Market Update US tsys slightly lower before PPI, Retail Sales , 10Y 2.852(+1bp), avg volume in TY futures (278k), curve bps flatter as the 2Y is 2bps higher @ 2.27%, longs outperforming. USD index slightly higher, off the lows , S&P futures +6.0. Slight losses in EGBs, in line with tsys, 10Y bund +0.5bps @ 0.62%. Draghi said monetary policy changes will remain predictable and gradual, while noting that he is optimistic on the Philips curve and a pickup in inflation. In Canada, GOCs lower, outperforming tsys , 10Y 2.20%. Provis open unch, Quebec/Ont rolls tighter, QC/Ont 48 -3.0/-3.5 – Quebec will pay down $10bln in debt over the next 5yrs, which will reduce debt service costs by $1bln per yr. CMB 5Y expected this morning- CMB 2.35/23 34/33.5 on screen.
News headlines
Trump Moves Closer to Presidency of One With Tillerson Firing (Bloomberg) In accepting the Republican nomination for president in 2016, Donald Trump described a nation plagued with problems and declared: “I alone can fix it.” Now, as he fires top aides who were a moderating force and replaces them with loyalists who share his world view and won’t object to his most controversial impulses, his administration is fast becoming a presidency of one.
May Plots to Punish Russia as Crisis Over Poisoned Spy Deepens (Bloomberg) U.K. Prime Minister Theresa May will set out how she aims to retaliate against Russia over the nerve agent attack on a former spy and his daughter, deepening tensions between Vladimir Putin and the West.
China Economy’s Strong Start Faces Risks at Home and Abroad (Bloomberg) China’s crackdown on financial risks and trade tensions with the U.S. threaten to undermine a stronger-than-expected start to the year for the world’s second-largest economy. Factory output and investment in fixed assets exceeded economists’ expectations in the first two months of this year, climbing 7.2 percent and 7.9 percent respectively from a year earlier as Chinese exports surged. Retail sales also remained robust, statistics bureau data — combined for January and February to smooth effects from the Lunar New Year holiday — showed on Wednesday.
Stocks Gain as China Data Lift Miners; Euro Dips: Markets Wrap (Bloomberg) Stocks in Europe advanced as economic data from China lifted mining shares after a day of market turmoil sparked by the latest shakeup in the Trump administration. The euro slipped as Mario Draghi said recent gains weren’t all warranted by economic fundamentals. The Stoxx Europe 600 Index reversed some of Tuesday’s 1 percent drop, with raw-material producers outperforming after factory output and investment growth in China unexpectedly accelerated. U.S. equity-index futures also climbed. Benchmarks dropped across Asia earlier after the sudden firing of U.S. Secretary of State Rex Tillerson. U.S. Treasuries held onto yesterday’s gains while the dollar edged lower. Crude oil halted a decline.
Draghi Promises to Avoid Surprises as ECB Tiptoes to QE End (Bloomberg) Mario Draghi said the European Central Bank will avoid surprising investors with sudden changes to its stimulus plans, stressing that inflation is still too low and U.S. trade policies and a stronger euro are concerns. “Adjustments to our policy will remain predictable, and they will proceed at a measured pace,” the institution’s president said in his opening speech at the annual ECB and Its Watchers conference in Frankfurt. “We still need to see further evidence that inflation dynamics are moving in the right direction. So monetary policy will remain patient, persistent and prudent.”
Bank of Canada: degree of untapped potential remains in economy (Reuters) A degree of untapped potential remains in the Canadian labor market, meaning the economy may be able to generate more growth without higher inflation, the head of the Bank of Canada said on Tuesday, suggesting the central bank can take its time raising interest rates.
Credit quality of Canadian banks under strain: Moody’s (Reuters) Rising interest rates along with strong job growth has led to more uninsured mortgages and longer tenure of car loans, putting a strain on the lending quality of Canadian banks, Moody’s Investor Service said in a report released on Tuesday.
Quebecor profit slips in fourth quarter (BNN) Quebecor Inc. reported its fourth-quarter profit fell compared with a year ago, as its revenue crept higher. The telecommunications and media company says it earned a profit attributable to shareholders of $65.6 million or 27 cents per share for the quarter ended Dec. 31, down from $123.3 million or 50 cents per share a year earlier. Revenue totalled $1.06 billion, up from $1.05 billion.
Overnight markets
Overview: US 10yr note futures are down -0.013% at 120-10, S&P 500 futures are up 0.25% at 2779.75, Crude oil futures are up 0.87% at $61.24, Gold futures are up 0.05% at $1327.8, DXY is up 0.06% at 89.718, CAD/USD is down -0.19% at 0.7728.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.795% | 2 Year | 2.266% |
| 5 Year | 2.034% | 5 Year | 2.633% |
| 10 Year | 2.209% | 10 Year | 2.848% |
| 30 Year | 2.379% | 30 Year | 3.09% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Mar 9th 0.9% (0.3% prior) |
| 8:30 AM | Retail Sales Advance MoM, Feb est 0.3% (-0.3% prior) |
| Retail Sales Ex Auto MoM, Feb est 0.4% (0.0% prior) | |
| Retail Sales Ex Auto and Gas, Feb est 0.3% (-0.2% prior) | |
| PPI Final Demand MoM, Feb est 0.1% (0.4% prior) | |
| PPI Ex Food and Energy MoM, Feb est 0.2% (0.4% prior) | |
| PPI Ex Food, Energy, Trade MoM, Feb est 0.2% (0.4% prior) | |
| PPI Final Demand YoY, Feb est 2.8% (2.7% prior) | |
| PPI Ex Food and Energy YoY, Feb est 2.6% (2.2% prior) | |
| PPI Ex Food, Energy, Trade YoY, Feb (2.5%) | |
| 10:00 AM | Business Inventories, Jan est 0.6% (0.4% prior) |
Canadian Economic Data
| 8:30 AM | Teranet/National Bank HP Index, Feb (219.19 prior) |
| Teranet/National Bank HPI MoM, Feb (0.3% prior) | |
| Teranet/National Bank HPI YoY, Feb (8.7% 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