Market Update Tsys trading steady/mixed on very light volume (TYM <200k), curve flattening out last few minutes with long end bouncing to modest session highs, trail EGBs post Smets comments on inflation.ECB’s Smets says that inflation may take longer to rise. Mkt absorbs accelerated Auction schedule ($28B 3Y note auction 1130ET and $21B 10Y note auction re-open 1300ET today; $13B 30Y Bond auction Re-open 1130ET Tue). Otherwise, Fed blackout; data watch w/focus on Wed’s Feb Retail Sales (+.4% est). Treasury auctions (3Y, 10Y and 30Y) will occur Monday and Tuesday in addition to 1-, 3- and 6M bill auctions, making the auctions a bit more challenging ahead the Thursday, March 15 coupon settlement.
News headlines
Kim Jong Un Wants a Peace Treaty From Trump, Report Says (Bloomberg) Kim Jong Un wants to sign a peace treaty after meeting with U.S. President Donald Trump, South Korean media reported, reviving a long-held goal of the North Korean regime. Kim is likely to raise the possibility of a peace treaty, along with establishing diplomatic relations and nuclear disarmament, during a meeting with the U.S. leader, the Dong-A Ilbo newspaper said Monday, citing an unidentified senior official in South Korea’s presidential office. Trump last week agreed to meet Kim, although key details of the summit have yet to be decided.
EON, RWE Shares Gain as Innogy Deal Gives Germany a Champion (Bloomberg) EON SE and RWE AG surged after their 22 billion-euro ($27.1 billion) bid to restructure the German energy industry and take control of Innogy SE established a national champion to cope with Angela Merkel’s move to upend once-mighty utilities. With investors from Italy and France weighing their own offers for the operator of green power plants and grid networks, EON on Sunday announced a complex deal with Innogy’s main shareholder, RWE. The transaction, first reported by Bloomberg March 10, would solidify EON and RWE as the main German electricity and gas providers and keep Innogy out of the hands of foreign utilities that have made gains in scale over their German counterparts.
U.S. Oil Export Surge Means OPEC’s Output Cuts May Be Doomed (Bloomberg) Oil risks sliding back under $60 a barrel as a surge in U.S. shipments to Asia threatens to undermine a deal between OPEC and its allies, according to ING Groep NV. While the producer group complied with a pledge to curb output and ease a glut in 2017, U.S. flows that are gaining a bigger slice of the prized Asian market may prompt some nations to boost supplies, said Warren Patterson, a commodities strategist at the Dutch bank. The resulting fallout could drag down crude prices after a rally of more than 40 percent since June, he said.
Stocks Rally on Upbeat Outlook; Dollar Pares Drop: Markets Wrap (Bloomberg) European stocks advanced, tracking gains across Asian markets as trade-war concerns took a back seat to economic optimism following a report Friday of stronger U.S. jobs growth. Treasuries edged lower and the dollar pared its decline while most commodities fell. The Stoxx Europe 600 Index rose for a sixth day, poised for the longest winning streak since October, as utility companies set the pace. U.S. equity futures joined the global rally, after gauges from Tokyo to Sydney jumped. The yen strengthened as political clouds gathered around Japan’s Finance Ministry, run by a stalwart ally of Prime Minister Shinzo Abe. Part of Abenomics focuses on weakening the yen to boost the nation’s exports.
May’s Next Brexit Headache Is Trying to Keep Scotland Happy (Bloomberg) No sooner does Theresa May put one Brexit dilemma to rest than another rears its head. After finally winning her Cabinet’s approval for an ambitious set of negotiating goals, the prime minister now faces threats from her political opponents in Scotland and Wales to derail her crucial European Union exit law. The Scottish and Welsh devolved governments want May to guarantee that when the U.K. leaves the EU in one year’s time, powers that return to London are automatically passed on to them.
Canada’s steel town still nervous despite tariff reprieve (Reuters) A temporary exemption from U.S. tariffs is little comfort to the Canadian steel city of Hamilton, coping with months of uncertainty as U.S. President Donald Trump has threatened a potentially devastating 25 percent duty unless the North American Free Trade Agreement is renegotiated.
‘Back to reality’: Canadian economy adds only 15,400 jobs in February (BNN) The Canadian economy added 15,400 jobs in February after a big loss in January but full-time positions shrank and wage growth decelerated, prompting analysts to predict the Bank of Canada will be in no rush to raise rates. Statistics Canada said on Friday the unemployment rate dipped to 5.8 per cent from 5.9 per cent in January.
Overnight markets
Overview: US 10yr note futures are down -0.065% at 119-31, S&P 500 futures are up 0.24% at 2795.5, Crude oil futures are down -0.71% at $61.6, Gold futures are down -0.48% at $1317.7, DXY is up 0.1% at 90.183, CAD/USD is up 0.15% at 0.7794.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.83% | 2 Year | 2.27% |
| 5 Year | 2.085% | 5 Year | 2.662% |
| 10 Year | 2.271% | 10 Year | 2.899% |
| 30 Year | 2.442% | 30 Year | 3.155% |
US Economic Data
| 14:00 PM | Monthly Budget Statement, Feb est -216.6b (-192.0b prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Mar 9th (57.7 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