with tsys, 10Y 2.155%. BOC 3Y auction at noon – reopening of the 0.75% Sep 21 for $2.2bln with the S21/2Y roll 3.6bps. The bond has cheapened ~4bps on ASW to -35 over the last few sessions, which should support the auction, as well as the smaller size (2.2bln vs 2.5bln pre DMS.
News headlines
Rare Coalition Bands Together to Fight Trump Tariffs (Bloomberg) A rare coalition of business groups are banding together to fight President Donald Trump’s proposed tariffs, arguing they will hurt U.S. consumers and the economy. Retail, agriculture, technology, manufacturing and other industries say the tariffs on $150 billion in Chinese goods are counterproductive to the goal of holding Beijing accountable for intellectual property theft and other trade practices. The groups are working to keep specific products off the U.S. list and trying collectively to keep levies from being imposed at all.
Trump Tells Russia to ‘Get Ready’ for Missiles Coming at Syria (Bloomberg) President Donald Trump warned Russia to « get ready » because a volley of U.S. missiles would soon be sent into Syria in response to a suspected chemical weapons attack. “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!,” Trump wrote on Twitter. “You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!”
Facebook’s Zuckerberg Earns Likes for Washington Performance (Bloomberg) Facebook Inc. Chief Executive Officer Mark Zuckerberg apologized, defended his company, and jousted with questioners while agreeing with others during his first-ever congressional testimony. Early reviews on his effort to restore trust with lawmakers and the public were mostly positive.
Fed Minutes to Hint at How Trade Spat Could Affect Outlook (Bloomberg) Federal Reserve policy makers have been publicly cautious about what a U.S. trade dispute with China could mean for their outlook if it escalates, but investors will get a peek at what they really think when the central bank publishes an account of its March meeting.
Syria Fears Hit Stocks Before U.S. Inflation Data: Markets Wrap (Bloomberg) Stocks faced a fresh wave of pressure on Wednesday as investors grappled with a slew of catalysts, chief among them the prospect of American military action in Syria. The dollar drifted and Treasuries climbed as traders also prepared for the latest U.S. inflation reading, and weighed the receding threat of a trade war.
Renters struggle to find homes as prices climb, availability declines (BNN) The Canada Mortgage and Housing Corp. says average rents nationally went up last year by 2.7 per cent to $947 per month. Meanwhile, the availability of rentals is becoming increasingly limited. The CMHC says the overall vacancy rate for cities across the country was three per cent in 2017, down from 3.7 per cent in 2016. In its annual report on rental housing, the corporation said the demand for purpose-built rental is outpacing the growth in supply, while the rate of condominiums rented out also declined.
IMF’s Lagarde warns global trading system risks ‘being torn apart’ (BNN) The world economy must avoid being sucked into a protectionist spiral that undermines the momentum of global growth, International Monetary Fund Managing Director Christine Lagarde said. The IMF remains optimistic about global growth prospects, Lagarde said Wednesday in a speech in Hong Kong ahead of next week’s annual spring meetings of the fund’s 189 member nations in Washington. The world economy is benefiting from surging investment, rebounding trade and favorable financial conditions, all of which are encouraging companies and households to step up spending, Lagarde said.
Overnight markets
Overview: US 10yr note futures are up 0.168% at 120-31, S&P 500 futures are down -0.88% at 2631.75, Crude oil futures are up 1.3% at $66.36, Gold futures are up 0.6% at $1354, DXY is down -0.12% at 89.483, CAD/USD is up 0.14% at 0.7926.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.811% | 2 Year | 2.287% |
| 5 Year | 2.02% | 5 Year | 2.598% |
| 10 Year | 2.159% | 10 Year | 2.772% |
| 30 Year | 2.297% | 30 Year | 2.995% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Apr 6th -1.9% (-3.3% prior) |
| 8:30 AM | CPI MoM, Mar est 0.0% (0.2% prior) |
| CPI Ex Food and Energy MoM, est 0.2% (0.2% prior) | |
| CPI YoY, Mar est 2.4% (2.2% prior) | |
| CPI Ex Food and Energy YoY, Mar est 2.1% (1.8%) | |
| CPI Index NSA, Mar est 249.588 (248.991 prior) | |
| CPI Core Index SA, Mar est 256.200 (255.751 prior) | |
| Real Avg Weekly Earnings YoY, Mar (0.6% prior) | |
| Real Avg Hourly Earning YoY, Mar (0.4% prior) | |
| 14:00 AM | Monthly Budget Statement, Mar est -186.0b (-215.2b prior) |
| FOMC Meeting Minutes, Mar 21st |
Canadian Economic Data
There is no Canadian economic data for today.
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