Market Update Tsys trading slightly weaker, yields 1bp higher out the curve, short end little changed, 10Y 2.84%, light volume in TY futures (209k). S&P futures +16, strong beat from GS in Q1 – eps $6.95 vs $5.56 est, revenues $10bln vs $8.75bln, 31% surge in trading rev, and the largest jump in FICC among banks reporting so far. Fed speakers today include Hacker, Evans & Quarles. Core EGBS higher, UK gilt curve steeper after labor market data showed a less than exp rise in avg weekly earnings (2.8% vs 3.0%) despite a decline in the unemployment rate. Odds of a rate increase from the BOE at the May meeting fell to 84% from ~90%. GOCs higher, outperformer tsys by ~1bp in 10s, Feb Manuf Sales +1.9% vs 0.8% exp. Provis unch after closing tighter for a sixth straight day. Alberta 10Y 2027 reopening yest @ 67.5/ Onts +3 – 3/2.8 now.
News headlines
China Hits $957 Million U.S. Sorghum Trade With Fresh Duty (Bloomberg) China will impose temporary anti-dumping deposits on U.S. sorghum imports from Wednesday, adding to trade tensions between the world’s biggest economies. Soybean meal futures climbed on concerns the oilseed could be targeted next. Imports will incur a 178.6 percent duty, China’s Ministry of Commerce said in a preliminary ruling on Tuesday. That’s in compliance with domestic law and World Trade Organization rules, Wang Hejun, chief of the trade remedy and investigation bureau at the ministry, said in a statement.
U.K. Wages Rise Most Since 2015 as End to Squeeze Nears (Bloomberg) U.K. wages are rising at their fastest pace in almost three years, raising the prospect of an end to the squeeze on living standards. Annual pay growth excluding bonuses accelerated to 2.8 percent in the three months through February, the Office for National Statistics said Tuesday. Inflation averaged 2.9 percent in the same period and is forecast to fall toward 2 percent this year.
Trump Loses Initial Bid to Review Seized Records From Cohen (Bloomberg) President Donald Trump suffered a setback as a federal judge rejected his initial request to keep prosecutors from immediately reviewing evidence seized by the FBI last week from his longtime personal lawyer, Michael Cohen. U.S. District Judge Kimba Wood wrestled in court Monday with the correct way to determine whether materials seized from Cohen’s home, office and hotel room involved privileged communications between Cohen and his clients. Still, the judge ordered prosecutors to make available to Cohen’s attorneys all of the evidence seized. Prosecutors must put the material in digital form and can’t review it yet, the judge said.
U.S. Futures Advance as Focus Shifts to Earnings: Markets Wrap (Bloomberg) U.S. equity futures advanced alongside stocks in Europe as investors switched their focus to earnings season following the market turmoil of recent weeks. The euro and pound both erased gains on soft economic data. Contracts for the S&P 500, Nasdaq, and Dow all shrugged off weakness in Asia to point to a higher U.S. open as traders digested results from companies including Goldman Sachs Group Inc. The bank gave a boost to sentiment with solid numbers across the board, also saying it would boost its dividend. In Europe, the Stoxx 600 Index rebounded from Monday’s drop, with automakers leading the way after China said it will ease access to its market.
Bank of America’s Cost-Cutting Drive Pushes Profit to Record (Bloomberg) Bank of America Corp. hit a new milestone in its years-long effort to get costs under control. First-quarter expenses totaled about 60 percent of revenue, the best ratio in more than five years. That helped push profit above analysts’ estimates, and corporate tax cuts spurred earnings to a record. Net interest income got a bigger boost than expected from higher interest rates, but fixed-income trading disappointed.
NAFTA meeting on tap; Mexico doesn’t want to be used to elude U.S. tariffs (Reuters) The ministers leading the renegotiation of the North American Free Trade Agreement (NAFTA) could meet again on Thursday in Washington as they push for quick progress, Mexican Economy Minister Ildefonso Guajardo said on Monday. Guajardo said he had spoken to Canadian Foreign Minister Chrystia Freeland on Monday and would talk to U.S. Trade Representative Robert Lighthizer on Tuesday to see about agreeing a trilateral meeting in Washington on Thursday.v Speaking after meeting with steel industry executives, Guajardo also said if that the United States imposed steel tariffs, Mexico might seek to mirror the move against some countries in order to prevent them from using Mexico to elude the duties.
TSX futures rise as risk appetite returns (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, suggesting a return of risk appetite on waning worries about more U.S. strikes in Syria. June futures on the S&P TSX index were up 0.08 percent at 7:15 a.m. ET. Data from Statistics Canada is expected to show a 1 percent rise in manufacturing sales in February after falling to its lowest in six months in January. Also expected is a report on foreign investment in Canadian securities for February.
China posts strong first-quarter growth, as GDP rises 6.8% (BNN) China’s economy grew at a slightly faster-than-expected pace of 6.8 per cent in the first quarter, buoyed by strong consumer demand, healthy exports and robust property investment. Resilience in the world’s second-largest economy will likely help keep a synchronized global recovery on track for a while longer, even as China faces rising trade tensions with the United States that could impact billions of dollars in business.
Overnight markets
Overview: US 10yr note futures are down -0.078% at 120-12, S&P 500 futures are up 0.56% at 2696.75, Crude oil futures are down 0% at $66.22, Gold futures are down -0.42% at $1345, DXY is down 0% at 89.421, CAD/USD is down -0.11% at 0.7968.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.88% | 2 Year | 2.382% |
| 5 Year | 2.124% | 5 Year | 2.69% |
| 10 Year | 2.277% | 10 Year | 2.84% |
| 30 Year | 2.378% | 30 Year | 3.037% |
US Economic Data
| 8:30 AM | Housing Starts, Mar est 1267k (1236k prior) |
| Housing Starts MoM, Mar est 2.5% (-7.0% prior) | |
| Building Permits, Mar est 1323k (1298k prior) | |
| Building Permits MoM, Mar est 0.2% (-5.7% prior) | |
| 9:15 AM | Industrial Production MoM, Mar est 0.3% (1.1% prior) |
| Manufacturing (SIC) Production, Mar est 0.1% (1.2% prior) | |
| Capacity Utilization, Mar est 77.9% (78.1% prior) |
Canadian Economic Data
| 8:30 AM | Int’l Securities Transaction, Feb (5.68b prior) |
| Manufacturing Sales MoM, Feb est 0.8% (-1.0% 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