Market Update

US tsys trading higher, 10Y 2.68% (-1bp), avg volume in TY futures (320k). EGBs outperforming, gilt yields in risk-off mode before ECB Draghi comments this aft and weak German business confidence data.  Equity futures higher (S&P +11) on more US/China trade talk news, and despite a ~20% plunge in Kraft after the co. revealed it is under an SEC investigation. Raft of Fed speakers today including VC Clarida and Harker in panel discussion in NYC.  GOCs rallying, 10Y below 1.90% before Dec Retail Sales (exp -0.3% vs -0.9% Nov). Yest BOC Poloz  said future rate hikes are uncertain due to the risk of a housing downturn and weak investment.  Ford bonds 5-10bps wider on emissions testing inaccuracies, Kraft Heinz also wider on SEC news.

News headlines

A Fed pivot, born of volatility, missteps, and new economic reality (Reuters) The Federal Reserve’s promise in January to be “patient” about further interest rate hikes, putting a three-year-old process of policy tightening on hold, calmed markets after weeks of turmoil that wiped out trillions of dollars of household wealth.

CANADA STOCKS-Trade optimism, higher oil prices lift TSX futures (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Friday on hopes that Washington and Beijing are on course to resolve their trade dispute.

Euro zone core inflation edges higher in Jan (Reuters) Euro zone headline consumer inflation slowed slightly in January because of a sharp deceleration of energy price growth, but core inflation watched closely by the European Central Bank in policy decisions edged slightly higher, data showed on Friday.

U.S., China haggle over toughest issues in trade war talks (Reuters) Top U.S. and Chinese trade negotiators haggled on Thursday over the details of a set of agreements aimed at ending their trade war, just one week before a Washington-imposed deadline for a deal expires and triggers higher U.S. tariffs.

EU debates how and when to start trade talks with Trump (Reuters) European ministers will begin debating on Friday how and when to start trade negotiations with the United States, aware that U.S. President Donald Trump may impose punitive tariffs on EU car imports if the bloc waits too long.

Stocks Climb With Bonds Before Trump-China Meeting: Markets Wrap (Bloomberg) U.S. equity futures extended gains on Friday alongside stocks in Europe as investors awaited results from top-level trade talks between America and China. Oil rose, while Treasuries posted a modest advance.

Oil Set for Second Weekly Gain on Trade Optimism and OPEC Curbs (Bloomberg) Oil headed for a second weekly increase as the U.S. and China worked on resolving their trade impasse, and as output cuts by OPEC and its allies balanced surging American supply.

Bank of Canada’s Poloz says rate hike path ‘highly uncertain’ (BNN) Bank of Canada Governor Stephen Poloz said the path toward higher interest rates is “highly uncertain” due to lingering questions around housing and investment, even as he stuck to his message that borrowing costs eventually need to head higher.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.789% 2 Year 2.52%
5 Year 1.81% 5 Year 2.507%
10 Year 1.907% 10 Year 2.679%
30 Year 2.161% 30 Year 3.036%

US Economic Data

Canadian Economic Data

8:30 AM Retail Sales MoM, Dec Surv -0.3% Prior -0.9%
  Retail Sales Ex Auto MoM, Dec Surv -0.3% Prior -0.6%

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