Market UpdateTsy yields 0.5-1.5bps higher, decent volume in TY futures (350k), US 10Y 2.853%. Equities lower as Trump “ready to go” with tariffs on $500bln in Chinese goods. UK gilts also lower after higher than exp public sector borrowing for June as well as hawkish comments from BOE member Tenreyro attributing Q1 slowdown to weather. GOCs lower before key May Retail Sales/ June CPI. Retail Sales expected to see a rebound from May’s 1.2% decline, while the m/m June CPI is expected to be held back by a ~2% drop in gas prices. With RRB breakevens at their lows for the year (~170 bps on RRB26s), b/e’s look cheap esp given the inflationary impact of tariffs on autos etc.
News headlines
Trump Says He’s ‘Ready To Go’ With $500 Billion in Tariffs on All China Imports (Bloomberg) President Donald Trump said he’s « ready to go » with $500 billion in tariffs on Chinese imports, saying the U.S. has been taken advantage of for too long. « I’m not doing this for politics. I’m doing this to do the right thing for our country, » Trump said in a CNBC interview aired Friday. « We are being taken advantage of and I don’t like it. »
Putin Hedges Trump Bet by Dumping Treasuries to Safeguard Assets (Bloomberg) Russian officials are hoping Vladimir Putin’s rapport with Donald Trump will lead to rapprochement with the U.S. But they’re not taking any chances. A U.S. Treasury report this week appears to show Russia liquidating dollar assets at a record pace, selling four-fifths of its cache of U.S. government debt, $81 billion worth, over a two-month period. It started in April, when the U.S. imposed the most onerous sanctions yet on allies of Putin.
Stocks Slip After Trump Tariff Talk; Dollar Dips: Markets Wrap (Bloomberg) U.S. equity futures edged lower with European stocks after President Donald Trump said he was “ready to go” with import tariffs on $500 billion of Chinese goods. Earlier in Asia stocks had reversed losses amid signs the Chinese central bank stepped in to stem weakness in the yuan. S&P stock-index futures declined along with the Stoxx Europe 600 gauge after Trump told CNBC he was ready to ratchet up protectionist measures “to do the right thing for our country”. Earlier, the Shanghai Composite Index posted the largest gain in a week as the offshore yuan paused a slide amid reports of intervention. The dollar dipped along with Treasuries. Italian bonds fell on concern that the finance minister may resign, though they pared the decline after a Treasury spokeswoman denied the reports.
Futures flat ahead of inflation, retail sales data (Reuters) Futures for Canada’s main stock index were little changed on Friday as investors awaited inflation and retail sales data. Canada’s annual inflation data is due at 8:30 a.m. ET. The annual inflation rate is expected to have risen 2.4 percent in June. Also, May retail sales is likely to have risen 1.1 percent after dropping 1.2 percent in April. September futures on the S&P/TSX index were down 0.02 percent at 7:15 a.m. ET.
Canada plays down Trump comments on NAFTA, sees trilateral deal (Reuters) Canada on Thursday played down U.S. President Donald Trump’s suggestion that he might seek separate trade deals with NAFTA partners Canada and Mexico, noting he has made similar comments before. Trump said on Wednesday the United States might hammer out a trade deal with Mexico, and then do a separate one with Canada later. Talks to modernize the North American Free Trade Agreement are moving slowly.
Canada will respond to potential auto tariffs with ‘proportional’ move: Ambassador to U.S. (BNN) The federal government has sent a blunt warning to the Trump administration — if it slaps Canada with auto tariffs, Canada will hit back. Canada’s deputy ambassador to the U.S. delivered the message Thursday in Washington during testimony at U.S. Commerce Department hearings. The department is investigating whether duties should be applied based on the premise auto imports pose a national security risk to the U.S. Putting levies on the highly integrated, economically critical North American auto industry and its supply chains would lead to large-scale layoffs on both sides of the border, numerous experts have argued.
Trudeau hopes to reduce provincial trade barriers with fall meeting (BNN) With Canadian companies facing a hardening of the border with the United States, Justin Trudeau wants to talk with his provincial and territorial counterparts later this year about breaking down trade barriers from within. The prime minister announced Thursday he will host a first ministers meeting in the fall aimed at making the country’s economy more interconnected. The gathering will likely also be the first opportunity for long-time Liberal MP Dominic LeBlanc to sit down face-to-face with all of the premiers as the federal minister responsible for intergovernmental affairs, a portfolio he took on when Trudeau shuffled his cabinet Wednesday.
Overnight markets
Overview: US 10yr note futures are down -0.052% at 120-08, S&P 500 futures are down -0.11% at 2802.25, Crude oil futures are up 0.53% at $69.83, Gold futures are down 0% at $1224, DXY is down -0.17% at 95.006, CAD/USD is down -0.28% at 0.7557.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.936% | 2 Year | 2.595% |
| 5 Year | 2.029% | 5 Year | 2.746% |
| 10 Year | 2.124% | 10 Year | 2.853% |
| 30 Year | 2.172% | 30 Year | 2.973% |
US Economic Data
There is no US economic data for today
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, May 2.0% est 1.0% (-1.2% prior) |
| Retail Sales Ex Auto MoM 1.4%, est 0.5% (-0.1% prior) | |
| CPI NSA MoM, Jun 0.1% est 0.0% (0.1% prior) | |
| CPI YoY, Jun 2.5% est 2.3% (2.2% prior) | |
| Consumer Price Index, Jun 133.6 est 133.4 (133.4 prior) | |
| CPI Core- Common YoY%, Jun 1.9% est 1.9% (1.9% prior) | |
| CPI Core- Median YoY%, Jun 2.0% (1.9% prior) | |
| CPI Core- Trim YoY%, Jun 2.0% (1.9% 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
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]