Market Update

US tsys slightly lower, 10Y 2.158% on low volume in TY futures (200k), narrow 4 tick range.  Core EGBs mixed – Bund curve flatter, 5Y +2bps, demand for flatteners , much higher than ag volume in the current 5Y ‘Bobl’ contract, the 5s30s curve 5bps flatter to lowest levels this yr. GOCs lower, curve 2bps flatter after strong April retail sales part the core (1.5% vs 0.7%)curve flatter led by 10s, 5s30s curve 86bps new lows, 10Y roll unch 8.7/8.5 – unch from auction lvls yest.. Provis trading up to start, Ont 27s @74, Ont 48s @ 83.5. Quebec/Ontario 48 -0.6/-1.0 from -0.5 yest – Quebec’s latest fiscal projection shows 2016-17 budget surplus @ 2.5bln vs 250mln forecast in March.

News headlines 

Weakness Persists in Europe Stocks; Gold, Yen Rise: Markets Wrap (Bloomberg) Stocks across Europe were headed for a third day of losses as yet another slump in oil prices on Wednesday fed into markets. Amid a risk-off mood havens were in demand, and the yen gained with precious metals.

Oil prices slip as physical excess overpowers OPEC (Reuters) Oil slid back toward multi-month lows on Thursday, after a brief recovery early in the session, as traders warily eyed a glut of physical supply that has persisted despite OPEC-led efforts to balance the market.

Warren Buffet’s company buys into troubled Home Capital Group (Financial Post) Home Capital Group Inc. (TSX:HCG) says American investment firm Berkshire Hathaway Inc. has agreed to indirectly acquire $400 million of its common shares in a private placement and provide a new $2 billion line of credit to its subsidiary, Home Trust Company.

UK factories have best month for orders since 1988: CBI (Reuters) British factory orders have hit their highest level in nearly 30 years, according to a monthly Confederation of British Industry survey which is likely to encourage Bank of England policymakers who favor an interest rate hike.

Quebec Sees 2016-17 Surplus Swelling Tenfold to C$2.5 Billion (Bloomberg) Quebec’s second straight budget surplus will likely be a whopper. Canada’s second most populous province posted a surplus of C$2.49 billion ($1.87 billion) for the fiscal year ended March 31, according to preliminary data released Thursday by the government. That’s 10 times as large as the C$250 million surplus forecast by Finance Minister Carlos Leitao in his March 28 budget. Final figures will be announced “in the fall,” Leitao told reporters Wednesday.

Yellen’s Future at Fed Resisted by Trump Aides Wanting New Blood (Bloomberg) Federal Reserve Chair Janet Yellen’s candidacy for another term is encountering resistance from some Trump administration advisers who want a new leader at the U.S. central bank, according to two administration officials, even as the Treasury secretary indicated she may still be in the running.

Closed-Door Talks Have Bank of Canada Concerned About Trust (Bloomberg) The Bank of Canada’s top policy makers spoke almost twice as often behind closed doors as they did in public over a three year span, according to an internal review that also said private speeches could undermine public trust.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 126-23, S&P 500 futures are down -0.07% at 2431.75, Crude oil futures are up 0.75% at $42.85, Gold futures are up 0.58% at $1253, DXY is down -0.04% at 97.522, CAD/USD is down -0.53% at 0.754.

US Economic Data 

8:30 AM Initial Jobless Claims, Jun 17, 241k, est. 240k (prior 237k, revised 238k)
Continuing Claims, Jun 10, 1944k, est. 1928k (prior 1935k, revised 1936k)
9:00 AM FHFA House Price Index, m/m, Apr, est. 0.5% (prior 0.6%)
9:45 AM Bloomberg Consumer Comfort, Jun 18, (prior 50.0)
Bloomberg Economic Expense, Jun, (prior 49.5)
10:00 AM Leading Index, May, est. 0.3% (prior 0.3%)
11:00 AM Kansas City Fed Manufacturing Activity, Jun, est. 9 (prior 8)

Canadian Economic Data 

8:30 AM Retail Sales, m/m, Apr, 0.8%, est. 0.3% (prior 0.7%, revised 0.5%)
Retail Sales Ex Auto, m/m, Apr, 1.5%, est. 0.7% (prior -0.2%, revised -0.1%)


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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230