Market Update

US tsys trading lower, yields 2- 2.5bps higher led by the long end with the 10Y 1.84%, curve 2bps steeper. US equity futures higher, S&P +12, Nasdaq +44, crude unch. Risk-on tone with US-Iran conflict fading and Wednesday’s signing of the US-China ‘phase one’ deal. Core EGBs mixed, gilts higher on dovish comments from BOE member Vlieghe and poor UK data (Nov GDP -0.3% vs 0.0 exp). GOCs lower in line with tsys – Can/US close to cheapest levels since Friday’s solid Dec employment figures, 10Y ~5bps wider from Thursday’s close.  Quebec 10Y  unch from Friday’s new issue level (69.5).

News headlines

U.S. Futures Gain, Europe Shares Drop; Bonds Slip: Markets Wrap (Bloomberg) U.S. equity futures advanced with Asian shares on Monday while Europe stocks turned lower at the beginning of a busy week likely to be dominated by the start of earnings season and the signing of a partial China trade deal. Bonds, the yen and gold retreated.

CANADA STOCKS-TSX futures flat ahead of Phase 1 Sino-U.S. trade deal (Reuters) Canada’s main stock index futures stayed flat on Monday, ahead of the imminent signing of a preliminary Sino-U.S. trade deal.

The World’s Most Precious Metal Leaves Everything Else in the Dust (Bloomberg) Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

As businesses hold back, U.S. consumers seen boosting big banks’ profits (Reuters) Consumer lending is expected to propel profits for big U.S. banks when they unveil fourth-quarter results this week, though stress in corporate lending and uneven capital markets may cast a shadow over results.

U.S. Champagne drinkers should expect costs to pop with new tariffs (Reuters) Lovers of Champagne and other French sparkling wines should brace for big cost increases if the United States makes good on a threat to impose 100% tariffs on French goods in a dispute over the country’s planned digital services tax.

Auto industry cautious as China starts 2020 with forecast of a 2% sales decline (Reuters) Automakers in China need to get used to a new normal of “low speed growth” in the world’s largest car market, the country’s top auto body said on Monday, as it reiterated predictions that sales will likely shrink for the third consecutive year in 2020.

Deadline to end use of Libor in doubt as banks stall on software changes (Reuters) Many banks in Britain are unlikely to hit an October deadline to stop writing loans tied to the discredited Libor benchmark as they grapple with upgrading to crucial new software that allows them to use replacement reference rates, industry sources said.

Canadian gas gains after drilling cutbacks, pipeline rule change (BNN) Canadian natural gas is trading at the highest price relative to U.S. benchmarks in about 10 months after producers cut back on drilling and a rule change on a key Alberta pipeline system last year helped better manage flows of the fuel.

Market Overview: US 10yr note futures are down -0.073% at 128-32, S&P 500 futures are up 0.34% at 3275.75, Crude oil futures are down -0.05% at $59.01, Gold futures are down -0.28% at $1555.8, DXY is up 0.09% at 97.444, CAD/USD is down -0.05% at 0.7666.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.661% 2 Year 1.574%
5 Year 1.617% 5 Year 1.643%
10 Year 1.611% 10 Year 1.835%
30 Year 1.713% 30 Year 2.297%

US Economic Data

02:00 PM Monthly Budget Statement, Dec  Survey: -$15.0b  Prior: -$13.5b

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Jan 10  Survey: —  Prior: 56.5
         Bloomberg Jan. Canada Economic Survey
10:30 AM BoC Overall Business Outlook Survey, 4Q  Survey: —  Prior: 0.4
         BoC Business Outlook Future Sales, 4Q  Survey: —  Prior: 23.00

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