Market Update
US tsys trading higher on decent volume (400k TY fut), long end outperforming, 10Y 1.795(-1.5bps). US futures close to unch, paring earlier losses: Target -7.0% pre-mkt after holiday sales rose 1.4% vs 5.7% last year, comparable sales now expected to be 1.4% for the qtr vs 3.8% forecast. BAC beat on Q4 eps , with ‘solid client activity in growing loans and gathering deposits’, stock is down slightly pre-mkt. Big rally in gilts on weaker UK CPI (1.3% vs 1.5% exp) and comments from MPC Saunders on need for further stimulus, 10Y 8bps lower @ 0.64% – a two month low while the 10Y gilt/bund spd at 20 month lows. GOCs higher & 1bp narrower vs tsys out the curve, 10Y approaching Jan low 1.53%
News headlines
U.S. Futures Slip Amid Mixed Earnings; Bonds Gain: Markets Wrap (Bloomberg) U.S. equity-index futures slipped amid mixed corporate earnings and concern over trade tensions that lingered even as America and China were set to sign their initial accord. Treasuries rose and the dollar steadied.
TSX futures rise as gold prices gain ahead of U.S.-China trade deal (Reuters) Canada’s main stock index futures rose on Wednesday ahead of signing of the U.S.-China phase 1 trade deal, supported by gains in gold prices.
U.S., China set to sign massive purchases deal, easing trade war (Reuters) The U.S.-China trade war is set to enter a new, quieter phase on Wednesday as U.S. President Donald Trump and Chinese Vice Premier Liu He sign an initial trade deal that aims to vastly increase Chinese purchases of U.S. manufactured products, agricultural goods, energy and services.
Phase 2 of China trade deal to address certain tech issues: U.S. Treasury Secretary (Reuters) U.S. Treasury Secretary Steven Mnuchin said on Wednesday that some technology and cybersecurity issues will be resolved in the next chapter of a deal to end the trade war between the United States and China.
German growth slows sharply in 2019 as trade disputes bite (Reuters) The German economy grew by 0.6% in 2019, the weakest expansion rate since 2013 and a marked cooling from the previous year, as export-dependent manufacturers in Europe’s largest economy face increased headwinds from trade disputes and less foreign demand.
Exclusive: India plans new law to protect foreign investment – sources (Reuters) India is planning a new law to safeguard foreign investment by speeding up dispute resolution, aiming to attract more capital from overseas to boost stuttering domestic growth, two officials with direct knowledge of the matter told Reuters.
China tariffs to remain until after 2020 election despite deal (BNN) Existing tariffs on billions of dollars of Chinese goods coming into the U.S. are likely to stay in place until after the American presidential election, and any move to reduce them will hinge on Beijing’s compliance with the terms of a phase-one trade accord, people familiar with the matter said.
Keystone XL inches forward with work planned for next month (BNN) TC Energy Corp. plans to begin pre-construction work on the Keystone XL oil pipeline next month, moving the long-delayed project forward even as opponents continue to fight it in court.
Market Overview: US 10yr note futures are up 0.121% at 129-10, S&P 500 futures are down -0.03% at 3287, Crude oil futures are down -0.03% at $58.21, Gold futures are up 0.39% at $1550.6, DXY is down -0.06% at 97.31, CAD/USD is up 0.04% at 0.7653.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.652% | 2 Year | 1.564% |
| 5 Year | 1.573% | 5 Year | 1.608% |
| 10 Year | 1.561% | 10 Year | 1.795% |
| 30 Year | 1.673% | 30 Year | 2.253% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, Jan 10 Survey: — Actual: 30.20% Prior: 13.50% |
| 08:30 AM | PPI Final Demand MoM, Dec Survey: 0.20% Actual: 0.10% Prior: 0.00% |
| PPI Ex Food and Energy MoM, Dec Survey: 0.20% Actual: 0.10% Prior: -0.20% | |
| PPI Ex Food, Energy, Trade MoM, Dec Survey: 0.20% Actual: 0.10% Prior: 0.00% | |
| PPI Final Demand YoY, Dec Survey: 1.30% Actual: 1.30% Prior: 1.10% | |
| PPI Ex Food and Energy YoY, Dec Survey: 1.30% Actual: 1.10% Prior: 1.30% | |
| PPI Ex Food, Energy, Trade YoY, Dec Survey: — Actual: 1.50% Prior: 1.30% | |
| Empire Manufacturing, Jan Survey: 3.60 Actual: 4.80 Prior: 3.50 | |
| 02:00 PM | U.S. Federal Reserve Releases Beige Book |
Canadian Economic Data
| 09:00 AM | Existing Home Sales MoM, Dec Survey: — Prior: 0.60% |
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