Market Update US tsys trading slightly higher, curve steeper, 10Y 2.865% on light volume in TY futures (209k). Quiet ahead of CPI at 8:30 and $13bln 30Y bond auction this aft. USD index firmer, S&P futures +5, crude unch 61.30. EGBs higher as well, gilt curve flatter on expectations of lower gilt issuance announcement in today’s budget. In Canada, GOCs are higher in line with tsys, 10Y 2.23%, provincials unch after closing 0.5bps tighter yest on no issuance. Manitoba fiscal update – deficit for this FY projected at $726mln vs $827mln in last update, $521mln for 2018-19. CMB 5Y deal expected today.
News headlines
Trump Blocks Broadcom Takeover of Qualcomm on Security Risks (Bloomberg) President Donald Trump issued an executive order Monday blocking Broadcom Ltd. from pursuing its hostile takeover of Qualcomm Inc., scuttling a $117 billion deal that had been scrutinized by a secretive panel over the tie-up’s threat to U.S. national security.
What to Look Out for in Hammond’s First U.K. Spring Statement (Bloomberg) At this time of year, the British finance minister is usually preparing to step out of Downing Street brandishing a red briefcase containing his new tax and spending proposals. This year Philip Hammond has decided to do things differently, moving the main Budget announcement to the Autumn and reducing the Spring Statement one to a handful of forecasts on the shape of the economy that will last less than half an hour.
The Five Most Important Moves in Xi’s Big China Cabinet Shake-Up (Bloomberg) China’s sweeping government restructuring plan gives President Xi Jinping more direct control over the levers of money and power by consolidating, creating or eliminating dozens of agencies. The plan presented to the National People’s Congress on Tuesday leaves 26 cabinet-level ministries tasked with regulating industries and initiatives at the heart of Xi’s policy agenda. Their duties range from curbing risk in the country’s $43 trillion banking and insurance sectors to overseeing aid programs for the president’s Belt and Road trade-and-infrastructure initiative.
Stocks Mixed, Dollar Climbs Before CPI; Yen Drops: Markets Wrap (Bloomberg) U.S. stock futures climbed and the dollar strengthened ahead of a key inflation report that may affect the outlook for Federal Reserve policy-tightening. European equities fluctuated after a mixed session in Asia, and the Japanese yen slumped.
What Goes Up, Must Come Down Is Why U.S. Inflation May Be Tamer (Bloomberg) Some consumer prices that skyrocketed in January probably returned to Earth in February, indicating fears of runaway U.S. inflation that jarred financial markets were overblown. The consumer price index probably rose 0.2 percent in February from the previous month, after a 0.5-percent jump in January, according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures due Tuesday. Excluding food and energy, prices were projected to advance 0.2 percent following a bigger-than-forecast 0.3 percent increase in January.
Trump spoke with Canada’s Trudeau about tariffs, NAFTA talks: White House (Reuters) President Donald Trump spoke on Monday with Canadian Prime Minister Justin Trudeau about the steel and aluminum import tariffs Trump announced last week, the White House said. Trump also emphasized the importance of quickly concluding ongoing negotiations on the North American Free Trade Agreement (NAFTA)“to ensure the vitality of United States and North American manufacturing industries and to protect the economic and national security of the United States,” the White House said in a statement.
OECD sees trade boosting global growth to 7-year high (BNN) The global economy will see its strongest growth in seven years in 2018 thanks to a rebound in trade and investment, the OECD said on Tuesday, while also warning a trade war could threaten the improved outlook. Updating its outlook for G20 economies, the Organisation for Economic Cooperation and Development raised its global growth forecast for both 2018 and 2019 to 3.9 per cent – the highest since 2011 – from a previous estimate of 3.6 per cent for both years.
Overnight markets
Overview: US 10yr note futures are up 0.026% at 120-08, S&P 500 futures are up 0.21% at 2794.75, Crude oil futures are down -0.18% at $61.25, Gold futures are down -0.09% at $1319.6, DXY is up 0.12% at 90.006, CAD/USD is up 0.19% at 0.7771.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.825% | 2 Year | 2.254% |
| 5 Year | 2.062% | 5 Year | 2.628% |
| 10 Year | 2.236% | 10 Year | 2.863% |
| 30 Year | 2.408% | 30 Year | 3.125% |
US Economic Data
| 6:00 AM | NFIB Small Business Optimism, Feb 107.6 est 107.1 (106.9 prior) |
| 8:30 AM | CPI MoM, Feb est 0.2% (0.5% prior) |
| CPI Ex Food and Energy, Feb est 0.2% (0.3% prior) | |
| CPI YoY, Feb est 2.2% (2.1% prior) | |
| CPI Ex Food and Energy YoY, Feb est 1.8% (1.8% prior) | |
| CPI Index NSA, Feb est 248.933 (247.867 prior) | |
| CPI Core Index SA, Feb est 255.800 (255.287 prior) | |
| Real Avg Weekly Earnings YoY, Feb (0.4% prior) | |
| Real Avg Hourly Earning YoY, Feb (0.8% prior) |
Canadian Economic Data
There is no Canadian 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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230