Market Update

Tsys opening slightly lower after core PPI 0.3% vs 0.1% exp for May, after a low volume overnite session, US 10Y 2.22%, tsy curve 0.5bps steeper as longs lag in front of today’s 30Y auction and tomorrow’s FOMC. Equity futures +3.75, crude lower after giving up early gains -0.46% 45.87.  GOCs continuing where they left off post BOC Wilkins yest – flatter and lower, 2s another 4bps higher 0.88%, 5s +3bps longs unch as the mkt views a pre-emptive move by the BOC as constructive for inflation. The Cdn mkt was caught flat footed by Wilkins Hawkins speech, coming barely three weeks after the Bank noted that while consumer spending and housing sector are improving, inflation remains subdued and export growth still weakish. We are pushing forward our call for the first rate hike to the October meeting.

News headlines 

CANADA STOCKS-Futures up as oil gains on Saudi pledge to make cuts (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday as oil rose on Saudi Arabia’s pledge to make sizable supply cuts in July. The world’s top oil exporter plans to curb volumes of crude to some Asian buyers and deepen cuts in allocation to the United States, as part of an OPEC-led agreement to prop up oil prices in an oversupplied market.

U.K. Inflation Rate Rises More Than Forecast to Four-Year High (Bloomberg) U.K. inflation resumed its upward march last month, accelerating more than forecast to the fastest pace in four years. An increase in prices for computer games, laptops and package holidays — partly reflecting the impact of the weaker pound — lifted the inflation rate to 2.9 percent, the highest since June 2013. Economists had forecast that it would remain at 2.7 percent.

Canadian dollar leaps after odds of a rate hike in Canada this year rise above 50% (Financial Post) The Canadian dollar climbed in an otherwise quiet trading day on Tuesday, hitting its highest level in nearly two months after comments from Canada’s central bank raised the prospect that interest rates could rise as soon as this year.

Record Foreign Sales Boost Returns For Canadian Provincial Bonds (Bloomberg) Canadian provinces are selling an unprecedented amount of bonds overseas, easing pressure on the domestic market and offering investors the highest annual return since 2014.

Deutsche Bank reaches $170 million Euribor-rigging settlement (Reuters) Deutsche Bank AG (DBKGn.DE) will pay $170 million to settle an investor lawsuit claiming it conspired with other banks to manipulate the benchmark European Interbank Offered Rate and related derivatives.

Bearish Bets on Home Capital Have Dropped to 20% (Bloomberg) Short sellers are easing pressure on Home Capital Group Inc. as speculation builds that Canada’s embattled alternative mortgage lender may be closer to a takeover of the company or refinancing its costly rescue loan.

Overnight markets 

Overview: US 10yr note futures are down -0.049% at 126-09, S&P 500 futures are up 0.23% at 2432, Crude oil futures are down -0.5% at $45.85, Gold futures are down -0.45% at $1263.2, DXY is down -0.11% at 97.031, CAD/USD is down -0.68% at 0.7556.

US Economic Data

6:00 AM NFIB Small Business Optimism, May, 104.5, est. 104.5 (prior 104.5)
8:30 AM PPI Final Demand, m/m, May, 0.0%, est. 0.0% (prior 0.5%)
PPI Ex Food and Energy, m/m, May, 0.3%, est. 0.1% (prior 0.4%)
PPI Final Demand, y/y, May, 2.4%, est. 2.3% (prior 2.5%)
PPI Ex Food and Energy, y/y, May, 2.1%, est. 1.9% (prior 1.9%)

Canadian Economic Data

There is no major economic data release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230