Market Update
Tsys trading slightly higher, 10Y 2.63%, modest volume in TY futures (283k), with S&P futures -3.0 and the USD unch. FOMC minutes to be released at 2:00PM expected to discuss shift to a neutral bias at January meeting, as well as the likelihood of a pause in the rolloff of treasuries and MBS on the Fed’s balance sheet. GOCs higher, in line with tsys, 10Y 1.89%. Volatility in the Cdn govi mkt is back to the lows of Dec, based on Scotia’s SNOVI <index> which measures implied vol across the curve. The BOC auctions 30Y rrbs at noon, reopening the Dec 1 2050 issue for $400mln (vs $700mln in Nov), with the rrb 50/47 roll having widened to 1.3/1.0 vs an average -0.14 over the past year. 30Y breakevens have consolidated ~145bps having lagged the rally in tips by ~20bps since year end. In corps, ARTIS REIT (BBB low DBRS) issued $250mln Feb 21s @ 190 , a 10-15bp concession. At 180bps the new Artis trades BAs +140 or ~50bps over the Artis Feb 20 FRNs (BAs +93).
News headlines
Fed minutes to shed light on biggest policy reversal in years (BNN)It was a big reversal: Federal Reserve officials pivoted last month toward keeping interest rates on hold, and now minutes of their meeting may shed light on just how long.
China will not change prudent monetary policy: Premier Li (Reuters) China has not and will not change its prudent monetary policy and will not resort to “flood-like” stimulus, Premier Li Keqiang said on Wednesday.
U.S.-China trade hopes extend equity surge; central banks supportive (Reuters) World stocks hit a four-month high on Wednesday on hopes of progress in trade talks between the United States and China, with a dovish backdrop at major central banks also helping push markets back into the black.
U.S. Futures Drift as Europe, Asia Stocks Advance: Markets Wrap (Bloomberg) U.S. equity futures struggled for direction and stocks in Europe and Asia climbed as investors awaited the release of minutes from the latest meetings of two of the world’s key central banks. The dollar edged higher and the yuan rose after a report America is asking China to keep its currency stable.
ECB to discuss new round of loans to banks soon, Praet says (Reuters) The European Central Bank will soon discuss new, multi-year loans to banks, its chief economist said on Wednesday, but he hinted that a new round of credit may not be as generous as a previous facility.
Amid trade talks, China urges U.S. to respect its right to develop, prosper (Reuters) The United States should respect China’s right to develop and become prosperous, the Chinese government’s top diplomat told a visiting U.S. delegation, reiterating that the country’s doors to the outside world would open wider.
British PM May says Honda plant closure can’t be blamed on Brexit (Reuters) British Prime Minister Theresa May said Honda’s announcement that it would close its factory in England in 2021 was deeply disappointing, but could not be blamed on the country’s upcoming departure from the European Union.
Oil Near Three-Month High as OPEC Cuts Amid Rising U.S. Supply (Bloomberg) Oil held near a three-month high as investors weighed OPEC’s production cuts against estimates of rising crude inventories in the U.S.
Canada’s British Columbia sees surplus, new child benefit (Reuters) Canada’s British Columbia province on Tuesday projected a budget surplus of C$274 million ($207 million) in fiscal 2019-20, with larger surpluses forecast over the following two years and launched a new child benefit program and several initiatives to tackle climate change.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.773% | 2 Year | 2.487% |
| 5 Year | 1.793% | 5 Year | 2.459% |
| 10 Year | 1.889% | 10 Year | 2.634% |
| 30 Year | 2.138% | 30 Year | 2.977% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Feb 15 Actual 3.6% Prior -3.7% |
| 2:00 PM | FOMC Meeting Minutes, Jan 30 |
Canadian Economic Data
There is no Canadian economic data for today.
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