Market Update Tsys trading weaker, near recent lows, yields 3-4bps higher, 10Y 2.85% (+2.5bps), small bounce after weaker core March Retail Sales/Empire Man. after limited reaction to US airstrikes in Syria. Core Euro bonds also lower, gilt/bund ylds 2-4bps higher – 10Y gilt testing support approaching 1.50% . GOCs weaker, undperforming tsys in the backup, 10Y 2.278% (+4.2bps). Data calendar is relatively thin until Friday’s CPI/Retail Sales, with the BOC decision on Wed – BOC not expected to hike rates until later this year according to OIS mkts, a full rate hike not priced in until Sep. Provis closed Friday tighter again, Ont 27s @64 have retraced 50bps of the Feb-March widening.
News headlines
Trump Says ‘Mission Accomplished’ With Syria Strike Unanswered (Bloomberg) The Pentagon said missile strikes on Syria have hampered Bashar al-Assad’s ability to use chemical weapons again, without encountering serious resistance from the Syrian military or its Russian allies. President Donald Trump summed up that achievement in two words: “Mission accomplished.”
Comey Says Trump Is ‘Morally Unfit’ to Be President (Bloomberg) Donald Trump is “morally unfit” to be president, former FBI Director James Comey said in a highly anticipated prime-time interview Sunday, adding that he couldn’t rule out the possibility that the Russian government has incriminating information about the president. “I think it’s possible. I don’t know,” Comey said in an interview with ABC News’ Chief Anchor George Stephanopoulos, when asked whether Trump has been “compromised” by the Russians. “These are more words I never thought I’d utter about a president of the United States, but it’s possible.”
U.S. Stock Futures Rally, Bonds Fall After Syria: Markets Wrap (Bloomberg) U.S. stock futures rallied and bonds fell with oil as traders speculated there would be limited repercussions from the weekend’s missile strikes in Syria. Haven assets including Treasuries and gold dropped with European debt, while the Stocks Europe 600 Index slipped as traders assessed the military action’s aftermath. The dollar weakened after futures data showed hedge funds are the most bearish on the currency in five years. WTI oil futures fell below $67 a barrel amid concern that shale production will rise further, and after there was no immediate reprisal to the missile attack. The ruble reversed earlier losses.
Oil Investors Rally Behind the Rally With Record Bets on Rise (Bloomberg) Hedge funds have never been so invested in the global oil rebound. Their bets that Brent crude futures will climb reached a new high as growing tensions across the Middle East are putting almost half of the world’s supply at risk. The escalation of strife in the region sent the key crude benchmark to its highest in more than three years, while volatility surged. “Clearly, emotionally, people view markets as tighter because they are actually reacting so strongly to these tensions,” said Ashley Petersen, lead oil analyst at Stratas Advisors in New York. “There is money to be made here again” amid heightened volatility, she said.
What to Expect From Retail Sales After the Trump Tax Cuts (Bloomberg) Tax cuts have given a boost to Americans’ take-home pay this year. The question hanging over the U.S. economy is whether they are putting the extra cash toward savings and debt, or using it to go shopping. Retail-sales data due Monday from the Commerce Department will help provide an answer, and economists are betting that consumers finally opened up their wallets a little wider, thanks in part to the boost in paychecks as well as 2017 tax refunds from Uncle Sam. Sales probably rose 0.4 percent in March from the prior month, based on the median estimate of analysts.
Canada’s Trudeau ready to offer aid to ensure pipeline is built (Reuters) Canadian Prime Minister Justin Trudeau on Sunday moved to end an escalating crisis over a Kinder Morgan Canada Ltd (KML.TO) oil pipeline, saying Ottawa was prepared to offer financial aid to ensure the project went ahead. Trudeau cited investor confidence as one reason to help Kinder Morgan Canada, part of Kinder Morgan Inc (KMI.N), which plans to almost triple the capacity of its Trans Mountain line from Alberta to the Pacific province of British Columbia.
TSX futures higher as concerns about Syria strikes fade (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday as investors expected that the weekend’s missile attacks on Syria would not escalate into a wider conflict. The U.S., France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7.
Rising inflation poses biggest test of Poloz’s cautious stance (BNN) Bank of Canada Governor Stephen Poloz’s cautious approach to interest rates is about to be challenged. While the central banker is expected to hold off from raising borrowing costs for a second straight policy decision on Wednesday, and retain a degree of prudence in his rhetoric, Poloz will probably face mounting pressure to return to the rate hike path soon, with inflation and growth beginning to pick up.
Overnight markets
Overview: US 10yr note futures are down -0.207% at 120-08, S&P 500 futures are up 0.55% at 2671.75, Crude oil futures are down -1.31% at $66.51, Gold futures are up 0.01% at $1348, DXY is down -0.29% at 89.542, CAD/USD is down -0.03% at 0.7933.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.881% | 2 Year | 2.386% |
| 5 Year | 2.132% | 5 Year | 2.705% |
| 10 Year | 2.286% | 10 Year | 2.862% |
| 30 Year | 2.391% | 30 Year | 3.067% |
US Economic Data
| 8:30 AM | Empire Manufacturing, Apr 15.8 est 18.6 (22.5 prior) |
| Retail Sales Advance MoM, Mar 0.6% est 0.4% (-0.1% prior) | |
| Retail Sales Ex Auto MoM, Mar 0.2% est 0.2% (0.2% prior) | |
| Retail Sales Ex Auto and Gas, Mar 0.3% est 0.4% (0.3% prior) | |
| 10:00 AM | Business Inventories, Feb est 0.6% (0.6% prior) |
| NAHB Housing Market Index, Apr est 70 (70 prior) | |
| 16:00 AM | Total Net TIC Flows, Feb (119.7b prior) |
| Net Long-term TIC Flows, Feb (62.1b prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Apr 13th (57.8 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