Market Update
US tsys trading higher, on heavy volume in TY futures (600k), 10Y 2.755(-3bps). Risk off tone (S&P futures -17, crude 52.94 -1.6%) driven by ongoing trade concerns, as the US is intensifying efforts to have a Huawei executive extradited to the US, according to an article in the Globe & Mail. The US shutdown extends to day 32 with House democrats vowing to reject Trump’s latest proposal to reopen the govt . Core EGBs higher, 10y bunds 1.5bps lower – the ZEW fell sharply in Jan to 27.6 from 43, while expectations came in slightly above exp at -15 vs -18. In Canada, GOCs are higher, lagging tsys by 1bp with the 10Y 1.995%. Wholesale Trade and Manufacturing Sales for Nov both coming in weaker than exp – Wholesale Sales -1.0% m/m the largest drop since Mar 2016. Nov Retail Sales scheduled for tomorrow -0.6% exp
News headlines
China demands U.S. drop Huawei extradition request with Canada (BNN) China on Tuesday demanded the U.S. drop a request that Canada extradite a top executive of the tech giant Huawei, shifting blame to Washington in a case that has severely damaged Beijing’s relations with Ottawa.
The Daily Chase: TSX hot streak continues; Notley lands energy investment (BNN) The S&P/TSX Composite Index is sporting the 12th best year-to-date return of any stock market around the world after logging its 12th straight day of gains yesterday; over that span, Canadian stocks have rallied 8.03 per cent.
Stock futures lower on global growth worries after IMF trims outlook (Reuters) U.S. stock index futures fell on Tuesday, as investors were hit by fears of global economic slowdown after the International Monetary Fund trimmed its growth forecasts in a week of heavy corporate earnings.
Oil drops nearly 2 percent as China slowdown bites (Reuters) Oil prices fell nearly 2 percent on Tuesday on signs that an economic slowdown in China is spreading, stoking concerns about global growth and fuel demand.
China’s growth slowed by service, farm sectors, despite construction rebound (Reuters) Weakness in the service and farm sectors slowed China’s economic growth in the fourth quarter, despite a strong pickup in construction activity, official data showed on Tuesday.
Global Stocks Fall, Bonds Rise as Risk Rally Flags: Markets Wrap (Bloomberg) Stocks dropped on Tuesday alongside U.S. futures as a cloudy outlook for trade and growth continued to weigh on risk appetite. Treasuries climbed and the yen strengthened.
Spanish yields hit six-month lows after record demand at 10-year bond sale (Reuters) Spain’s long-dated government bond yields fell to six-month lows on Tuesday after a new 10-year bond, sold via a syndicate of banks, attracted record demand.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.92% | 2 Year | 2.589% |
| 5 Year | 1.933% | 5 Year | 2.593% |
| 10 Year | 1.997% | 10 Year | 2.752% |
| 30 Year | 2.218% | 30 Year | 3.065% |
US Economic Data
| 8:30 AM | Wholesale Trade Sales MoM, Nov Surv -0.3% Prior 1.0% |
| Manufacturing Sales MoM, Nov Surv -1.0% Prior -0.1% |
Canadian Economic Data
| 10:00 AM | Existing Home Sales, Dec Surv 5.24m Prior 5.32m |
| Existing Home Sales MoM, Dec Surv -1.5% Prior 1.9% |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230