Market Update
US tsys trading higher, near top of range on moderate futures volume (365k TY), with the 10Y 2.69% (-1.3bps) as mkts await critical vote on Brexit this aft, bonds moving higher on weaker than exp PPI (-0.2% vs -0.1%). Bunds/gilts higher as German GDP rose 1.5% last yr, from 2.2% in 2016 & 17. Equity futures only slightly higher after giving up gains on the back of China’s pledge to add more stimulus. GOCs higher, in line with tsys after PPI., 10Y 1.94%
News headlines
Canadian dollar slips to a six-day low amid concerns for global economy (TheGlobeAndMail) The Canadian dollar weakened to a six-day low against its U.S. counterpart on Monday, reducing gains since the start of the year as oil prices fell and weak Chinese trade data raised concerns about prospects for the global economy.
JPMorgan cuts loonie forecast as new NAFTA faces turbulence (BNNBloomberg) The bank now expects the Canadian currency to weaken to $1.35 per dollar by the middle of 2019, having previously forecast that it would be around $1.30. A key reason for the pessimism is the fraught outlook for the passage this year of the U.S.-Mexico-Canada Agreement, according to analysts Daniel Hui and Patrick Locke. Ratifying the pact will be “bumpier” than most investors realize given the deep fissures within a split U.S. Congress, as well as an ongoing partial government shutdown.
Stocks Pare Gains as Bonds Advance; Pound Swings: Markets Wrap (BNN) U.S. equity futures and European stocks trimmed gains on Tuesday as the boost from potential China stimulus that spurred Asian shares proved hard to sustain. The pound fluctuated as U.K. politicians prepared for a crunch vote on Brexit.
First U.S. crude cargoes head to China since trade breakthrough (Reuters) Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September and a 90-day pause in the two countries’ trade war that began last month.
China signals more stimulus as economic slowdown deepens (Reuters) China on Tuesday signaled more stimulus measures in the near term as a tariff war with the United States took a heavy toll on its trade sector and raised the risk of a sharper economic slowdown.
Pound could flop if May loses by more than 100 votes, analysts say (BNN) The pound may manage to hold its ground if Theresa May’s Brexit deal is defeated in Parliament by 100 votes or less, as the market would then eye the odds of the prime minister seeking a second vote, analysts say.
May faces defeat in parliament over Brexit plan (Reuters) Prime Minister Theresa May faced the prospect of defeat in a historic vote on her Brexit deal in parliament on Tuesday, potentially leaving Britain in limbo about the biggest political and economic change for the country in decades.
OPEC leaves market guessing as it struggles to set meeting date (BNN) OPEC and its allies are still struggling to set the date for their next meeting, a sign that the coalition’s increased influence comes at a cost of slower decision-making.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.881% | 2 Year | 2.531% |
| 5 Year | 1.89% | 5 Year | 2.514% |
| 10 Year | 1.949% | 10 Year | 2.693% |
| 30 Year | 2.158% | 30 Year | 3.044% |
US Economic Data
| 8:30 AM | Empire Manufactuting, Jan Est 10.0 Actual 3.9 Prior 10.9 |
| PPI Final Demand MoM, Dec Est -0.1% Actual -0.2% Prior 0.1% | |
| PPI Ex Food and Energy MoM, Dec Est 0.2% Actual -0.1% Prior 0.3% | |
| PPI Final Demand YoY, Dec Est 2.5% Actual 2.5% Prior 2.5% | |
| PPI Ex Food and Energy YoY, Dec Est 2.9% Actual 2.7% Prior 2.7% |
Canadian Economic Data
| 9:00 AM | Existing Home Sales MoM, Dec Est -1.0% Prior -2.3% |
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