Market Update Tsys trading higher, 10Y below 2.90% @ 2.88 (4bps), following move in bunds after weaker German GDP. Also supporting bunds is the widening in peripherals, particularly Italy , BTP/bund 10Y spd @ 1 mnth wides on pre Italian election jitters. USD index is firmer, equities stronger (emini +11), crude unch 62.75 consolidating after yesterday’s rally on surprise draw in DOE crude inventories. Focus on Fed speakers and Fed MPR to congress at 11:00. In Canada, GOCs are lower after Jan CPI surprised to the upside 0.7% vs 0.5% exp with the y/y falling to 1.7% vs 1.5% exp, and the range of BOC 3 core measures up to 1.8-1.9 from 1.6-1.9 in Dec. By region Ontario’s inflation rate rose 0.9% vs -0.5% in Dec reflecting a 20% hike in the minimum wage on Jan 1st.
News headlines
Mnuchin Urges Markets to Shrug Off Worries Over Tax Cuts, Debt (Bloomberg) Treasury Secretary Steven Mnuchin brushed aside signs that investors are nervous about rising prices and criticism that growing debt will harm U.S. economic security, declaring that President Donald Trump’s policies won’t cause inflation. “There are a lot of ways to have the economy grow,” Mnuchin said in an interview aboard a train to Philadelphia on Thursday, where he toured the U.S. Mint. “You can have wage inflation and not necessarily have inflation concerns in general.”
Wall Street May Be Rethinking Its Relationship With Guns (Bloomberg) Will Wall Street ever let go of guns? That question has come up before — after the shootings in Newtown, in Orlando, in Las Vegas, and on and on. Now, with the nation’s emotions raw over the killings in Florida last week, evidence is mounting that investors may be rethinking their long, fraught relationship with the firearms industry.
VIX Funds Face Fresh Scrutiny From U.S. Regulators (Bloomberg) U.S. regulators are scrutinizing this month’s implosion of investments that track stock-market turmoil, including whether wrongdoing contributed to steep losses for VIX exchange-traded products offered by Credit Suisse Group AG and other firms, several people familiar with the matter said.
With Elections to Win, One Nafta Team May Prefer to Keep Talking (Bloomberg) Few people are cheering the prospect of several more months of Nafta talks. Mexico’s ruling party may be among that small group. The country is cranking into campaign mode at the same time as it prepares to host the latest round of trade wrangling next week. That means Mexican negotiators have a kind of dual mandate. They have to pursue the best outcome for the nation, while keeping one eye out for their bosses in the governing PRI, which is seeking to hang on to the presidency in July’s election.
RBC tops first-quarter profit expectations, raises dividend (BNN) Royal Bank of Canada is boosting its payout to shareholders after topping first-quarter profit estimates on the back of growth in its core retail banking division. Net income in the three months ending Jan. 31 held steady at $3.01 billion as RBC took a $178-million charge tied to U.S. tax changes. On an adjusted basis, the bank earned $2.05 per share. Analysts, on average, expected $1.99 in earnings per share.
Global stocks subdued as U.S. dollar edges higher (BNN) A stronger U.S. dollar and slightly higher global borrowing costs kept world shares subdued on Friday and left gold limping toward its worst week since December. Europe’s main London, Frankfurt and Paris markets barely budged in early moves, keeping MSCI’s 47- country world index just in the black on the day but facing its third red week in the last four. Modest gains for the dollar meant the euro was set to post its second biggest weekly loss in nearly four months, as caution over the Italian election gave bond markets there their toughest week of 2018.
Overnight markets
Overview: US 10yr note futures are up 0.182% at 120-21, S&P 500 futures are up 0.42% at 2723, Crude oil futures are down 0% at $62.77, Gold futures are down -0.04% at $1332.2, DXY is up 0.17% at 89.893, CAD/USD is down -0.05% at 0.7875.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.796% | 2 Year | 2.23% |
| 5 Year | 2.072% | 5 Year | 2.623% |
| 10 Year | 2.268% | 10 Year | 2.882% |
| 30 Year | 2.424% | 30 Year | 3.168% |
US Economic Data
There is no US Economic data for today
Canadian Economic Data
| 8:30 AM | CPI NSA MoM, Jan 0.7% est 0.5% (-0.4% prior) |
| CPI YoY, Jan 1.7% est 1.5% (1.9% prior) | |
| Consumer Price Index, Jan 131.7 est 131.5 (130.8 prior) | |
| CPI Core- Common YoY%, Jan 1.8% est 1.7% (1.6% prior) | |
| CPI Core- Median YoY%, Jan 1.9% (1.9% prior) | |
| CPI Core- Trim YoY%, Jan 1.8% (1.9% 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