Market Update
Tsys trading higher, led by the short end with the curve 2bps steeper, 10Y 2.12% (-2.5bps) before May CPI (0.1%, 1.9% exp). US equity futures lower (S&P -8.5), crude falling to weekly low, -2.7% 51.84. API reported crude inventories rose for a second week by 4.85mln bbls vs forecasts of a 480k drawdown. GOCs higher in line with tsys, 10Y 1.51%. Corp and Provi supply impacting Can/US spreads which were out ~2bps yest. In provis $500mln HQ 55s , $200mln Sask 28s and $1bln Ont 29s (500mln carve out), spreads fairly solid at the tights despite supply. In corps Fairfax issued $500mln 10Y @ 270 which looked fair (30 bps vs FFHCN 12/27s or 25bps/yr). Keyera Energy in the mkt with $600mn 60NC10 Hybrids at 6.875%. Focus today on GOC 3Y auction ($2.4bln reopening of Can 1% Sep 2022) with the S22/May21 roll -2.7bps
News headlines
Trump renews Fed attack, saying interest rates way too high (BNNBloomberg) President Donald Trump slammed the Federal Reserve for high interest rates in a tweet on Tuesday, complaining the euro and other currencies were “devalued” against the dollar. “The Fed interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” Trump said on Twitter, renewing his complaints about the U.S. central bank a week before it meets in Washington to discuss monetary policy.
The president also tweeted that the U.S. has “VERY LOW INFLATION,” calling it a “beautiful thing!
South Korea’s won is Asia’s whipping boy in U.S.-China trade war (Reuters) South Korea’s exposure to a stressed global manufacturing supply chain has knocked its currency – Asia’s most risk sensitive – to over two-year lows as investors use it as a proxy to bet on the economic costs of a protracted U.S.-China trade war.
U.S. Commerce Secretary says Fed’s last rate hike was ‘premature’: Bloomberg TV (Reuters) U.S. Commerce Secretary Wilbur Ross said in a television interview on Wednesday the Federal Reserve should reconsider its last rate increase, which he said was premature. “I think the Fed taking a more cautious attitude on rates and reconsidering, in effect, the last rate increase that they put in, I think that’s good. I think they should reconsider. I think it’s quite likely that that last increase was, at best, premature,” Ross told Bloomberg TV.
U.S. mortgage applications jump to highest since September 2016: MBA (Reuters) U.S. mortgage applications jumped to their highest level in more than 2-1/2 years last week, led by a surge in refinancing activity, as some home borrowing costs tumbled to their cheapest level since September 2017, the Mortgage Bankers Association said on Wednesday.
Turkey’s central bank cites ‘disinflation’ as it holds rates (Reuters) Turkey’s central bank on Wednesday left its key interest rate unchanged at 24% as expected and said it will keep its policy stance tight to “reinforce the disinflation process,” a somewhat more upbeat assessment than its past statement.
Market Overview: US 10yr note futures are up 0.099% at 126-30, S&P 500 futures are down -0.27% at 2883.25, Crude oil futures are down -2.8% at $51.78, Gold futures are up 0.44% at $1337, DXY is up 0.02% at 96.707, CAD/USD is up 0.09% at 0.7521.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.461% | 2 Year | 1.899% |
| 5 Year | 1.415% | 5 Year | 1.887% |
| 10 Year | 1.52% | 10 Year | 2.124% |
| 30 Year | 1.768% | 30 Year | 2.602% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, 39234 Actual: 26.80% Prior: 1.50% |
| 08:30 AM | CPI MoM, May Survey: 0.10% Prior: 0.30% |
| CPI Ex Food and Energy MoM, May Survey: 0.20% Prior: 0.10% | |
| CPI YoY, May Survey: 1.90% Prior: 2.00% | |
| CPI Ex Food and Energy YoY, May Survey: 2.10% Prior: 2.10% | |
| CPI Core Index SA, May Survey: 26228.00% Prior: 26173.50% | |
| CPI Index NSA, May Survey: 25617.90% Prior: 25554.80% | |
| Real Avg Hourly Earning YoY, May Prior: 1.20% | |
| Real Avg Weekly Earnings YoY, May Prior: 0.90% | |
| 10:30 AM | DOE U.S. Crude Oil Inventories, 39234 Survey: -1000k Prior: 6771k |
| DOE U.S. Gasoline Inventories, 39234 Survey: 950k Prior: 3205k | |
| 02:00 PM | Monthly Budget Statement, May Survey: -$202.5b Prior: -$146.8b |
Canadian Economic Data
There is no CDA 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, Émile Bordeleau
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