Market Update Tsys  trading higher, rebounding from yesterday’s post FOMC minutes sell-off, the 10Y 2.92%(-3bps), on heavy volume in TY futures (~540k).  Equities lower in Europe, S&P futures +5.25, crude slightly lower 61.53. Core EGBs mixed – gilts lower, bunds slightly higher. Bunds rallying on weaker German IFO – the expectations component dropping to the lowest since last March. Gilts lagging bunds, tsys despite downward revision in Q4 GDP to 0.4% from 0.5%.  The US auctions $29bln in 7Y notes at 1:00pm.  GOCs sharply higher, outperforming tsys 2-4bps after Retail Sales fell 0.8% in Dec vs unch exp , with the core down 1.8% vs 0.3% increase exp.

News headlines

Fed’s Quarles Says U.S. Economy in ‘Best Shape’ Since Crisis (Bloomberg) Federal Reserve Governor Randal Quarles delivered an upbeat assessment of the U.S. economy and endorsed a “gradual” path for raising interest rates in his first public speech on monetary policy since joining the central bank in October. “The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis,” Quarles said in prepared remarks Thursday in Tokyo.

ECB Keeps Policy Unchanged as Euro Gains Risk Curbing Inflation (Bloomberg) The European Central Bank maintained its pledge to move slowly in removing euro-area stimulus, setting the stage for President Mario Draghi to face questions on the strength of the single currency. Policy makers reiterated that they’ll continue buying 30 billion euros ($37 billion) of assets a month until at least the end of September. They kept interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net bond purchases.

Top Political Donors Have Already Given $66 Million for Midterms (Bloomberg) Billionaire Tom Steyer and packaging king Richard Uihlein are leading the charge among mega-donors seeking to influence the November elections, with the top 10 contributors logging a combined $65.7 million so far in the current campaign cycle.  With control of Congress at stake, the top Democratic and Republican donors will be pressed to finance a battle that’s already triggering television advertising and expected to set a spending record. The first midterm elections under President Donald Trump will be a high-priced test of whether the GOP can keep majorities in both the House and Senate. As many as a dozen Senate seats and 80 in the House could be in play.

Big Banks in U.S. Forced to Reevaluate Hiring Foreign Workers (Bloomberg) Big banks in the U.S., which have been seeking to hire more foreign workers in recent years under the H-1B visa program, are now being forced to reconsider their approach after the Trump administration made it harder to obtain the work permits. Eight major investment banks increased their H-1B applications for high-skilled workers by almost 60 percent over five years to more than 7,000 in fiscal year 2017, according to a Bloomberg analysis of visa filing data.

Canada close at 2-1/2-week high, led by financials (Reuters) Canada’s main stock index closed at a 2-1/2-week high on Wednesday, led by financials and industrials, with all sectors but technology posting gains. The Toronto Stock Exchange’s S&P/TSX composite index closed up 84.57 points, or 0.55 percent, higher at 15,524.01, its strongest close since Feb. 2. Canadian stocks bucked a downward trend in global stocks that were driven lower by a stronger U.S. dollar and rising government bond prices after minutes of the Federal Reserve’s January policy meeting showed confidence in the need to keep raising interest rates.

CIBC beats first-quarter profit estimates, raises dividend (BNN) Canadian Imperial Bank of Commerce set the bar for its peers on Thursday with fiscal first-quarter profit easily beating expectations. Overall net income in the three months ending Jan. 31 was $1.33-billion. On an adjusted basis, CIBC earned $1.43-billion or $3.18 per share. Analysts, on average, were expecting $2.83 in earnings per share.

Loblaw books $107-million charge on bread scandal, warns of ‘exceptional headwinds’ (BNN) The head of Loblaw Companies is warning of major headwinds facing his food retailing empire as it contends with fallout from last year’s stunning bread price-fixing admission. Total revenue at Loblaw dipped 0.9 per cent in the fourth quarter to $11.03-billion. Adjusted quarterly profit rose 12.2 per cent to $441-million or $1.13 per share. Analysts, on average, expected $1.11 in earnings per share.

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-11, S&P 500 futures are up 0.25% at 2705.5, Crude oil futures are down -0.42% at $61.42, Gold futures are down -0.43% at $1326.4, DXY is up 0.12% at 90.112, CAD/USD is down -0.06% at 0.7877. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.841% 2 Year 2.266%
5 Year 2.131% 5 Year 2.665%
10 Year 2.327% 10 Year 2.921%
30 Year 2.466% 30 Year 3.195%

US Economic Data

8:30 AM Initial Jobless Claims, Feb 17th 222k est 230k (230k prior)
  Continuing Claims, Feb 10th 1875k est 1935k (1942k prior)
10:00 AM Leading Index, Jan est 0.7% (0.6% prior)
11:00 AM Kansas City Fed Manf. Activity

Canadian Economic Data

7:10 AM CFIB Business Barometer, Feb 62.4 (62.7 prior)
8:30 AM Retail Sales MoM, Dec -0.8% est 0.0% (0.2% prior)
  Retail Sales Ex Auto MoM, Dec -1.8% est 0.3% (1.6% 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