Market Update

Tsys slightly lower, 10Y 2.76% (+1bp), above avg volume in TY futures (420k), core EGBs also lower on ‘risk on’ flows while EU peripheral spreads are tighter. Stocks trading well on optimistic outlook for US-China trade after WSJ mentioned US officials were discussing lifting tariffs, S&P futures +11, crude 52.80 (+1.3%). GOCs lower, 0.5bps tighter vs tsys, 10y Can/US -76bps three-week narrows.  Dec CPI on deck, -0.4% m/m or 1.7% y/y exp with the core +1.9%. A monthly decline would follow the 0.4% pullback in Nov, the weakest since last Dec- thou seasonality is definitely at play with seven of the last eight yrs showing declines in Dec –  the drop in gasoline prices a prime contributor, along with seasonal weakness in other categories.

News headlines

Global stocks advance as trade hopes aid rally; oil rises (BNN) Stocks rose in Europe and Asia on Friday alongside U.S. equity futures, building on the recent rally in risk assets amid further optimism for trade talks between America and China. Treasuries and the yen edged lower, while crude climbed.

TSX futures rise as oil prices gain on OPEC’s production cut (Reuters) Futures for Canada’s main stock index rose on Friday, as oil prices gained after a report from the Organisation of the Petroleum Exporting Countries (OPEC) showed its production fell sharply last month.

Pound set for biggest weekly gain vs euro in more than a year on Brexit hopes (Reuters) The pound weakened on Friday as investors took profits after a stellar rally this week that set the currency up for its biggest weekly gain against the euro in more than a year on growing confidence that a no-deal Brexit can be avoided.

Canada’s Huawei 5G Decision Is Months Away, Sources Say (Bloomberg) Canada is still conducting its security review of 5G telecommunications technology, and a decision on whether to restrict Huawei Technologies Co. is still at least months away, people familiar with the plans say.

Trump meets with Cabinet officials to revive infrastructure push (Reuters) U.S. President Donald Trump is reviving efforts to win approval for a significant infrastructure plan lasting up to 13 years, two people briefed on the matter said, as the administration seeks to bring a long-stalled campaign promise back to life.

Shutdown clouds outlook for consumer-driven U.S. economic growth (Reuters) After tax cuts, rising incomes and buoyant stock markets set off a consumer boom in 2018, signs are emerging that the main engine of U.S. economic growth could sputter, and a record-long government shutdown further muddies the waters.

Greece plans five-year bond once Macedonia accord has passed (Reuters) Greece plans to return to bond markets with a five-year syndicated issue once a parliamentary vote on a long-running dispute with neighbouring Macedonia is out of the way, two sources told Reuters on Friday.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.909% 2 Year 2.576%
5 Year 1.93% 5 Year 2.588%
10 Year 2.002% 10 Year 2.761%
30 Year 2.234% 30 Year 3.083%

US Economic Data

8:30 AM Industrial Production MoM, Dec Surv 0.2% Prior 0.6%
9:15 AM Capacity Utilization, Dec Surv 78.5% Prior 78.5%
10:00 AM U. of Mich Sentiment, Jan P Surv 96.8 Prior 98.3

Canadian Economic Data

8:30 AM CPI NSA MoM, Dec -0.1% Surv -0.4% Prior -0.4%
  CPI YoY, Dec 2.0% Surv 1.7% Prior 1.7%

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