Market Update Tsys are little changed, 10Y 2.84%, avg volume in TY futures (300k). Equity futures continuing to rise (S&P +9) after JPM reported strong Q1 rev & eps: eps $2.37 vs $2.28 est, revenues rose to all time high $28.52bln vs $27.71bln est, higher ROE (19 vs 18), trading revenues rose 7% driven by equities – shares up 1.0% pre-mkt. GOCs mixed, small narrower vs tsys out the curve, yesterday’s steep selloff cheapened Can-Us 2-3bps, 10Y rising to 2.28% highest since mid March while yields at the short end are the highest levels since 2011. The BOC will auction $3.0bln 2Y notes next Thurs, reopening the 1.75% May 2020 issue. Provis another 2bp tighter yesterday supported by selloff in GOCs and ‘risk on’ tone. Long Ontarios holding in well, Ont 48/27 curve @12.5 , unch on the week despite $1.8bln in long provi supply (Ont ,QC & BC). New BNS 5Y dep note yest – $2.25bln @ 85.2, now 82/81.
News headlines
TPP Nations Welcome Trump’s Interest, Don’t Want Renegotiation (Bloomberg) Members of an 11-nation Asia-Pacific trade pact said Friday they opposed any renegotiation of the deal to accommodate the U.S. should it decide to rejoin at a later date. Ministers from Japan, Australia and Malaysia welcomed President Donald Trump directing officials to explore returning to the Trans-Pacific Partnership, a pact he withdrew from shortly after coming to office. But they also cautioned against making any significant changes.
Trump Orders Post Office Review After Attacks on Amazon (Bloomberg) President Donald Trump ordered the creation of a task force to review business practices at the United States Postal Service, a move that could affect one of the president’s favorite corporate targets: Amazon.com Inc. “The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” the president said in an order that was released Thursday night. The order calls for an examination of the Postal Service’s pricing, policies and workforce costs.
JPMorgan, Citi Results May Prove Whether Higher Rates Pay Off (Bloomberg) Bank investors will have their eyes trained on what the U.S. Federal Reserve’s recent interest rate increases, and a shifting yield curve, meant for first-quarter results. JPMorgan Chase & Co. kicks off earnings reports from big banks before the market opens Friday, along with Wells Fargo & Co. and Citigroup Inc. Next week, Bank of America Corp. arrives Monday, with Goldman Sachs Group Inc. Tuesday and Morgan Stanley Wednesday. The sector rose Thursday ahead of earnings, with the KBW Bank Index gaining as much as 2.8 percent intraday, helped by the prospect of looser regulation, higher 10-year Treasury yields, and easing geopolitical tensions.
Ruble Whipsawed on Trump Syria Threat, Mnuchin Sanction Remarks (Bloomberg) Russia’s ruble was whipsawed on Wednesday as Treasury Secretary Steven Mnuchin soothed traders by saying that his agency advised against Russian sovereign debt sanctions after President Donald Trump’s Syrian missile warning sent the currency tumbling earlier in the day. The pledged strikes over an alleged chemical attack in Syria and the latest round of U.S. sanctions rattled markets in Moscow, driving Russia’s currency to a 16-month low in morning hours. By afternoon, after Mnuchin reiterated his opposition to debt sanctions, it had rallied to its highest in nearly two weeks.
Canada job openings, vacancy rate climb in fourth quarter (Reuters) The number of job vacancies in Canada rose in the fourth quarter compared to a year ago, with increased openings led by the accommodation and food services, and manufacturing sectors, data from Statistics Canada showed on Thursday. There were 470,000 vacancies in the fourth quarter of 2017, up 23.2 percent from the fourth quarter of 2016. It was the largest annual increase since the series started in 2015. The vacancy rate, which measures the share of unfilled jobs out of those available, rose to 2.9 percent from 2.4 percent.
Canadian February small business lending edges up, but delinquencies rise (Reuters) Lending to small Canadian businesses edged up in February, but the number of delinquencies jumped, suggesting firms are unlikely to invest heavily in the near term, data showed on Friday. The PayNet Small Business Lending index rose to 112.0 from a downwardly revised 110.2 in January, while borrowing by medium-sized firms increased to 190.2 from 187.5. But compared to a year ago, small business lending was still down 5 percent and lending to medium firms slumped 18 percent, suggesting firms were pulling back after a strong 2017, said PayNet President Bill Phelan.
Trudeau to talk NAFTA with Mexican president and Pence in Peru (BNN) Prime Minister Justin Trudeau will aim to advance Canada’s position on the North American free trade talks when he meets with Mexican President Enrique Pena Nieto and U.S. Vice-President Mike Pence here over the next two days. There had been hopes leading up to Trudeau’s visit to Peru, where he and the others are attending the Summit of the Americas, that Canada, Mexico and the U.S. would emerge with some sort of North American free trade agreement.
Overnight markets
Overview: US 10yr note futures are down 0% at 120-15, S&P 500 futures are up 0.31% at 2672.25, Crude oil futures are down -0.07% at $67.02, Gold futures are down -0.18% at $1339.5, DXY is up 0.07% at 89.815, CAD/USD is down -0.18% at 0.7958.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.9% | 2 Year | 2.353% |
| 5 Year | 2.136% | 5 Year | 2.671% |
| 10 Year | 2.28% | 10 Year | 2.836% |
| 30 Year | 2.39% | 30 Year | 3.04% |
US Economic Data
| 10:00 AM | JOLTS Job Openings, Feb est 6024 (6312 prior) |
| U. of Mich. Sentiment, Apr est 100.5 (101.4 prior) | |
| U. of Mich. Current Condition, Apr (121.2 prior) | |
| U. of Mich. Expectations, Apr (88.8 prior) | |
| U. of Mich. 1 Yr inflation, Apr (2.8% prior) | |
| U. of Mich. 5-10 Yr Inflation, Apr (2.5% prior) |
Canadian Economic Data
| 9:00 AM | Existing Home Sales MoM, Mar (-6.5% prior) |
| Bloomberg April Canada Economic Survey |
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.
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