Market Update Tsys mixed, curve steeper, narrow range in TY futures , 10Y 2.92% (+1bp), close to one month high yield. UK gilts rallying, yields 3-4 bps lower after BOE Gov Carney dovish comments suggesting rate hike may be put off for now due to recent weak economic data, probability of a May hike falling sharply to 50% from ~80% while the GBP fell to a two week low. GOCs lower, underperforming tsys by 1-2 bps after steep drop in crude ~7:00am after Trump tweeted oil prices are artificially high. March Retail Sales/CPI data on tap. 10Y GOC 2.35% highest since Feb 22nd, 2s10s 1.5bps steeper. Provis closed 1bp tighter yest, Ont 27s 61.5/60.5 (unch)
News headlines
Commodities Shoulder the Blame for Hits to Treasuries and Stocks (Bloomberg) The recent weeks of sanctions, tariff dust-ups and tight oil supplies that jolted commodities prices higher have now got equities and Treasuries investors on the run, according to Weeden & Co. Unlike in February, when optimism over global growth sent Treasury yields higher, this time it’s the price pressure from rising metals, Weeden’s Michael Purves wrote in a note to investors Thursday.
OPEC, Russia Find Reasons to Keep Cutting After Hitting Goal (Bloomberg) The oil stockpile surplus that’s weighed on prices for three years is all but gone, but instead of celebrating victory some of the world’s largest producers are finding reasons to continue cutting output. OPEC and Russia’s historic agreement has achieved impressive results, wiping out 97 percent of the targeted inventory surplus. Still, the curbs should continue because another important goal — boosting investment in oil and gas production — remains far out of reach, said Saudi Energy Minister Khalid Al-Falih. There’s nothing to fear from prices rising even further from their current three-year high, he said.
Carney Hints That BOE Rate Hike Next Month Isn’t a Done Deal (Bloomberg) Bank of England Governor Mark Carney unexpectedly damped expectations for an interest-rate increase next month, a move that many investors had considered a sure thing. In a BBC interview that sent the pound lower, Carney said policy makers will make their decision “conscious that there are other meetings” at which they could act this year. That was enough to shake confidence in a move in May, with market pricing dropping to less than 50 percent from more than 80 percent earlier in the week.
Dollar Gains as Treasuries Steady; Stocks Struggle: Markets Wrap (Bloomberg) The recent weeks of sanctions, tariff dust-ups and tight oil supplies that jolted commodities prices higher have now got equities and Treasuries investors on the run, according to Weeden & Co. Unlike in February, when optimism over global growth sent Treasury yields higher, this time it’s the price pressure from rising metals, Weeden’s Michael Purves wrote in a note to investors Thursday.
Canada adds 42,800 jobs in March: ADP (Reuters) Canada added 42,800 jobs in March, led by hiring in the construction industry, according to a report from ADP released on Thursday. The new report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies.
TSX futures down ahead of inflation data, dip in oil prices (Reuters) Stock futures pointed to slightly lower opening for Canada’s main stock index on Friday as investors awaited inflation data and as criticism of rising prices by U.S. President Donald Trump weighed on oil. June futures on the S&P TSX index were down 0.1 percent at 7:15 a.m. ET. The annual inflation rate is expected show a 2.4 percent rise in March, from 2.2 percent in February. Annual inflation and retail sales data are both due at 8:30 a.m. ET. “Oil prices are artificially Very High! No good and will not be accepted!” Trump wrote in a post on Twitter.
Freeland says auto rules will be ‘core’ of new NAFTA deal (BNN) New automotive rules will be the centrepiece of a new NAFTA agreement, Foreign Affairs Minister Chrystia Freeland said Thursday during a round of negotiations she characterized as being focused on cars. In an exchange with reporters between sessions at the U.S. trade representative’s office across from the White House, Freeland said she and her peers are now down to the finest details on auto rules of origin.
Overnight markets
Overview: US 10yr note futures are down -0.013% at 119-26, S&P 500 futures are down -0.04% at 2692, Crude oil futures are down -0.85% at $67.71, Gold futures are down -0.22% at $1345.8, DXY is up 0.2% at 90.117, CAD/USD is down -0.25% at 0.7912.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.947% | 2 Year | 2.428% |
| 5 Year | 2.182% | 5 Year | 2.755% |
| 10 Year | 2.345% | 10 Year | 2.916% |
| 30 Year | 2.444% | 30 Year | 3.11% |
US Economic Data
There is no US economic data for today.
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, Feb est 0.4% (0.3% prior) |
| Retail Sales Ex Auto MoM, Feb est 0.4% (0.9% prior) | |
| CPI NSA MoM, Mar est 0.4% (0.6% prior) | |
| CPI YoY, Mar est 2.4% (2.2% prior) | |
| Consumer Price Index, Mar est 132.9 (132.5 prior) | |
| CPI Core- Common YoY%, Mar est 2.0% (1.9% prior) | |
| CPI Core- Median YoY%, Mar est 2.2% (2.1% prior) | |
| CPI Core- Trim YoY%, Mar est 2.1% (2.1% prior) |
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