Market Update

Tsys higher after both core Apr CPI and retail sales missed to the downside, US 10Y 2.36.  Tsys rose overnite with EGBs.  German bunds spiked in early trading on muted volumes as yesterday’s 165.98 high was breached, but prices have almost completely retraced the move higher.  Italy outperforming other peripherals as early election looks less likely. GOCs higher , lagging the advance in tsys by ~1bp, Provis slightly wider.

News headlines 

Commodity Rout Shows Signs of Easing as Gold Rises: Markets Wrap (Bloomberg) Gold climbed a second day amid a rebound for metal prices that helped ease a commodity rout even as oil remained depressed. Bonds extended gains. The Bloomberg Commodity Index rose for a third day, recovering from a 16-month low on May 9. European stocks struggled for direction following the biggest drop in three weeks Thursday as investors assessed global earnings and the appetite of U.S. consumers to keep spending. The Bloomberg Dollar Spot Index headed for its best week of the month as bets stack up on a Federal Reserve interest-rate increase next month.

China’s April loans growth highlights debt challenge (Reuters) China’s banks unexpectedly extended more credit in April than in the previous month, though household loans fell in a sign authorities are walking a tight rope as they try to tamp down debt risks without throttling the economy.

Dollar Heads for Best Week This Year Before CPI, Retail Sales (Bloomberg) The dollar headed for its best week this year before reports forecast to show inflation and retail sales both increased last month, backing the case for the Federal Reserve to keep raising interest rates.

Home Capital says uncertainty over funding capabilities putting its future in doubt (FinancialPost) Alternative mortgage lender Home Capital Group Inc. said Thursday discussions with potential investors on the sale of certain loan portfolios are on the table to shore up its liquidity, but uncertainty around its future funding abilities casts “significant doubt on the Company’s ability to continue as a going concern.”

Magna pivots auto-parts production for the cars of the future (TheGlobeAndMail) Two key trends that are transforming the auto industry – electrification and full, self-driving technology – will not be evident in a majority of vehicles until well after 2025, but Magna International Inc. is positioning itself to be a crucial supplier of parts for what it calls the vehicle of the future.

Amaya beats profit estimates as it adds more customers (TheGlobeAndMail) Canada’s Amaya Inc , the owner of online gambling sites PokerStars and Full Tilt, reported a better-than-expected quarterly profit as it added more customers. Amaya said the number of its active customers rose 5 per cent to about 2.7 million in the first quarter ended March 31.

Overnight markets 

Overview: US 10yr note futures are up 0.325% at 125-11, S&P 500 futures are down -0.01% at 2390.75, Crude oil futures are up 0.36% at $48, Gold futures are up 0.56% at $1231, DXY is down -0.29% at 99.337, CAD/USD is down -0.11% at 0.7309.

US Economic Data

8:30 AM CPI , m/m, Apr, 0.2%, est. 0.2%  (prior -0.3%)
  CPI Ex Food and Energy, m/m, Apr, 0.1%, est. 0.2% (prior -0.1%)
  CPI, y/y, Apr, 2.2%, est. 2.3% (prior 2.4%)
  CPI Ex Food and Energy, y/y, Apr, 1.9%, est. 2.0% (prior 2.0%)
  Retail Sales Advance, m/m, Apr,  0.4%, est. 0.6% (prior -0.2%, revised 0.1%)
  Retail Sales Ex Auto, m/m, Apr, 0.3%, est. 0.5% (prior 0.0%, revised 0.3%)
  Retail Sales Ex Auto and Gas, Apr, 0.3%, est. 0.4% (prior 0.1%, revised 0.4%)
  University of Michigan, May P, est. 97.0 (prior 97.0)

Canadian Economic Data 

8:30 AM Teranet/National Bank HPI, m/m, Apr, (prior 0.9%)
  Teranet/National Bank HPI, y/y, Apr, (prior 13.5%)


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