Market Update Treasury futures trading mostly weaker, following Bunds/Gilts lead to near late overnight lows, Tsy curves bouncing off 10+ year lows; 10YY tapped 2.895%, near Feb 21 4+ year high of 2.950%. US$ index mildly higher after some decent chop overnight (DXY +.025, 89.648; US$/YEN>107.42); equities seeing mild selling (emini -3.75, 2706.0); gold near steady (XAU +0.30, 1349.73); West Texas crude making new 3+ year highs (WTI +.99, 69.46). Asia, Tsys opened steady to NY closes, held narrow range/drifted higher into London crossover on modest 2-way flow.
News headlines
Commodities Rally as Metals Surge; Bonds Slide: Markets Wrap (Bloomberg) Metals extended their stellar gains on Thursday, driving another rally in Bloomberg’s commodity index as investors continue to fret about how Russian sanctions will impact the market. Government bonds retreated amid an upbeat global growth outlook. Aluminum and nickel led the advance as the BCOM Index flirted with the highest level since 2015. U.S. 10-year Treasury yields climbed to 2.89 percent after leaping on Wednesday in the wake of the Federal Reserve’s Beige Book report, which showed a solid outlook for the economy despite trade concerns. European bonds played catch up, and yields in the region jumped.
Oil Extends Rally Before OPEC Meeting After U.S. Stockpiles Fall (Bloomberg) Oil rallied above $69 a barrel after a surprise drop in U.S. inventories added to signs the market is in balance before a key OPEC meeting. Futures in New York rose as much as 1.2 percent after gaining 2.9 percent in the previous session. Focus is now shifting to whether OPEC and its allies will signal an extension of supply cuts at their meeting on Friday in Saudi Arabia. Total U.S. inventories of crude and fuel dropped below their five-year average for the first time since 2014, government data showed Wednesday.
VIX Jumped in Flat Market After Futures Settled Way Above Range (Bloomberg) The Cboe Volatility Index, a barometer for investor anxiety, jumped Wednesday amid a tranquil stock market, reprising a pattern of jerky moves on days when futures on the gauge are settled in monthly auctions. The VIX was heading for its longest streak of daily losses in almost a year in early New York trading, before it reversed direction and rose as much as 11 percent. The gain occurred around the time of the settlement, which happened 13 percent above the VIX close on Tuesday and outside of today’s range.
Malaysia Stocks Hit Record as Foreigners Buy Ahead of Elections (Bloomberg) Stock market volatility, global trade tensions, geopolitical risks aren’t ending the fervor for the second hottest stock market in Southeast Asia. A rally in consumer stocks this year and over $753.2 million in foreign inflows boosted Malaysia’s benchmark stock index to close at an all-time high Thursday, ahead of the nation’s 14th general election on May 9.
Bank of Canada says more rate hikes coming, but holds for now (Reuters) The Bank of Canada flagged more interest rate hikes would be coming after it held its benchmark rates steady on Wednesday, but said it did not know when or how aggressive it would need to be to keep inflation in check. Pointing to a pickup in wage growth and inflation, two issues that had concerned the central bank, Governor Stephen Poloz said policymakers believe the need for monetary stimulus continues to diminish steadily, albeit gradually.
TSX futures point to higher open on commodities rally (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday, tracking a fierce rally in commodities and resource stocks following talk that Saudi Arabia has its sights on $80-$100 a barrel oil again. June futures on the S&P TSX index were up 0.21 percent at 7:15 a.m. ET. Oil prices rose to their highest since late 2014 as U.S. crude inventories declined, moving closer to five-year averages. [O/R] Canada’s main stock index rose for the fifth straight day on Wednesday to reach a four-week high, as energy and metal mining companies led broad-based gains, boosted by higher commodity prices.
Canada-Britain trade deal could come quickly after Brexit: May’s office (BNN) Canada and Britain will be able to quickly pursue a new trade deal after Brexit, Canadian PM Justin Trudeau told British counterpart Theresa May at a bilateral meeting on Wednesday, according to May’s office. “Prime Minister Trudeau said he believed that, post-Brexit, the UK and Canada governments would be able to move in rapid fashion towards a new trade deal that will be particularly beneficial to both countries,” a Downing Street spokeswoman said in a statement.
Overnight markets
Overview: US 10yr note futures are down -0.13% at 119-32, S&P 500 futures are down -0.18% at 2705, Crude oil futures are up 1.37% at $69.41, Gold futures are down -0.08% at $1352.4, DXY is down -0.07% at 89.564, CAD/USD is down -0.21% at 0.7936.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.893% | 2 Year | 2.428% |
| 5 Year | 2.152% | 5 Year | 2.745% |
| 10 Year | 2.306% | 10 Year | 2.893% |
| 30 Year | 2.407% | 30 Year | 3.083% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Apr 14th 232 est 230k (233k prior) |
| Continuing Claims, Apr 7th 1863k est 1845k (1871k prior) | |
| Philadelphia Fed Business Outlook, Apr 23.2 est 21.0 (22.3 prior) | |
| 9:45 AM | Bloomberg Economic Expectations, Apr (56.0 prior) |
| Bloomberg Consumer Comfort, Apr 15th (58.0 prior) | |
| 10:00 AM | Leading Index, Mar est 0.3% (0.6% prior) |
Canadian Economic Data
| 8:30 AM | ADP Publishes Marsh Payrolls Report |
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