Market Update

Tsys are trading slightly higher out the curve unch in the short end, 10Y 2.96%, ,little reaction to stronger May PPI (0.5% vs 0.3%, ex food & energy 2.4% vs 2.3%).  Equity mkts higher, S&P futures +3, crude under slight pressure, below $66 after Trump’s latest tweet on OPEC. FOMC this afternoon – futures mkts pricing in 85% odds of a 25bp hike., dot plots and press conference will be paid particular attention. Core Euro bonds outperforming tsys ,  UK gilts higher after May inflation came in as exp. German bunds lagging the rally in gilts after a technically uncovered 10Y bund auction. More event risk tomorrow with ECB decision where Draghi may announce the end to QE.  GOCs maintaining outperformance vs tsys across the curve, 2s setting new tights yest as it becomes increasingly more apparent the BOC will lag the Fed in tightening despite last month’s strong rise hourly wages,  reduction in excess capacity.

News headlines

South Africa Retail Sales Rise at Slowest Since February 2017 (Bloomberg) Retail sales in South Africa, the continent’s most-industrialized economy, rose at the slowest pace in 15 months in April. Sales climbed 0.5 percent from a year earlier, Pretoria-based Statistics South Africa said in a statement on its website Wednesday. That’s less than the revised 4.6 percent expansion for March and compares with a median estimate of 4.4 percent in a Bloomberg survey.

Trump Says North Korea Poses No Nuclear Threat, Despite Weapons (Bloomberg) President Donald Trump declared that North Korea no longer posed a nuclear threat, even though Kim Jong Un hasn’t committed to a timetable for giving up his regime’s weapons. “Everybody can now feel much safer than the day I took office,” Trump said on Twitter Wednesday shortly after arriving back in Washington from his meetings in Singapore with Kim. “There is no longer a Nuclear Threat from North Korea.”

Turkey’s Election Is Too Close to Call, Bloomberg Poll Shows (Bloomberg) Turkey’s election this month could go down to the wire, with President Recep Tayyip Erdogan facing a tougher battle to cement power or even an upset, according to a poll commissioned by Bloomberg. Erdogan can win the presidential vote in the first round on June 24 with 50.8 percent support and get the backing of a majority in parliament, the survey by Foresight Danismanlik of 500 people on June 7-11 found. But a surprise victory for the opposition is also within the margin of error.

Anti-U.S. consumer boycott? Canadians may find it hard to pull off (Reuters) Canadians outraged by U.S. President Donald Trump’s attack on their prime minister have called for a consumer boycott targeting the United States, but indignation may be hard to sustain in a nation enamored by U.S. popular culture and larded with American goods. A push for some sort of reprisal in response to Trump’s personal attack on Justin Trudeau has gained force since Canada’s Parliament on Monday condemned weekend broadsides from its ally amid an escalating trade dispute.

AT&T slips after Time Warner buyout gets approval (Reuters) Shares of AT&T Inc fell 2 percent on Wednesday after a federal judge approved the telecom company’s $85 billion buyout of Time Warner Inc, clearing the path for more deals in a rapidly changing media industry. The news lifted shares of other telecom and media companies such as Sprint Corp, CBS Corp and Discovery Inc by around 4 percent in premarket trading. Time Warner was also up about 5 percent. “Once technically driven volatility wears off we expect the stock to move higher as closure will likely provide a new investor catalyst including $1.5 billion in anticipated cost synergies,” said Cowen & Co analyst Colby Synesael. However, at least one analyst raised concerns about the debt AT&T was taking on as part of the deal.

Trump aide Navarro apologizes for ‘inappropriate’ Trudeau comments (BNN) White House trade adviser Peter Navarro apologized for suggesting Canadian Prime Minister Justin Trudeau deserved a “special place in hell” for a perceived breach in protocol against U.S. President Donald Trump. “My job was to send a signal of strength,” he said at a Wall Street Journal CFO Network conference in Washington on Tuesday. “The problem was that in conveying that message I used language that was inappropriate.”

U.S. Fed dots in focus as market awaits interest rate hike (BNN) Federal Reserve Chairman Jerome Powell has repeatedly played down the central bank’s “dot plot” as a guide to future interest rates, but Wall Street just won’t take the hint. While the Federal Open Market Committee is almost certain to raise rates a quarter point at the close of a two-day meeting Wednesday, investors are focused on whether the panel will signal one or two additional 2018 hikes when it releases updated interest-rate forecasts with the policy decision at 2 p.m. Powell will begin his press conference 30 minutes later.

Overnight markets

Overview: US 10yr note futures are down 0% at 119-13, S&P 500 futures are up 0.17% at 2793, Crude oil futures are down -0.53% at $66.01, Gold futures are down -0.08% at $1298.4, DXY is up 0% at 93.822, CAD/USD is up 0.01% at 0.7682.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.905% 2 Year 2.541%
5 Year 2.137% 5 Year 2.811%
10 Year 2.288% 10 Year 2.954%
30 Year 2.325% 30 Year 3.083%

US Economic Data

7:00 AM MBA Mortgage Applications, Jun 8th -1.5% (4.1% prior)
8:30 AM PPI Final Demand MoM, May est 0.3% (0.1% prior)
  PPI Ex Food and Energy MoM, May est 0.2% (0.2% prior)
  PPI Ex Food and Energy, Trade MoM, May est 0.2% (0.1% prior)
  PPI Final Demand YoY, May est 2.8% (2.6% prior)
  PPI Ex Food and Energy YoY, May est 2.3% (2.3% prior)
  PPI Ex Food, Energy, Trade YoY, May (2.5% prior)
14:00 PM FOMC Rate Decision (Upper Bound), Jun 13th est 2.00% (1.75% prior)
  FOMC Rate Decision (Lower Bound), Jun 13th est 1.75% (1.50% prior)

Canadian Economic Data

8:30 AM Teranet/National Bank HP Index, May (219.49 prior)
  Teranet/National Bank HPI MoM, May (0.2% prior)
  Teranet/National Bank HPI YoY, May (5.6% prior)


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