Market Update Tsys trading slightly weaker, 10Y back above 2.90% , above avg volume in TY futures(~270k), curve 0.5bps flatter ahead of FOMC , 3M libor set higher for 31st day +2.3bps to 2.711%. European bonds lower, gilt yields 4-7bps higher after solid UK employment and wage data – UK unemployment rate fell back down to 4.3% cycle low, as employment rose 168k between Dec and Feb, while wages rose at the fastest rate since Sep 2015. GOCs weaker, underperforming tsys across the curve, with provis trading up to start 0.5bps.
News headlines
Powell to Ponder Hawkish Tone in FOMC Debut: Decision Day Guide (Bloomberg) Jerome Powell will likely make headlines Wednesday with an interest-rate hike in his first meeting as Federal Reserve chairman. But look to the fine print for his biggest news.The rate-setting Federal Open Market Committee is expected to lift the target federal funds rate by a quarter percentage point to 1.5 percent to 1.75 percent after its two-day meeting in Washington on Wednesday. A policy statement will be released at 2 p.m. and he’ll host a press conference that begins 30 minutes later.
Facebook Besieged by Wall Street, Washington and Europe (Bloomberg) The company on Tuesday was beset on two continents by governments suddenly focused on data security and investors unliked its stock to the point that it lost $60 billion in value. The Menlo Park, California, company, whose social network is a ubiquitous venue for social and political life, is drawing the unaccustomed unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump. The company, Cambridge Analytica, has been implicated in dirty tricks in elections around the globe.
European Stocks Steady, Dollar Weakens Before Fed: Markets Wrap (Bloomberg) Shares in Europe pared earlier declines and the dollar fell as traders await the Federal Reserve’s first policy decision since Jerome Powell took the helm. Treasuries steadied and oil touched a the highest in almost seven weeks. Leisure and mining companies were among the biggest losers in the Stoxx Europe 600 Index, following a mixed performance in Asian equities. An index tracking the dollar’s value against trading partners dropped the most in two weeks. Oil advanced on renewed tension between producers Saudi Arabia and Iran. European bonds fell and the pound extended its advance after data on stronger wage growth, and before a Bank of England policy meeting. U.S. equity-index futures edged higher and gold climbed.
Soaring U.S. Libor Rate Trickles Into Funding Markets Worldwide (Bloomberg) From Riyadh to Sydney, short-term funding markets worldwide are starting to feel the effects of soaring U.S. dollar Libor rates. The surge in recent weeks in this key global short-term financing indicator may have a mostly technical explanation, meaning it’s probably not flashing warning signals like it was during the credit crunch or the European sovereign debt crisis. Nonetheless, it’s still making funding more costly for some borrowers outside the U.S.
Congress Stymied on $1.3 Trillion Bill With Days to Go Before Shutdown (Bloomberg) Congressional Republicans missed another target to unveil a $1.3 trillion spending bill, as talks continued early Wednesday with just days remaining for House and Senate votes to avert a third government shutdown this year. Lawmakers had hoped to announce a bill by the end of the day Tuesday, but disagreements persisted over immigration, border security, tax breaks and a rail tunnel under the Hudson River between New York and New Jersey.
TSX futures drop as Fed caution weighs (Reuters) Canada’s main stock index futures dipped on Wednesday as with investors brace for a near-certain raise U.S. interest rates and watch for signals from the Federal Reserve on how many more to expect for this year. The Fed is expected to raise interest rates at its first policy meeting under Chairman Jerome Powell, and may signal more hikes are coming in response to tax cuts and government spending that could further stoke a robust U.S. economy.
Canada regulator halts trading in First Quantum Minerals shares (Reuters) A Canadian securities regulator halted trading in shares of First Quantum Minerals Ltd on Tuesday after the stock dived 12.4 percent by late afternoon. Investment Industry Regulatory Organization of Canada did not give a reason for the trading halt, but the regulator imposes suspensions to a ensure fair and orderly market.
G20 commits to fighting protectionism, calls for ‘further dialogue’ on trade (BNN) The world’s financial leaders on Tuesday reaffirmed their commitment to fighting protectionism but called for « further dialogue and actions » on trade, just days before U.S. metals tariffs take effect and U.S. President Donald Trump readies sanctions on China. Finance ministers and central bankers of the world’s 20 biggest economies, the G20, issued the change to their communique as a two-day meeting in Buenos Aires drew to a close amid worries about the potential for a global trade war.
Overnight markets
Overview: US 10yr note futures are down -0.143% at 119-30, S&P 500 futures are down -0.15% at 2719.5, Crude oil futures are up 1.05% at $64.21, Gold futures are up 0.24% at $1315.1, DXY is down -0.27% at 90.128, CAD/USD is down -0.62% at 0.7698.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.854% | 2 Year | 2.349% |
| 5 Year | 2.087% | 5 Year | 2.703% |
| 10 Year | 2.24% | 10 Year | 2.901% |
| 30 Year | 2.364% | 30 Year | 3.132% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Mar 16th -1.1% (0.9% prior) |
| 8:30 AM | Current Account Balance, 4Q -128.2b est -125.0b (-100.6b prior) |
| 10:00 AM | Existing Home Sales, Feb est 5.40m (5.38m prior) |
| Existing Home Sales MoM, est 0.4% (-3.2% prior) | |
| 14:00 PM | FOMC Rate Decision (Upper Bound), Mar 21st est 1.75% (1.50% prior) |
| FOMC Rate Decision (Lower Bound), Mar 21st est 1.50% (1.25% 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