Market Update Tsys are lower, US 10Y above 3.0% , now 3.03% (+2.5bps), on strong volume in TY futures (>525k), risk off tone with US equity futures lower, Euro stoxx unch and the USD index higher, crude back to recent highs 71.75. Empire Man. & Apr Retail Sales at 8:30ET. Core EGBs weaker, 10Y bund 0.63% new 3 week high, eurozone Q1 GDP +2.5% as exp, German ZEW 87.4 vs 85.5. Gilts outperforming bunds, despite better than exp employment data – solid demand for new ultra long 2071 gilt syndication, despite larger than expected size (Stg6bln vs 5bln). GOCs lower in line with tsys, provis unch.
News headlines
U.S. Business Groups Bash Trump Tariffs as China Talks Intensify (Bloomberg) U.S. companies and business groups are lining up to oppose the Trump administration’s plan to slap tariffs on Chinese imports, as the two nations step up efforts to resolve their trade dispute. About 120 firms and industry groups are scheduled to testify at a hearing beginning Tuesday on the administration’s plan to impose tariffs on $50 billion in Chinese goods. So many groups signed up that the U.S. Trade Representative’s Office extended the hearing by two days until Thursday. The USTR has received more than 2,700 comments.
Pennsylvania Voters May Hold Key to Democrats’ Hopes in November (Bloomberg) If November delivers the wave election that Democrats hope will give them control of the U.S. House, it’s almost certain to wash through Pennsylvania. Results from Tuesday’s primary in the battleground state will offer fresh insight into whether Democrats can seize an opportunity — or miss a chance — to end one-party control of Washington under President Donald Trump.
German Economy Stumbles as Europe Suffers Setback in Growth (Bloomberg) Economic growth slowed across Europe at the start of the year, with Germany seeing its pace of expansion cut in half amid weaker trade. The 0.3 percent increase in Europe’s largest economy was softer than forecast and the weakest in more than a year. Dutch and Portuguese growth also cooled more than expected in the first quarter, while a similar trend was seen across central and eastern Europe.
Stocks Struggle Amid Risk-Off Mood; Dollar Climbs: Markets Wrap (Bloomberg) There was a risk-off flavor to markets on Tuesday, with U.S. stock futures slipping, European equities struggling for traction and declines across Asia as investors grappled with worries around trade, growth and geopolitics. The dollar rallied, a bond sell-off deepened, and oil advanced. The Stoxx Europe 600 Index edged higher led by energy shares, gradually overcoming a plunge in telecom companies. Equity benchmarks fell in South Korea and Australia earlier, while they rose in Shanghai and dropped in Hong Kong after data showed China’s economic momentum holding up but investment slowing. Treasury yields once again climbed above 3 percent. The euro slid after German growth data disappointed.
Canada home prices rise in April: Teranet (Reuters) Canadian home prices rose slightly in April as Vancouver hit another record high, but the rate of appreciation continued to decelerate amid softening sales and higher interest rates, data showed on Monday. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices increased 0.2 percent on a monthly basis after a flat month in March.
TSX futures higher as oil prices climb (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices hit a 3-1/2-year high, buoyed by tight supply and looming U.S. sanctions against Iran. June futures on the S&P TSX index SXFc1 were up 0.23 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE rose 102.29 points, or 0.64 percent, to 16,085.61.
Quebec premier agrees in principle with single tax return (BNN) Quebec is ready to collect provincial and federal taxes, which would permit citizens to file a single tax return instead of two, Premier Philippe Couillard said Monday. Couillard was responding to a resolution favourable to the change that was passed over the weekend at a Conservative party meeting in Quebec. « To simplify the lives of citizens, we would agree with that, » Couillard said. « There is no reason we wouldn’t be able to do it. »
NAFTA negotiators set to miss May 17 target without deal (BNN) NAFTA negotiators from the U.S., Canada and Mexico are poised to miss House Speaker Paul Ryan’s deadline this week, the latest blown marker for reworking the 24-year-old deal. U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Affairs Minister Chrystia Freeland aren’t scheduled to meet together in person this week, according to three government officials familiar with talks who spoke on condition of anonymity. The trio met at least bilaterally every day last week.
Overnight markets
Overview: US 10yr note futures are down -0.236% at 118-31, S&P 500 futures are down -0.25% at 2724.25, Crude oil futures are up 0.73% at $71.48, Gold futures are down -0.89% at $1306.5, DXY is up 0.48% at 93.029, CAD/USD is up 0.18% at 0.7791.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.01% | 2 Year | 2.556% |
| 5 Year | 2.279% | 5 Year | 2.883% |
| 10 Year | 2.457% | 10 Year | 3.028% |
| 30 Year | 2.484% | 30 Year | 3.155% |
US Economic Data
| 8:30 AM | Empire Manufacturing, May est 15.0 (15.8 prior) |
| Retail Sales Advance MoM, Apr est 0.3% (0.6% prior) | |
| Retail Sales Ex Auto MoM, Apr est 0.5% (0.2% prior) | |
| Retail Sales Ex Auto and Gas, Apr est 0.4% (0.3% prior) | |
| 10:00 AM | Business Inventories, Mar est 0.1% (0.6% prior) |
| NAHB Housing Market Index, May est 69 (69 prior) | |
| 16:00 PM | Total Net TIC Flows, Mar (44.7b prior) |
| Net Long-term TIC Flows, Mar (49.0b prior) |
Canadian Economic Data
| 9:00 AM | Existing Home Sales MoM, Apr est 0.4% (1.3% 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