Market Update
US tsys trading lower, yields 1.5-3bps higher, 10Y 2.77%, equities higher (S&P fut +13, Euro Stocks +0.50%), USD index near lows (DXY -0.09). Quiet day data wise in the US with Redbook retail sales, FHFA home prices and Richmond Fed. Risk on continuation from yest after Larry Kudlow denied an FT article saying a US-China trade meeting this week in the US was cancelled. Core European bonds lower, UK gilts 2bps wider vs bunds (10Y gilt/bund spd 110 bps highest since mod Nov.), GBP above 1.30, on hopes a no-deal Brexit will be avoided. In Canada, GOCs lower in line with tsys before key Nov Retail Sales (-0.6% exp) – lower gas prices and auto sales expected to have outsized impact.
News headlines
Trump won’t soften hardline on China to make trade deal: advisers (Reuters) As much as U.S. President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a deal, advisers say.
CANADA STOCKS-TSX futures gain as oil prices edge higher (Reuters) Futures for Canada’s main stock index rose on Wednesday, as oil prices gained on optimism after China and Japan said they would use fiscal stimulus to boost economic growth in the face of trade protectionism and faltering global demand.
Investors shun stocks, seek safety in bonds as economic gloom spreads (Reuters) Renewed concerns about a global economic slowdown continued to sap investor appetite for assets considered risky, dragging global stocks and bond yields lower on Wednesday, while the U.S. dollar held near three-week highs.
China says will step up fiscal spending this year to support economy (Reuters) China will step up fiscal spending this year to support its economy, focusing on further cuts in taxes and fees for small firms, finance ministry officials said on Wednesday.
Stocks Gain as Traders Eye Earnings; Dollar Drops: Markets Wrap (Bloomberg) U.S. equity-index futures gained alongside stocks in Europe on Wednesday as traders juggled the latest corporate earnings with moves to end the U.S. government shutdown and doubts over progress on trade talks. The yen slid as the Bank of Japan cut its inflation outlook.
Oil Rises on Expectations of Market Balance, Slower Shale Growth (Bloomberg) Oil recovered after its biggest decline in more than a week on signs U.S. shale supply growth is slowing, and expectations that OPEC’s output cuts are well on their way to balancing the market.
Senate sets votes but U.S. shutdown likely to go on (Reuters) There was no sign of quick relief for 800,000 federal workers going without pay because of the partial government shutdown as the U.S. Senate scheduled votes on competing proposals to end the month-long impasse that both faced long odds.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.908% | 2 Year | 2.604% |
| 5 Year | 1.921% | 5 Year | 2.601% |
| 10 Year | 1.991% | 10 Year | 2.762% |
| 30 Year | 2.206% | 30 Year | 3.08% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Jan 18 actual -2.7% Prior 13.5% |
| 9:00 AM | FHFA House Price Index MoM, Nov Surv 0.3% Prior 0.3% |
| 10:00 AM | Richmond Fed Manufact. Index, Jan Surv -2 Prior -8 |
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, Nov Surv -0.6% Prior 0.3% |
| Retail Sales Ex Auto MoM, Nov Surv -0.4% Prior 0.0% |
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