Market Update

US tsys significantly higher, yields 4-6bps lower with the 10Y below 2.50% for the first time since Jan 2018, now 2.475 (-6bps). Weak European PMIs driving 10Y bund below 0% for the first time since 2016.  German Manuf PMI fell to 44.7 in March vs 48 exp, the third consecutive month of contraction, new orders falling to the lowest since 2009. UK gilts lagging the rally in tsys, bunds – the EU has agreed to delay Brexit by two weeks from next Friday.  GOC yields 2-6bps lower , curve flatter led by 10s, 10Y 1.60%, the GOC curve trading below cash thru 2029. Two corp deals yest – $750mln IPL 29s @ ~522 & $500mln Bruce Power @275 – the IPLs gapping in ~20bps on the break

News headlines

Stocks Drop, Bonds Climb After German Data Shocker: Markets Wrap (Bloomberg) European stocks fell with U.S. equity futures and Treasuries rose after miserable data from the German manufacturing sector renewed worries about global growth on Friday. The yield on Germany’s 10-year bonds — Europe’s benchmark — tumbled below zero.

U.S. corporate breakups could be catalyst to change Dow index (Reuters) Shake-ups come infrequently for the Dow Jones Industrial Average, but some degree of change may be in the works for the stock index as two of its 30 constituents prepare to transform from large conglomerates into smaller companies.

German manufacturing contracts for third month in a row: PMI (Reuters) German manufacturing contracted further in March, a survey showed on Friday, compounding fears that unresolved trade disputes are exacerbating a slowdown in Europe’s biggest economy.

Skittish investors pull more than $20 billion from stocks, rush into bonds: BAML (Reuters) Global equity funds saw massive outflows this week, a sharp reversal from last week’s inflows as pessimism over economic growth gripped investors once again, driving them instead to search for yield in credit and buy safer assets like bonds.

China, Italy looking to strengthen trade, infrastructure ties-Xi (Reuters) Italy and China want to revive the spirit of the ancient Silk Road by deepening their trade and investment ties, Chinese President Xi Jinping said on Friday during a trip to Rome that has raised eyebrows in Washington.

TSX futures fall on lower crude prices (Reuters) Futures for Canada’s main stock index traded lower on Friday, as oil prices dropped on concerns over a slowdown in global economic growth.

Trump: China trade deal likely; carmakers can avoid tariffs with U.S. plants (Reuters) U.S. President Donald Trump said trade negotiations with China were progressing and a final agreement “will probably happen,” adding that his call for tariffs to remain on Chinese imported good for some time did not mean talks were in trouble.

Fitch warns Canada’s debt close to level incompatible with ‘AAA’ status (BNN) A major credit rating agency is warning Ottawa that sustained deficits will make Canada more vulnerable to an economic downturn.

Overnight markets

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.573% 2 Year 2.369%
5 Year 1.509% 5 Year 2.286%
10 Year 1.615% 10 Year 2.478%
30 Year 1.924% 30 Year 2.914%

US Economic Data

9:45 AM Markit US Manufacturing PMI, Mar P Surv 53.5 Prior 53.0
          Markit US Services PMI, Mar P Surv 55.5 Prior 56
  Markit US Composite PMI, Mar P Prior 55.5
10:00 AM Wholesale Inventories MoM, Jan Surv 0.1%  Prior 1.1%
    Existing Home Sales, Feb Surv 5.10m Prior 4.94m
    Existing Home Sales MoM, Feb Surv 3.2% Prior -1.2%
2:00 PM Monthly Budget Statement, Feb Surv -$227.0b Prior -$215.2b

Canadian Economic Data

8:30 AM Retail Sales MoM, Jan Surv 0.4% Actual -0.3% Prior -0.1%
               Retail Sales Ex Auto MoM, Jan Surv 0.1% Actual 0.1% Prior -0.5%
           CPI NSA MoM, Feb Surv 0.6% Actual 0.7% Prior 0.1%
          CPI YoY, Feb Surv 1.4% Actual 1.5% Prior 1.4%

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