Market Update

Tsys trading higher, TY futures near top of overnight range on relatively strong volume (405k), 10Y 2.622%. Tsys rising in Asia after the BOJ announced unch policy, maintaining stimulus with Kuroda stressing inflation is still far from 2.0% target. Trump announced tariffs on imported solar panels & washing machines.  Equities higher in Europe, thou S&P futures are lower (-2.0), giving up earlier gains, while crude remains close to $64 before inventory data later this morning. GOCs higher in line with tsys, 10Y 2.225% after reaching briefly above 2.25% yest aft.  Provincials unch yest after ~4bp widening off the lows of last week. We like 5Y provis after the rise in underlying GOC yields, while provi spds have lagged the narrowing in IG, particularly over 5Y product in ‘high beta’ sectors like reits/telcos.  If rates consolidate around these levels, there is an oportunity to play the bank sub/senior basis which will narrower since y/e, we feel has room to narrow further. 

News headlines

Trump Signs Bill Ending Shutdown as Immigration Battle Looms (Bloomberg) President Donald Trump signed a government spending bill Monday evening that ends a three-day partial shutdown, the White House said in a statement. But that leaves the fight over a politically charged immigration proposal unresolved for at least another three weeks.

Trump Marks Second Year With Asia Tariffs World Has Feared (Bloomberg) After a year of chest thumping, President Donald Trump has finally delivered the type of trade blow his political base has been craving. Trump slapped tariffs on imported solar panels and washing machines on Monday in his first major move to level a global playing field he says is tilted against American companies. The decision came two days after the one-year anniversary of his inauguration as he prepares to travel to the World Economic Forum in Davos, Switzerland, where his “America First” stance is likely to be at odds with the global business and political elite.

Kuroda Pushes Back Against Speculation Tightening Is Near (Bloomberg) Governor Haruhiko Kuroda delivered a message to investors speculating that the Bank of Japan might be nearing the start of policy normalization: Not so fast. Kuroda said the BOJ wasn’t in a position to even consider exiting its current policy, after it maintained its massive stimulus program and kept its inflation and economic forecasts unchanged earlier on Tuesday.

Bonds Advance as Stock Rally Sputters; Oil Climbs: Markets Wrap (Bloomberg) Government bonds advanced after the Bank of Japan signaled the age of easy money isn’t over yet, while U.S. stock futures and European equities pared a gain as optimism around corporate earnings and the end of the shutdown began to ebb. Gold and oil rose.

Netflix crosses US$100B market cap as subscribers surge (BNN) Netflix Inc snagged two million more subscribers than Wall Street expected in the final three months of last year, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.

IMF raises outlook for Canadian economy, upgrades global economic projections (CBC) The International Monetary Fund raised its estimate for economic growth in Canada this year as it said U.S. tax cuts are expected to help boost global economic growth. The international lending agency said Monday it now projects Canada’s economy will grow 2.3 per cent this year, up from an estimate of 2.1 per cent in October. Growth for 2019 is forecast at 2.0 per cent, up from an earlier projection for 1.7 per cent.

BMO and China’s largest bank ICBC expand tie up to sell more products (CBC) The Bank of Montreal has signed a new memorandum of understanding with China’s largest state-owned bank, Industrial and Commercial Bank of China Ltd. (ICBC), in an effort to expand its footprint in the world’s second largest economy. The new agreement will allow BMO and ICBC to cooperate on everything from asset management to corporate financing and trade in China and Canada.

Overnight markets

Overview: US 10yr note futures are up 0.282% at 122-14, S&P 500 futures are down -0.08% at 2833, Crude oil futures are up 0.93% at $64.16, Gold futures are up 0.34% at $1336.4, DXY is down -0.08% at 90.332, CAD/USD is up 0.15% at 0.8024.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.793% 2 Year 2.051%
5 Year 2.023% 5 Year 2.422%
10 Year 2.221% 10 Year 2.619%
30 Year 2.347% 30 Year 2.887%

US Economic Data

10:00 AM Richmond Fed Manufact. Index, Jan est 19 (20 prior)

Canadian Economic Data

There is no Canadian Economic Data for today.


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