Market Update
US tsys lower, avg volume in TY futures (345k), 10Y 2.08 (+2bps), curve 1.5bps flatter 2s30s ahead of FOMC later today. Core Euro bonds lower, gilt/bund 10Y yields 3-4bps higher, retracing most of yesterday’s Draghi inspired gains despite some weak data in Germany (May PPI -0.1% vs 0.1% exp). Fed not expected to cut rates today, yet may alter the statement to reflect the latest downbeat readings on the economy and threats from a prolonged trade war with China. GOCs lower , ~1bp wider vs the US in 10s before May CPI (0.1% exp). Provi spreads well bid yest on ‘risk-on’, despite low yields and ongoing supply – $300mln long NBs @ 105 . In corps, TD issued $1.75bln 12NC7 NVCC @ 168, closing 2bps tighter.
News headlines
U.S. Stock Futures Drift as Bonds Slip Before Fed: Markets Wrap (Bloomberg) U.S. equity futures were in a holding pattern on Wednesday while Treasuries slipped as investors prepared for the latest Federal Reserve meeting to conclude, with anticipation growing that policy makers will signal a readiness to lower rates.
China says history shows positive outcome from U.S. talks possible (Reuters) China said on Wednesday positive outcomes were possible in trade negotiations with the United States, after the presidents of the world’s two largest economies agreed to revive their troubled talks at a G20 meeting this month.
Central banks’ dovish cooing keeps world stocks lulled near two-week highs (Reuters) World stocks held near two-week highs on Wednesday as investors bet on a worldwide wave of central bank stimulus, with expectations building that the United States and the euro zone may deliver interest rate cuts as early as July.
China snub, drought and debt shake finances of Canada’s farmers (Reuters) For years, the financial stability of Canadian farmers was the envy of their American counterparts, but rising costs, drought and a dispute with China have weakened their bottom lines.
U.S. Federal Reserve seen signaling cut by losing patience (BNN) Facing pressure from Wall Street and President Donald Trump, Federal Reserve Chairman Jerome Powell and his colleagues may be running out of patience.
Dollar near two-week high before Fed and after dovish ECB (Reuters) The dollar traded near two-week highs against the euro on Wednesday as investors waited to see whether the U.S. Federal Reserve would sound as dovish on future interest rate cuts and stimulus as the European Central Bank.
Market Overview: US 10yr note futures are down -0.184% at 127-09, S&P 500 futures are down 0% at 2926.25, Crude oil futures are down -0.07% at $53.86, Gold futures are down -0.38% at $1345.5, DXY is down -0.11% at 97.54, CAD/USD is down 0% at 0.7475.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.424% | 2 Year | 1.895% |
| 5 Year | 1.351% | 5 Year | 1.864% |
| 10 Year | 1.454% | 10 Year | 2.084% |
| 30 Year | 1.692% | 30 Year | 2.564% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, Jun 14 Survey: — Actual: -3.40% Prior: 26.80% |
| 02:00 PM | FOMC Rate Decision (Upper Bound), Jun 19 Survey: 2.50% Actual: — Prior: 2.50% |
| FOMC Rate Decision (Lower Bound), Jun 19 Survey: 2.25% Actual: — Prior: 2.25% |
Canadian Economic Data
| 08:30 AM | CPI NSA MoM, May Survey: 0.10% Actual: — Prior: 0.40% |
| CPI YoY, May Survey: 2.10% Actual: — Prior: 2.00% | |
| Consumer Price Index, May Survey: 136.2 Actual: — Prior: 136.0 |
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