Market Update Tsys higher on avg volume (257k), US10Y 2.905% (-1.5bps), escalation in US/China trade , USD index slightly lower, equities weaker (S&P fut -18).  German bunds bid on back of Merkel immigration crisis, while trade war also supporting EGBs, 10Y bund below 0.40% @ 0.39% a two-week low.  Crude 65.00 rallying $2 over the course of the o/n session in advance of OPEC meeting , rumours of more modest output hike (300-600k), also Goldman sees oil back over $80 despite OPEC increase. GOCs higher in lines with tsys, Can/US 4-6bps tighter over the week, this week relatively quiet in terms of data unti Friday retail sales/CPI. Provis closed 1-1.5bps weaker Friday, this morning spds another 1-1.5bps wider. 

News headlines

OPEC Discusses Output Hike of Up to 600,000 Barrels a Day (Bloomberg) OPEC members are discussing a compromise agreement that would see an oil production increase of between 300,000 and 600,000 barrels a day over the next few months, according to people briefed on the talks.

Xi to Counter Trump Blow for Blow in Unwanted Trade War (Bloomberg) The first punches have been thrown in a potential trade war and now Xi Jinping is poised to match Donald Trump blow for blow. The next flurry of jabs may be imminent. In his announcement of tariffs on Chinese goods on Friday, Trump vowed additional duties if China retaliated — which Beijing immediately did. Details of U.S. restrictions on investments from China will follow in the next two weeks, according to Trade Representative Robert Lighthizer.

Head of VW’s Audi arrested in Germany over diesel scandal (Reuters) German authorities arrested the head of Volkswagen’s luxury arm Audi on Monday, the most senior company official so far to be detained over the carmaker’s emissions test cheating scandal.

China’s tariffs on U.S. oil would disrupt $1 billion monthly business (Reuters) China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month.

Emerging Asia hit by biggest foreign investor exodus since 2008 (BNN) A falling tide lowers all boats, it seems. Amid an exodus from emerging markets, investors are even pulling out of Asian economies with solid prospects for growth and debt financing. Overseas funds are withdrawing from six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 — yanking US$19 billion from India, Indonesia, the Philippines, South Korea, Taiwan and Thailand so far this year, according to data compiled by Bloomberg.

Magnitude 6.1 earthquake kills three people, shutters factories in Japan’s Osaka (CNBC) A magnitude 6.1 earthquake hit Japan’s Osaka on Monday morning, with three people reported dead, according to government officials and broadcaster NHK. No tsunami warning was issued. Prime Minister Shinzo Abe said authorities were assessing damage and that its top priority was the safety of residents.

Trump says he requested end to ‘war games’ in talks with North Korea’s Kim Jong Un (NBC News) “Holding back the “war games” during the negotiations was my request because they are VERY EXPENSIVE and set a bad light during a good faith negotiation,” Trump said on Sunday morning.

U.S. lawmakers warn Canada about Chinese telecom giant Huawei (The Globe and Mail) Senior lawmakers on U.S. intelligence committees are warning the Trudeau government that Chinese smartphone maker Huawei – which has turned Canada into a key research centre for next-generation mobile technology – is a national-security threat to a network of Canada’s allies.

U.S. auto tariffs could spark global trade war, Scotiabank warns (The Globe and Mail) U.S. tariffs on vehicles and auto parts would harm Ontario and key auto producing regions of the United States, but the greater danger is that they could spark an all-out trade war, Bank of Nova Scotia economists say.

Trump Policy of Separating Migrant Families Threatens to Engulf Immigration Talks (WSJ) Divided GOP lawmakers on Capitol Hill are trying to show results on the issue of illegal immigration ahead of midterm elections.

Overnight markets

Overview: US 10yr note futures are up 0.131% at 119-24, S&P 500 futures are down -0.69% at 2765.25, Crude oil futures are up 0.17% at $65.17, Gold futures are up 0.34% at $1282.8, DXY is down -0.02% at 94.768, CAD/USD is down -0.15% at 0.7584.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.879% 2 Year 2.541%
5 Year 2.066% 5 Year 2.78%
10 Year 2.199% 10 Year 2.904%
30 Year 2.234% 30 Year 3.031%

US Economic Data

10:00 AM NAHB Housing Market Index, June est 70 (70 prior)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Jun 15th  (57.3 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