Market Update It has been a rather uneventful Asian and start to European trading session with US Treasuries currently trading mixed, curve touch flatter as 30-yr outperforms the rest of the curve, on mild return to risk-on sentiment. 10-yr treasury yield is unchanged at 2.897% and the 5s/30s yield spread 1.2bp flatter at 24.8bps. Less risk on than cooling of risk-off tone, no new revelations on US/China tit-for-tat tariff-fest while EU slaps E2.8B tariffs on US, not much economic data seen to direct markets and therefore volumes have been low. With little US data due today as well attention will remain on UK and European politics, central bank officials at ECB forum and OPEC meeting in Vienna. Futures trade mildly lower, near low end narrow overnight range on modest volume, 10s lead decline. Fed Chair Powell participates in policy panel w/ECB Draghi and BoA Lowe from Portugal at 9h30 am.
News headlines
Trump threatens China with new tariffs on another $200 billion of goods (CNN Money) President Donald Trump just raised the stakes in the fight with China over trade. The White House said Monday evening that if China goes through with its promise to retaliate against the US tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods. “Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States,” Trump said in a statement.
U.S. Quits UN Human Rights Council, Saying It’s Anti-Israel (Bloomberg) The Trump administration withdrew from the United Nations Human Rights Council on Tuesday, making good on a pledge to leave a body it accused of hypocrisy and bias against Israel. “For too long, the Human Rights Council has been a protector of human rights abusers, and a cesspool of political bias,” Nikki Haley, the American ambassador to the UN, said Tuesday at the State Department in Washington. She said the decision was an affirmation of U.S. respect for human rights, a commitment that “does not allow us to remain a part of a hypocritical and self-serving organization that makes a mockery of human rights.”
These Stocks Have Left Amazon Behind This Year (WSJ) Share prices of department stores like Macy’s and Dillard’s have risen more than 50%. Everyone knows that Amazon.com AMZN 0.64% has left retailers for dead. Just don’t tell investors in some stocks of big store chains. Shares of retailers are enjoying their biggest rally in years, an unexpected turnaround fueled by strong earnings, buoyant consumer confidence and a nationwide shopping spree.
Canada Senate approves recreational use of marijuana (Reuters) Canada’s upper house of parliament on Tuesday approved a revised bill to legalize recreational marijuana, setting the stage for the country to become the first Group of Seven nation to legalize cannabis. The Senate voted 52-29 in favor of the revised bill from the elected House of Commons, paving the way for a fully legal cannabis market within eight to 12 weeks. Prime Minister Justin Trudeau’s Liberals had made legalizing recreational use of marijuana part of their successful 2015 election campaign, arguing the new law would keep pot out of the hands of underage users and reduce related crime.
Starbucks closing cafes; CEO calls performance ‘not acceptable’ (Reuters) Starbucks Corp (SBUX.O) forecast on Tuesday slower sales growth than Wall Street expected this quarter and plans to close about 150 U.S. cafes next fiscal year to boost performance, sending its shares down 2 percent after hours. The world’s largest coffee chain is facing competition both from upscale coffee houses and lower-priced fast-food chains like McDonald’s Corp (MCD.N) and Dunkin’ Donuts (DNKN.O). It has missed analysts’ estimates for same-store sales in the U.S.-dominated Americas region in five of the last six quarters.
After surrendering CSeries, Bombardier pushes regional plane revival (Reuters) As Bombardier surrenders hopes of securing a top spot in commercial aviation with the sale of its money-losing CSeries jet program to Airbus , the Canadian company is now drawing up plans to breathe new life into its older regional planes. Bombardier is shoring up its loss-making regional jets and turboprops with a mixture of hard-sell, cost-cutting and outsourcing. It is also growing its line of business jets after a cash squeeze and production delays forced it to cede a majority stake in its high-tech CSeries which aims to break into the market for mainline jets dominated by Airbus and Boeing.
Overnight markets
Overview: US 10yr note futures are down -0.026% at 119-26, S&P 500 futures are up 0.27% at 2773.75, Crude oil futures are up 1.03% at $65.74, Gold futures are down -0.21% at $1275.9, DXY is up 0.06% at 95.068, CAD/USD is up 0.09% at 0.752.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.844% | 2 Year | 2.549% |
| 5 Year | 2.023% | 5 Year | 2.769% |
| 10 Year | 2.157% | 10 Year | 2.893% |
| 30 Year | 2.2% | 30 Year | 3.026% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Jun 15th 5.1% (-1.5% prior) |
| 8:30 AM | Current Account Balance, 1Q -124.1b est -129.0b (-116.1b prior) |
| 10:00 AM | Existing Home Sales, May est 5.52m (5.46m prior) |
| Existing Home Sales MoM May, est 1.1% (-2.5% prior) |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230