Market Update Tsys mixed, slightly higher in the short end, with the 10Y 1bp lower @ 2.82%, on very light volume in TY (~200k). Data calendar is second tier – Feb Housing Starts &  Ind Prod as well as March Univ of Michigan Sentiment. EGBs higher in line with tsys, gilts outperforming. Eurozone inflation fell to 1.1% in Feb from 1.3%, below the 1.2% exp.  peripheral spreads continue to narrow with notable outperformance from 30Y Spanish & Italian bonds. There is no peripheral supply next week.  GOCs trading higher, in line with tsys, 10Y 2.13% low since early Jan, while GOC curve has flattened to new lows , 5bps since Poloz speech on Tuesday. Provi spreads fairly stable this week, Ontario credit curve flattening out to 10Y this week.

News headlines

White House Denies McMaster Is Next to Be Ousted (Bloomberg) President Donald Trump is not about to oust his national security adviser, H.R. McMaster, according to White House Press Secretary Sarah Huckabee Sanders, even as speculation intensified that McMaster’s departure had already been decided. Sanders tweeted on McMaster’s status late Thursday night following a Washington Post report that Trump had decided to replace the Army lieutenant general, who has led the National Security Council for more than a year. The Wall Street Journal later reported that Trump wants to remove McMaster and has conveyed his wishes to White House Chief of Staff John Kelly.

Irish Border Spat Complicates Brexit Transition Talks (Bloomberg) The U.K. has significant ground to make up on the Irish border issue before next week’s summit where it aims to clinch a deal on a Brexit transition period, European diplomats said. While both sides are keen have a deal signed off by EU leaders at the meeting, the gap on the Irish question remains wide, according to three diplomats, who asked not to be identified as talks are ongoing. If the EU isn’t satisfied with British proposals for avoiding a hard border, they might attach more conditions to a transition agreement, one of the officials said.

Aramco Gets Cool Response on IPO From U.S. Investors (Bloomberg) Saudi Arabia’s willingness to delay the initial public offering of state oil company Aramco to 2019 has several motivations, from regulatory risk to competing projects in the government’s crowded agenda. There’s another, perhaps more significant hurdle: it appears some American investors aren’t that interested.

Dollar Slips Amid Political Noise; Stocks Mixed: Markets Wrap (Bloomberg) The dollar edged lower and Treasuries gained as investors considered the potential for further churn of White House personnel. European stocks and U.S. futures drifted after Asian shares slipped, with equities traders showing little conviction.

After Tillerson, the Iran Deal Hangs By a Thread (Bloomberg) President Donald Trump’s decision to fire his top diplomat has put the Iran nuclear agreement at risk and cast new uncertainty on a meeting of the accord’s signatories. Diplomats from six world powers and Iran convened in Vienna on Friday to review the nuclear deal, called the Joint Comprehensive Plan of Action, which restricts the Persian Gulf country’s nuclear work in exchange for sanctions relief. It’s the last scheduled meeting of the group before Trump’s May 12 decision on whether the U.S. sticks to the accord.

Canada’s Trudeau ‘very optimistic’ of NAFTA win for all three countries (Reuters) Canadian Prime Minister Justin Trudeau said on Wednesday that he was “very optimistic” of a successful result for his country, the United States and Mexico as they renegotiate the North American Free Trade Agreement. Speaking in a Bloomberg TV interview in Regina, Saskatchewan, Trudeau said there was an “eminently achievable win-win-win” result available, and that NAFTA has been good for all three countries.

Loonie at lowest since last June amid murky trade outlook (BNN) The Canadian dollar fell to its lowest level since last June on Friday, as the currency hunts for a floor amid a host of factors that are weighing it down. The loonie was trading at 76.46 cents U.S. at 6:05 a.m. ET, more than five cents below its year-to-date high of 81.52, and extending a rough stretch that has seen the dollar post just five winning sessions since the middle of February.

Canada’s fourth quarter household debt-to-income nears record high (BNN) Canadian household debt as a share of income, a measure closely watched by policy makers, slipped slightly in the fourth quarter from a record high in the third quarter, Statistics Canada said on Thursday. The ratio of debt to disposable income dipped to 170.4 per cent from 170.5 per cent in the third quarter. Statscan revised the third quarter down from an initial 171.1 per cent.

Overnight markets

Overview: US 10yr note futures are down 0% at 120-16, S&P 500 futures are up 0.03% at 2756.25, Crude oil futures are up 0.23% at $61.33, Gold futures are up 0.22% at $1320.7, DXY is down -0.18% at 89.973, CAD/USD is up 0.22% at 0.7644. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.756% 2 Year 2.279%
5 Year 1.978% 5 Year 2.621%
10 Year 2.136% 10 Year 2.823%
30 Year 2.289% 30 Year 3.054%

US Economic Data

8:30 AM Housing Starts, Feb 1236k est 1290k (1326k prior)
  Housing Starts MoM, Feb -7.0% est -2.7% (9.7% prior)
  Building Permits, Feb 1298k est 1320k (1396k prior)
  Building Permits MoM, Feb -5.7% est -4.1% (7.4% prior)
9:15 AM Industrial Production, Feb est 0.4% (-0.1% prior)
  Capacity Utilization, Feb 77.7% (77.5% prior)
10:00 AM JOLTS Job Opening, Jan est 5917 (5811 prior)
  U. of Mich. Sentiment, Mar est 99.3 (99.7 prior)
  U. of Mich. Current Conditions, Mar (114.9 prior)
  U. of Mich. Expectations, Mar (90.0 prior)
  U. of Mich. 5-10 Yr Inflation, Mar (2.5% prior)

Canadian Economic Data

8:30 AM Manufacturing Sales MoM, Jan -1.0% est -0.9% (-0.3% prior)
  Int’l Securities Transaction, Jan 5.69b (-1.97b 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