Market Update
Tsys trading firmer, near top of o/n range on heavy volume (>500k), 10Y 2.533% (-1.3bps), curve 1.5bps flatter. Tsys lagging the rally in bunds – ECB not planning changes to bond purchase plan until March according to Reuters. Gilts higher, steeper after CPI fell in Dec to 3.0% from 3.1%, core 2.5% vs 2.6% exp. European equities stronger, S&P fut + 12.25 , CITI Q4 eps beat $1.20 vs $1.19, $18.3bln overall loss fur to $22bln charge due to writeoff of deferred tax assets, shares are up ~3% pre-mkt. In Canada, GOCs opening slightly higher out to 10s, longs better bid on the curve 10s30s @17.5bps new low, in line with outperformance of long tsys since Sep. Provis wider yest again, ~4bps off the lows of last Tuesday – Ont 27s 59/58.5. Supply expected today from Ontario/Mani before BOC tomorrow. JPM in the US mkt with 2 tranche 11NC10 and 31NC30 at 100-105 & 115. The USD JPM 3.625 12/27 swaps back at CAD+ 133 so the new 11NC10 looks fair at T+105 (CAD +135).
News headlines
GOP Sees Possible DACA Deal as Trump Bemoans Sticking Points (Bloomberg) Republican lawmakers held out hope that a deal can be reached allowing young undocumented immigrants to remain in the U.S., despite President Donald Trump saying the effort is “probably dead” amid growing tensions about keeping the government funded past Friday.
Bitcoin Tumbles 20% as Fears of Cryptocurrency Crackdown Linger (Bloomberg) January’s cryptocurrency selloff got fresh impetus on Tuesday when bitcoin slumped, plunging as much as 20 percent as the prospect of regulatory crackdowns appeared to spread.
Dollar Climbs as Euro, Pound Drop; Stocks Advance: Markets Wrap (Bloomberg) The U.S. dollar strengthened on Tuesday, rebounding from its lowest close in three years to gain versus the yen, euro and pound. European stocks and government bonds advanced, while most commodities including gold turned lower.
U.K. Inflation Slows as BOE Policy Maker Tenreyro Shifts Dovish (Bloomberg) U.K. inflation eased for the first time in six months in December, which may be the start of a slowdown that will ease pressure on consumers who spent 2017 being squeezed by rising prices.
Shares stay on record run, metals suffer meltdown (Reuters) Asia and Europe’s big bourses kept world shares on their record-breaking run on Tuesday, though a steadier dollar halted the sizzling start to the year for the euro, yen and yuan and sent metals markets sprawling.
TSX futures rise; tracking global shares (Reuters) Stock futures pointed to a slightly higher open for Canada’s main stock index on Tuesday tracking gains in global shares, despite a dip in the price of metals and crude.
Overnight markets
Overview: US 10yr note futures are up 0.102% at 123-02, S&P 500 futures are up 0.41% at 2800.25, Crude oil futures are down -0.37% at $64.06, Gold futures are up 0.1% at $1336.2, DXY is down -0.38% at 90.627, CAD/USD is down -0.04% at 0.8048.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.769% | 2 Year | 2.002% |
| 5 Year | 1.983% | 5 Year | 2.335% |
| 10 Year | 2.178% | 10 Year | 2.533% |
| 30 Year | 2.357% | 30 Year | 2.839% |
US Economic Data
| 8:30 AM | Empire Manufacturing, Jan 17.7 est 19.0 (18.0 prior) |
Canadian Economic Data
There is no Canadian economic data for today.
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