Market Update
Tsys trading mixed, short end yields slightly higher, 10Y 1bp lower @ 2.65%, longs outperforming with the 30Y -2bps @ 2.916%. Above avg volume in TY futures (>400k). US shutdown likely to delay release of key retail sales, GDP data. US equity futures back to unch, recovering earlier losses. Core EGBs lower, 10Y gilt +3bps @ 1.37% highest since Oct, bunds lower despite positive news on German govt coalition over the weekend. GOCs opening unch, yields slightly lower in longs. GOC 5s30s steepening 2bps Friday after reaching new narrows in wake of BOC hike, similar move in US tsy curve. OIS mkts are pricing in at least two more 25bp rate hikes by year end which would put the o/n rate at 1.75%. NAFTA talks start this Tuesday in Montreal. Provi spds ~2bps wider last week with resumption of supply, despite 5-7 bp rise in underlying GOC yields.
News headlines
Shutdown Extends Into Third Day as Senate Fails to End Impasse (Bloomberg) Lawmakers failed to negotiate an end to the government shutdown Sunday despite a bipartisan effort to broker a deal, raising the political stakes as federal agencies begin closing at the start of their normal workweek.
OPEC, Russia Signal Global Oil Alliance May Endure Past 2018 (Bloomberg) OPEC and Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signaled their readiness to cooperate beyond that.
Merkel Closes in on Fourth Term With Her Familiar Coalition Ally (Bloomberg) Chancellor Angela Merkel moved forward in her bid to form a fourth-term government after her prospective coalition partner agreed to shelve its misgivings and enter negotiations on a common policy platform for Germany.
Dollar Slips as Shutdown Drags On; Stocks Mixed: Markets Wrap (Bloomberg) The dollar declined and Treasuries halted a recent selloff as investors assessed the impact of the U.S. government’s partial shutdown. European and Asian equities were mixed.
The Global Economy Is Doing Just Fine, But the Davos Elite Is Worried (Bloomberg) If things seem too good to be true in the global economy, they probably are. That’s according to some of the investors, Nobel laureates and academics attending the World Economic Forum’s annual meeting in Davos, Switzerland, which kicks off on Monday.
Sobeys CEO vows to provide best home delivery ‘on the planet’ with Ocado partnership (BNN) Sobeys is vowing to step up its game online, announcing a deal on Monday that its CEO says will give it the best delivery service « on the planet ». The Canadian supermarket operator is teaming up with Hatfield, U.K.-based Ocado to launch a new digital shopping platform. Under the agreement, Ocado will work exclusively with Sobeys on its web site, a new automated warehouse, and delivery management.
Canada PM to boost support for NAFTA in U.S. as talks intensify (Reuters) Canadian Prime Minister Justin Trudeau will visit three major U.S. cities next month to bolster support for NAFTA as negotiators revising the trade pact tackle major differences, officials said on Friday.
Halliburton posts wider fourth-quarter loss on tax provision (Reuters) Halliburton Co (HAL.N) reported a wider loss in the fourth quarter, as it set aside $1.05 billion for income tax payments related to recently-passed changes in U.S. corporate taxation.
Overnight markets
Overview: US 10yr note futures are down -0.102% at 122-05, S&P 500 futures are down -0.05% at 2809.5, Crude oil futures are down -0.09% at $63.31, Gold futures are down -0.15% at $1331.1, DXY is down -0.02% at 90.557, CAD/USD is down -0.15% at 0.8016.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.804% | 2 Year | 2.073% |
| 5 Year | 2.032% | 5 Year | 2.453% |
| 10 Year | 2.239% | 10 Year | 2.654% |
| 30 Year | 2.367% | 30 Year | 2.923% |
US Economic Data
| 8:30 AM | Chicago Fed Nat Activity, Dec 0.27 est 0.22 (0.15 prior) |
Canadian Economic Data
| 8:30 AM | Wholesale Trade Sales MoM, Nov 0.7% est 1.2% (1.5% prior) |
| 10:00 AM | Blomberg Nanos Confidence, Jan 19th (60.5 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