Market Update
US tsys trading higher on moderate futures volume (198k TY1) 10Y below 2.60% (2.59%) , ahead of FOMC policy announcement later this aft, tsy curve flatter 2s10s 13.6bps narrowest since Jan 29th. UK gilts spiking as PM May asked the EU for a Brexit deadline until June 39th. GOCs lagging the rally in tsys by 1bp in 10s. Canada budget highlights – deficit projection for this FY ~$3bln lower at $14.9bln, unch for 2020FY at $19.8bln. The DMS outlines an $19bln in additional issuance to $119bln for FY 19/20, with the increase falling on the short end and the 30Y sector, with one less 10Y & rrb auction.
News headlines
Fed’s balance sheet plan, economic outlook under microscope (Reuters) The U.S. Federal Reserve on Wednesday is expected to hold interest rates steady, shave the number of hikes projected for the rest of the year, and release long-awaited details of a plan to end the monthly reduction of its massive balance sheet.
Stocks Decline, U.S. Futures Fluctuate Before Fed: Markets Wrap (Bloomberg) U.S. equity-index futures drifted and European shares fell Wednesday as investors adopted a cautious stance before the Federal Reserve policy decision and awaited further news on U.S.-China trade talks, where negotiators remain at odds. Ten-year Treasury yields slipped.
Oil’s Rally Stuck Near $59 as U.S.-China Trade Jitters Return (Bloomberg) Oil’s rally stuttered as uncertainty over the status of trade negotiations between the U.S. and China stoked concerns over global economic growth.
Canada lifts bond borrowing ahead of election as maturities rise (BNN) Canada plans to increase federal bond issuance by almost 20 per cent next fiscal year to finance a growing budget deficit and a jump in debt maturities.
Canada offers stimulus budget, but may be too little to re-elect Trudeau government (Reuters) Canadian Prime Minister Justin Trudeau’s government, seeking to move past a political crisis threatening its re-election, lavished new spending on middle-class voters in its budget on Tuesday, but the measures may be spread too thin to move the needle before October’s vote.
Dollar rises on trade war angst before Fed (Reuters) The dollar gained on Wednesday, attracting safe-haven bids after reports of further tension in U.S.-China trade negotiations, but its gains were slight, with caution expected from the Federal Reserve at its policy meeting later in the day.
Abe describes BOJ’s inflation goal as means to spur growth (Reuters) Japanese Prime Minister Shinzo Abe said on Wednesday he sees the central bank’s inflation target as a means to achieve the more important goal of reviving the economy, in a sign that firing up inflation may no longer be a priority for the government.
EU leaders will ask ministers to clear negotiating mandates for U.S. trade talks (Reuters) European Union leaders will ask their trade ministers on Friday to quickly approve negotiating mandates for the European Commission to start formal trade talks with the United States, draft conclusions showed.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.647% | 2 Year | 2.462% |
| 5 Year | 1.622% | 5 Year | 2.414% |
| 10 Year | 1.723% | 10 Year | 2.6% |
| 30 Year | 2.009% | 30 Year | 3.012% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Mar 15 Actual 1.6% Prior 2.3% |
| 2:00 PM | FOMC Rate Decision (Upper Bound), Mar 20 Surv 2.50% Prior 2.50% |
| FOMC Rate Decision (Lower Bound), Mar 20 Surv 2.25% Prior 2.25% | |
| Interest Rate on Excess Reserves, Mar 21 Surv 2.40% Prior 2.40% |
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