Market Update
Tsys trading weaker , curve steeper out to tens, 10Y 2.25% (+2bps), longs outperforming on avg volume in TY futures esp compared to the last couple of days. Euro stocks higher, S&P mini +5pts, crude +1.2% @ 49.95. Tsys in a narrow range overnite, fading in Europe with EGBs. 10Y bund yield 0.364% (+2.3bps) , rally in peripheral spds continues with rumoured short covering in BTPs and outright buying in cash, 10Y BTP/Bund spd 175bps back to lows of early March. GOCs lower, outperforming after Apr Cdn CPI came in below exp 1.3% vs 1.4% in the core, 10Y 1.46%. Longs seeing good support all week, 10s30s 4bps flatter since the long auction wed on rumoured foreign buying, long rolls also flatter. Provis well bid since yest morning Ont 48 deal @ 88.5, which closed 85.5 bid on news Muskrat Falls had been assigned a AAA rating from Moodys. This morning spds are in another 0.5-1bps. In corps, weve seen demand for ABIBB & AT&T 7Y maples this week, the latter vs deposit notes. Enbridge in the mkt with a 2Y FRn @ CDOR + 59bps.
News headlines
Stocks Steady After Volatile Week; Crude Rises: Markets Wrap (Bloomberg) Global equities showed signs of stabilizing at the end of a turbulent week in which investors confronted political crises in Washington and Brazil. Oil headed for a second weekly gain as OPEC members supported Saudi Arabian and Russian pledges to extend supply cuts.
Oil prices climb on hopes output cuts will be extended (Reuters) Oil futures rose on Friday to the highest in nearly a month on growing optimism that big producing countries will extend output cuts to curb a persistent glut in crude, with key benchmarks heading for a second week of gains.
OPEC Reality: Saudis Delivered, Non-OPEC Didn’t (Bloomberg) Just under a week from now, the Organization of Petroleum Exporting Countries will meet in Vienna to decide whether to extend the first oil production curbs in eight years in order to eliminate a glut. The group will evaluate data, described below, that highlights two key details: First, Saudi Arabia is shouldering much of the burden. Second, non-member producers – who pledged reductions of their own – haven’t delivered in full.
TPP trade deal members seek to move ahead without United States (Reuters) Remaining members of the Trans Pacific Partnership (TPP) free trade agreement are working on a statement to reaffirm their commitment to it despite the withdrawal of the United States, sources close to the discussions said.
ECB cannot ‘run the economy hot’ to create jobs: Coeure (Reuters) The European Central Bank cannot risk running “the economy hot” to support employment once inflation stabilizes at its target of almost 2 percent, ECB Executive Board member Benoit Coeure said on Friday.
Cheap Gas Drilling Rouses Canada’s Permian of the North (Bloomberg) Drilling rigs and roughnecks are hot commodities once again across the Montney shale formation in northern British Columbia and Alberta, and companies like Grimes Well Servicing Ltd. are having a hard time keeping up with demand.
Overnight markets
Overview: US 10yr note futures are down -0.049% at 126-07, S&P 500 futures are up 0.29% at 2370.25, Crude oil futures are up 1.48% at $50.08, Gold futures are up 0.03% at $1253.2, DXY is down -0.53% at 97.363, CAD/USD is down -0.16% at 0.7363.
US Economic Data
There is no major economic data release for today.
Canadian Economic Data
| 8:30 AM | CPI NSA, m/m, Apr, 0.4%, est. 0.5% (prior 0.2%) |
| CPI, y/y, Apr, 1.6%, est. 1.7% (prior 1.6%) | |
| CPI Core – Common, y/y, Apr, 1.3%, est. 1.4% (prior 1.3%) | |
| CPI Core – Trim, y/y, Apr, 1.3%, (prior 1.4%) | |
| CPI Core – Median, y/y, Apr, 1.6%, (prior 1.7%) | |
| Retail Sales, m/m, Mar, 0.7%, est. 0.3% (prior -0.6%, revised -0.4%) | |
| Retail Sales Ex Auto, m/m, Mar, -0.2%, est. 0.2% (prior -0.1%) |
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230