Market Update
Tsys trading higher with equity futures weakening, US 10Y 2.375% (-3.5bps), five week low on above avg volume in TY futures (437k), the 2Y yield 2.16% lowest since Feb 2018. Data in the US includes April Retail Sales & Empire Man. Overnight data from China driving risk off as Industrial Output, Retail Sales and Fixed Investment all came in weaker. Core European bonds outperforming, 10Y bund 5bps lower at -0.122bps , Italian yields continuing to move higher after Italian Deputy PM said Italy was prepared to break EU rules on deficits and debt to boost employment. GOCs higher, lagging tsys by 1bp before April CPI. Another solid reading expected – 0.4% m/m or 2.0% y/y , gas prices rose another 10% in April to the highest since June 2014. CMB dual tranche issue to price this morning – new 10Y fixed in the area of 46.5bps and 5Y FRN (WI 45.5/), spreads opening unch
News headlines
U.S. Futures, Europe Stocks Dip as Asia Advances: Markets Wrap (Bloomberg) U.S. equity futures slipped on Wednesday alongside European stocks as the rebound in global shares struggled for momentum. Oil declined, while Treasuries advanced with German bonds.
CANADA STOCKS-TSX futures flat ahead of monthly inflation data (Reuters) Futures for Canada’s main stock index were little changed on Wednesday ahead of April inflation data.
No easy options for China as trade war, U.S. pressure bite (Reuters) China is running out of options to hit back at the United States without hurting its own interests, as Washington intensifies pressure on Beijing to correct trade imbalances in a challenge to China’s state-led economic model.
Rising U.S. oil output helps fill gap left by Iran, Venezuela: IEA (Reuters) The world will require very little extra oil from OPEC this year as booming U.S. output will offset falling exports from Iran and Venezuela, the International Energy Agency said on Wednesday.
Fed officials pledge rate patience amid trade and Trump pressure (BNN) Federal Reserve officials are sticking with their pledge for patience on interest rates, shrugging off President Donald Trump’s escalating trade war and his pressure for a cut.
Oil Drops as U.S. Stockpile Report Counters Supply Risk in Gulf (Bloomberg) Oil fell as an industry report signaling a jump in U.S. stockpiles eased concerns over a supply crunch, even after a drone attack in Saudi Arabia highlighted the vulnerability of the country’s energy infrastructure.
Italian budget worries knock European shares lower (Reuters) Italian shares led losses in Europe on Wednesday after the country’s deputy prime minister said Rome was ready to break EU fiscal rules, masking early gains fueled by optimism around U.S.-China trade rhetoric.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.585% | 2 Year | 2.162% |
| 5 Year | 1.542% | 5 Year | 2.151% |
| 10 Year | 1.66% | 10 Year | 2.375% |
| 30 Year | 1.891% | 30 Year | 2.816% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, May 10 Survey – Actual -0.6% Prior 2.70% |
| 08:30 AM | Empire Manufacturing, May Survey 8.0 Prior 10.1 |
| Retail Sales Advance MoM, Apr Survey 0.20% Prior 1.60% | |
| Retail Sales Ex Auto MoM, Apr Survey 0.70% Prior 1.20% | |
| Retail Sales Ex Auto and Gas, Apr Survey 0.30% Prior 0.90% | |
| 09:15 AM | Industrial Production MoM, Apr Survey 0.00% Prior -0.10% |
| Capacity Utilization, Apr Survey 78.70% Prior 78.80% | |
| 10:00 AM | NAHB Housing Market Index, May Survey 64 Prior 63 |
| Business Inventories, Mar Survey 0.00% Prior 0.30% | |
| 04:00 PM | Net Long-term TIC Flows, Mar Survey — Prior $51.9b |
| Total Net TIC Flows, Mar Survey — Prior -$21.6b |
Canadian Economic Data
| 08:30 AM | CPI NSA MoM, Apr Survey 0.40% Prior 0.70% |
| CPI YoY, Apr Survey 2.00% Prior 1.90% | |
| Consumer Price Index, Apr Survey 135.9 Prior 135.4 | |
| 09:00 AM | Existing Home Sales MoM, Apr Survey 1.80% Prior 0.90% |
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