Market Update US tsys weaker, 10Y 2.91 (+1.5bps), light volume in TY futures (240k) risk-on with S&P futures +15, crude higher after OPEC deal to increase supply. EGBs lower after EU Services PMI came in stronger than exp, also strong French & German PMIs. In Canada, GOCs lower in line with tsys, curve 0.5bps flatter with longs outperforming before Retail Sales/CPI at 8:30. Can/US spreads little changed yest in the rally which saw 10s move below 2.12% and despite $3.55bln in corp supply – 3 tranche Hydro one, 5Y LB deposit note @ 145, TD 5Y covered & 5Y covered FRN @ 31. The latter looked the most interesting on a RV basis, considering the reopned 1.68/21 trade 17 on ASW, the new 5Y @ 31 seem like a decent pickup on AAA credit curve.
News headlines
Euro-Area Economy Sees Silver Lining as Growth Momentum Picks Up (Bloomberg) The much awaited rebound in euro-area growth momentum may have finally begun. A gauge measuring private-sector activity unexpectedly increased in June, suggesting the economy is gathering pace after a slow start to the year. With output strengthening in the bloc’s two largest economies, Germany and France, the numbers underpin the European Central Bank’s prediction that a rebound is on the cards, even if it arrives later than expected.
Europe’s Retaliation Takes U.S. Trade Tensions to the Next Level (Bloomberg) The European Union’s retaliatory tariffs on U.S. products came into force on Friday, the latest shots fired in what increasingly looks like a global trade war. The EU, the world’s largest trading bloc, imposed levies on 2.8 billion euros ($3.3 billion) of American products in response to U.S. duties on its steel and aluminum exports that were justified on national security grounds.
Stocks Jump on Data; Oil Gains as OPEC Nears Deal: Markets Wrap (Bloomberg) European stocks rose along with U.S. futures as manufacturing and services data from the euro zone’s largest economies beat analysts’ expectations, also lifting the region’s common currency. Oil jumped as OPEC inched closer to an agreement on output. Risk sentiment also benefited from reports that some U.S. officials were trying to restart trade talks with China before President Trump’s tariffs come into effect next month. Declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts as investors awaited developments. U.S. Treasuries fell and the dollar edged lower.
BlackBerry posts quarterly loss (Reuters) BlackBerry Ltd (BB.TO) reported a quarterly loss on Friday, compared with a year-ago profit when the Canadian software maker received a one-time arbitration payment of $940 million from chipmaker Qualcomm Inc (QCOM.O). The company’s net loss was $60 million, or 11 cents per share, for the first quarter ended May 31, compared with a profit of $671 million, or $1.23 per share, a year earlier. Total revenue fell to $213 million from $235 million.
Stocks set for worst week in three months on trade war worries (Reuters) World shares rose on Friday but were set to end a second week lower amid intensifying worries over the fallout of a trade dispute resulting from U.S. tariffs, while oil prices were higher ahead of an OPEC meeting later in the day. The MSCI All-Country World index .MIWD00000PUS, which tracks stocks in 47 countries, was up 0.2 percent in the European morning but down 1.3 percent on the week, its worst weekly showing since mid-March.
U.S. banks clear Fed’s stress test hurdle (BNN) Big banks cleared the first hurdle of this year’s U.S. stress tests as the Federal Reserve found all 35 lenders examined could withstand a severe economic downturn, though Goldman Sachs Group Inc. () trailed the rest of Wall Street in a key measure of leverage. The results announced Thursday mark the third straight year every bank exceeded the Fed’s minimum capital demands, indicating the industry’s increased comfort with reviews that once triggered headaches. The exams assess how much capital lenders would have left after enduring financial shocks. This year, Goldman Sachs and Morgan Stanley () came closest to the edge among Wall Street behemoths.
Overnight markets
Overview: US 10yr note futures are down -0.117% at 119-23, S&P 500 futures are up 0.49% at 2766, Crude oil futures are up 1.45% at $66.49, Gold futures are up 0.09% at $1271.7, DXY is down -0.27% at 94.605, CAD/USD is down -0.29% at 0.7532.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.852% | 2 Year | 2.55% |
| 5 Year | 2.026% | 5 Year | 2.781% |
| 10 Year | 2.16% | 10 Year | 2.913% |
| 30 Year | 2.219% | 30 Year | 3.058% |
US Economic Data
| 9:45 AM | Markit US Manufacturing, Jun est 56.1 (56.4 prior) |
| Markit US Services PMI, Jun est 56.5 (56.8 prior) | |
| Markit US Composite PMI, Jun (56.6 prior) |
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, Apr est 0.0% (0.6% prior) |
| Retail Sales Ex Auto MoM, Apr est 0.5% (-0.2% prior) | |
| CPI NSA MoM, May est 0.4% (0.3% prior) | |
| CPI YoY, May est 2.6% (2.2% prior) | |
| Consumer Price Index, May est 133.9 (133.3 prior) | |
| CPI Core- Common YoY%, May est 1.9% (1.9% prior) | |
| CPI Core- Median YoY%, May est 2.1% (2.1% prior) | |
| CPI Core- Trim YoY%, May est 2.1% (2.1% 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