Market Update Tsys higher, yields 0.3-1.5bps lower led by the long end with the 10Y 2.93% , heavy volume in TY futures (465k), off the highs after BOE decision, spike in gilt yields. BOE left rates unchanged at 0.50% in a 6-3 vote as exp, yet decision seen as a ‘hawkish hold’ with BOE Haldane joining dissenters, and new guidance on QE aims to reduce bond holdings when the base rate reaches 1.5% vs 2.0% prev. Odds of an August hike jumped to 67% from 54% pre-meeting, gilt curve 2bps flatter. Bunds higher, supported by risk -off tone with peripheral yields higher, 2Y Italy +24bps after two euroskeptics were appointed by new govt, CNBC survey found 76% of executives are concerned about Italy leaving the euro zone. GOCs higher, led by the 10Y (2.15, -2.7bps), longs lagging for a second day, 10s30s 6bps vs 4.5bps, 10Y roll unch @ 1.1 from yest 10Y reopening.
News headlines
Legal Marijuana, Oil Send Canadian Stocks to Record High (Bloomberg) Canadian stocks surged to a record high on Wednesday, driven by soaring cannabis stocks and a rebound in the energy sector. The S&P/TSX Composite Index rose 0.7 percent to 16,424.82 at 10:09 a.m., above the intraday and closing high on Jan. 4. After a bout of volatility that sent global markets plunging in February, it took nearly six months for Canadian stocks to claw their way back to levels last seen at the beginning of the year. The S&P 500 Index is still trading about 3.6 percent below its Jan. 26 high.
U.S. Homes Prices Least Affordable in Almost a Decade (Bloomberg) The American dream continues to fade for many people. Housing affordability dropped this quarter to the lowest since late 2008, according to data released this month by the National Association of Realtors. In May, the median price of a previously owned homes rose to a record $264,800, NAR data show.
Trump’s Metal Tariffs Have Yielded More Than $775 Million So Far (Bloomberg) The Trump administration has collected more than $775 million so far from its metal import tariffs, as lawmakers from both parties blasted the duties and said the process for requests by companies for exclusions must improve. The tariffs President Donald Trump imposed in March have generated $582 million from steel imports and $195 million from aluminum as of last week, and the combined total is expected to top $1 billion within the next six weeks, according to the Commerce Department.
Dollar Gains, Stocks Slip as Italy Adds to Worries: Markets Wrap (Bloomberg) The dollar strengthened, Treasuries climbed and stocks slipped on Thursday as two prominent euroskeptics were handed key roles in the Italian parliament, adding to the worry list for investors already fretting over the outlook for global trade. Italian bonds and stocks slumped on the news before paring some of the drop, while the euro touched the weakest in 11 months. The main European equity gauge, already under pressure in the wake of Daimler AG’s cut to its profit outlook, headed lower and futures on the S&P followed suit. The greenback, which was strengthening after China reiterated threats to retaliate against proposed American tariffs, advanced against most major peers. The pound rose after the Bank of England held interest rates steady in a more hawkish-than-expected vote.
British Columbia cracks down on anonymous ownership amid housing crisis (Reuters) British Columbia said on Wednesday it is preparing legislation to crack down on “hidden ownership” in real estate and pledged Canada’s first public registry of property owners, amid concerns that offshore money and criminal investors are helping fuel a housing crisis in the Pacific Coast province. Real estate investors in British Columbia are able to buy housing using numbered companies, corporations and offshore and domestic trusts, which obscure true ownership and can be used to dodge taxes, the province’s Minister of Finance Carole James said in a statement.
Dollar scales 11-month peak, oil slides ahead of OPEC (Reuters) Simmering trade and political tensions and a pumped-up dollar weighed on world shares on Thursday, while oil prices were under pressure before an OPEC meeting expected to increase the world’s supply of crude. Europe’s main stock markets were back near two-month lows and Wall Street futures had also turned lower [.N], as the jitters that have dominated markets for months began to reassert themselves. [.EU] Europe’s car shares .SXAP fell to a nine-month lows after Mercedes-Benz maker Daimler (DAIGn.DE) warned the global trade tensions were slowing its sales. Italian stocks and bonds also tumbled on reports a eurosceptic had been given a key finance role [.EU][GVD/EUR].
Canadian steel not a national security threat on its own: U.S. commerce secretary (BNN) U.S. Commerce Secretary Wilbur Ross says Canada is not a national security threat to the United States and that a revitalized NAFTA could make the Trump administration’s tariffs on steel and aluminum go away. Ross also acknowledged Wednesday that the U.S. doesn’t have a trade deficit on steel with Canada. In fact, he said it has a surplus with its northern neighbour in terms of dollar value.
Overnight markets
Overview: US 10yr note futures are down -0.026% at 119-19, S&P 500 futures are down -0.05% at 2770.75, Crude oil futures are down -1.43% at $64.77, Gold futures are down -0.74% at $1265.1, DXY is up 0.15% at 95.269, CAD/USD is up 0.09% at 0.7506.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.845% | 2 Year | 2.562% |
| 5 Year | 2.026% | 5 Year | 2.801% |
| 10 Year | 2.162% | 10 Year | 2.928% |
| 30 Year | 2.214% | 30 Year | 3.063% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Jun 16th 218k est 220k (218k prior) |
| Continuing Claims, Jun 9th 1723k est 1710k (1697k prior) | |
| Philadelphia Fed Business Outlook, Jun 19.9 est 29.0 (34.4 prior) | |
| 9:00 AM | FHFA House Price Index MoM, Apr est 0.5% (0.1% prior) |
| 9:45 AM | Bloomberg Economic Expectations, Jun (54.5 prior) |
| Bloomberg Consumer Comfort, Jun 17th (55.8 prior) | |
| Leading Index, May est 0.4% (0.4% prior) |
Canadian Economic Data
| 8:30 AM | Wholesale Trade Sales MoM, Apr est 0.3% (1.1% 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