Market Update

US tsys lower overnight after selling in Asia, rebound in Europe, volume light in TY futures (238k), 10Y 2.386 (+1.3bps). Core Euro bonds lower , curves mixed. Gilt yields 1-2.5bps higher led by the short end while the bund curve is bear steepening. Gilts weighed by supply with  GBP 2.5bln reopening of 2056 linker and ahead of comments from BOE Broadbent. Slow data day in the US with only JOLTS & Inventories, with Fed Brainard speech on balance sheet at 12:30 & US $24bln 3Y note auction at 1:00PM. GOCs slightly higher outperforming tsys byh ~1bp ahead of BOC tomorrow. Provis opening unch after closing 0.5bps tighter yest.

News headlines 

Stocks Follow Crude Prices Lower; Bonds in Retreat: Markets Wrap (Bloomberg) Stocks fell in Europe as energy producers got caught in a downdraft in crude prices and reversed an earlier gain. Bonds extended a slump triggered by last week’s hawkish rhetoric from central bankers.

Oil falls as banks cut price forecasts (Reuters) Oil prices fell on Tuesday as global oversupply encouraged several banks cut their price forecasts. Benchmark Brent crude LCOc1 was down 30 cents at $46.58 a barrel by 0945 GMT. U.S. crude CLc1 was 25 cents lower at $44.15.

Markets are baking in a rate hike — it’s what comes next that could surprise you (Financial Post) The market is convinced that the Bank of Canada will hike the overnight interest rate on Wednesday and that means investors will likely be looking beyond the decision itself to what the central bank says (or doesn’t say) about the path forward.

China says ‘China responsibility theory’ on North Korea has to stop (Reuters) China hit back on Tuesday in unusually strong terms at repeated calls from the United States to put more pressure on North Korea, urging a halt to what it called the “China responsibility theory”, and saying all parties needed to pull their weight.

SocGen has filed Brexit contingency plans with Bank of England (Reuters) French bank Societe Generale (SOGN.PA) has filed its Brexit contingency plans with the Bank of England ahead of a July 14 deadline for banks operating in the country, a SocGen executive told Reuters. Deputy Chief Executive Severin Cabannes, speaking on the sidelines of a conference in Paris, also said SocGen had the advantage of dual business hubs in London and Paris and so could easily adapt to Brexit.

Air Canada jet in close call at San Francisco airport (TheGlobeAndMail) U.S. aviation authorities are investigating an apparent close call involving an Air Canada flight at San Francisco International Airport. The U.S. Federal Aviation Authority says just before midnight on Friday, an Air Canada Airbus A320 was cleared to land on one of the runways, but the pilot “inadvertently” lined up instead for a taxiway which runs parallel to the runway.

Overnight markets 

Overview: US 10yr note futures are down -0.075% at 124-32, S&P 500 futures are down -0.06% at 2423, Crude oil futures are down -1.08% at $43.92, Gold futures are down -0.22% at $1210.5, DXY is up 0.05% at 96.07, CAD/USD is up 0.19% at 0.7743.

US Economic Data 

6:00 AM NFIB Small Business Optimism, Jun, 103.6, est. 104.4 (prior 104.5)
10:00 AM JOLTS Job Openings, May, est. 5950 (prior 6044)
Wholesale Inventories, m/m, May F, est. 0.3% (prior 0.3%)
Wholesale Trade Sales, m/m, May, (prior -0.4%)

Canadian Economic Data

8:15 AM Housing Starts, Jun, 212.7k, est. 200.0k  (prior 194.7k)


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