Market Update

US tsys trading slightly higher on avg volume (330k TY futures), 10Y 1.84%, US equity futures paring earlier losses (S&P -3.75). JPM up ~2.0% pre-mkt on stronger Q4 fixed income & trading revenues, eps $2.57 vs $2.36 est. US Dec CPI on tap – 0.3% m/m, 2.4% y/y and 2.1% core expected.  Core EGBs higher, UK gilts continue to outperform, 2Y UK/German spread at two-year lows, GBP extending its decline on speculation of BOE easing this month in the wake of negative Nov GDP.  GOCs higher in line with tsys, BOC Business Outlook survey indicator rose to the highest since 2018, 0.7% in Q4 vs 0.3% prev.  while inflation expectations over the next year fell to the lowest since 2017.

News headlines

U.S. Futures, Europe Stocks Fluctuate; Bonds Rise: Markets Wrap (Bloomberg) American equity-index futures fluctuated with European stocks on Tuesday as U.S. earnings season kicked off and officials prepared to sign the China trade deal in Washington. The yuan held close to its strongest level since July.

CANADA STOCKS-TSX futures drop ahead of Phase 1 U.S-China trade deal (Reuters) Canada’s main stock index futures fell on Tuesday, as investors remained cautious before the U.S.-China Phase 1 trade deal is signed on Wednesday.

Futures pause after rally, JPMorgan results draw cheer (Reuters) U.S. stock index futures were flat to slightly lower on Tuesday, as investors took a breather following a record rally, even as JPMorgan’s quarterly results set a positive tone for big bank earnings.

Phase 1 commodity targets likely more than China can chew: analysts (Reuters) Commodity traders and analysts are struggling to map out how China will reach the eye-popping amounts it is committing to buy from the United States under Phase 1 of their trade deal.

China’s yuan gains after U.S. drops China FX manipulator label (Reuters) China’s yuan climbed to its highest level since July on Tuesday and the Japanese yen plumbed eight-month lows as the U.S. Treasury Department reversed its decision in August to designate China as a currency manipulator.

China posts strong December exports as world awaits Sino-U.S. trade deal signing (Reuters) China’s exports rose for the first time in five months in December and by more than expected, signaling a modest recovery in demand as Beijing and Washington agreed to defuse their prolonged trade war.

Switzerland rejects U.S. allegations of currency manipulation (Reuters) Switzerland is not manipulating the Swiss franc for competitive gain, the country’s government said on Tuesday after the United States added it to a watchlist of currency manipulators.

Gold Falls Again as Demand for Havens Wanes (Bloomberg) Gold nudged lower, extending declines from last week’s peak, as the soon-to-be clinched U.S.-China trade pact undermines the case for havens. Palladium hit a fresh record.

Market Overview: US 10yr note futures are up 0.024% at 128-31, S&P 500 futures are down -0.06% at 3287.75, Crude oil futures are up 0.72% at $58.5, Gold futures are down -0.5% at $1542.9, DXY is up 0.13% at 97.468, CAD/USD is up 0.1% at 0.7651.

Cda BenchmarksYieldTsy BenchmarksYield
2 Year1.666%2 Year1.586%
5 Year1.616%5 Year1.646%
10 Year1.61%10 Year1.842%
30 Year1.712%30 Year2.3%

US Economic Data

06:00 AMNFIB Small Business Optimism, Dec  Survey: 104.6  Actual: 102.7 Prior: 104.7
08:30 AMCPI MoM, Dec  Survey: 0.30%  Prior: 0.30%
      CPI Ex Food and Energy MoM, Dec  Survey: 0.20%  Prior: 0.20%
        CPI YoY, Dec  Survey: 2.40%  Prior: 2.10%
       CPI Ex Food and Energy YoY, Dec  Survey: 2.30%  Prior: 2.30%
       CPI Core Index SA, Dec  Survey: 266.111  Prior: 265.620
       CPI Index NSA, Dec  Survey: 257.169  Prior: 257.208
       Real Avg Weekly Earnings YoY, Dec  Survey: —  Prior: 1.10%
       Real Avg Hourly Earning YoY, Dec  Survey: —  Prior: 1.10%

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, 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