Market Update Tsys trading weaker, 10Y close to 3.0% for the first time since Jan 2014, currently 2.975% vs 2.995% high, on heavy volume in TY futures (>500k,. ~2x avg daily vol), USD surging higher for a 5th day, DXY highest since March 1st. EGBs lower, weighed by better than exp Eurozone PMI – German 10Y +3.7bp @ 0.623%, 10Y gilt +3.8bps . Ahead of ECB meeting Thursday, Euribor futures lower- consensus is for no change in the ECB language just yet. GOCs lower, narrower vs tsys beyond 2yrs, 10Y 2.35% high since feb 21st. BOC governor Poloz and deputy Wilkins are scheduled to discuss monetary policy before the House of Commons this afternoon. Over the weekend Poloz said he is wiling to be patient and overlook the rise in inflation above 2.0%, commenting that the BOC does not raise rates ‘mechanically’ when inflation rises above a certain target. Provis 2-3bps tighter last week despite heavy supply ($3.75bln) and a downgrade of Ontario by Moody’s.
News headlines
U.S. Hints at China Truce as World Warns of Trade-War Threat (Bloomberg) U.S. Treasury Secretary Steven Mnuchin said he’s considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing. Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade.
Dollar Strengthens as U.S. Treasury Yields Near 3%: Markets Wrap (Bloomberg) The dollar rallied at the start of a week packed with catalysts, from economic data to new debt supply, as the yield on benchmark U.S. Treasuries climbed toward 3 percent. European stocks edged lower after equities across Asia retreated.
Euro-Area Economy Stays in Lower Gear as Order Growth Weakens (Bloomberg) Economic momentum in the euro area kept a steady pace in April after softening earlier in the year, in a sign that growth in the region is set to continue albeit at a slower pace. A composite Purchasing Managers’ Index remained unchanged at 55.2, IHS Markit said on Monday. Economists surveyed by Bloomberg predicted a decline to 54.8. While activity in services picked up, growth in manufacturing slowed to the weakest in more than a year.
Walmart Is Close to $12 Billion-Plus Deal for Flipkart (Bloomberg) Walmart Inc. is close to finalizing a deal to buy a majority stake in India’s leading e-commerce company for at least $12 billion and may complete the agreement in the next two weeks, according to people familiar with the matter. All the major investors in Flipkart Online Services Pvt are now on board with the Walmart purchase, after an earlier debate over an Amazon.com Inc. acquisition, said the people, asking not to be named because the matter is private. Tiger Global Management will sell nearly all its 20 percent stake in Flipkart, while SoftBank Group Corp. will offload a substantial part of its 20 percent-plus holding, the people said. Walmart will likely end up with 60 percent to 80 percent of Flipkart, valued at about $20 billion, they said.
TSX futures flat as U.S. yields hover near critical mark (Reuters) Futures for Canada’s main stock index were little changed on Monday as investors weighed U.S. bond yields approaching the critical 3 percent barrier. June futures on the S&P TSX index were up 0.08 percent at 7:15 a.m. ET. Canadian wholesale trade data for February is due at 8:30 a.m. ET and is expected to show a 0.5 percent rise. Canada’s main stock index rose on Friday as higher bond yields boosted financials, while shares of Rogers Communications jumped after the telecommunications company reported profits that beat estimates.
China opposes all forms of protectionism, commerce minister says (Reuters) China opposes all forms of protectionism and will firmly safeguard the world’s multilateral trading system, its commerce minister wrote on Monday in the ruling Communist Party’s official newspaper.
CP Rail strike postponed, while unions urge workers to reject offer (BNN) A rail strike has been temporarily averted after the federal labour minister ordered employees of Canadian Pacific Railway Ltd. to vote on the company’s final offers, just hours before they were set to walk off the job. Statements from both CP Rail and two unions representing workers say the minister’s order to administer a ratification vote on each of the two offers follows advice of federal mediators.
Overnight markets
Overview: US 10yr note futures are down -0.196% at 119-10, S&P 500 futures are up 0.19% at 2676.5, Crude oil futures are down -0.29% at $68.2, Gold futures are down -0.74% at $1328.4, DXY is up 0.39% at 90.669, CAD/USD is up 0.17% at 0.7821.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.932% | 2 Year | 2.466% |
| 5 Year | 2.186% | 5 Year | 2.817% |
| 10 Year | 2.363% | 10 Year | 2.979% |
| 30 Year | 2.466% | 30 Year | 3.163% |
US Economic Data
| 8:30 AM | Chicago Fed Nat Activity Index, Mar est 0.27 (0.88 prior) |
| 9:45 AM | Markit US Manufacturing PMI, Apr est 55.2 (55.6 prior) |
| Markit US Services PMI, Apr est 54.1 (54.0 prior) | |
| Markit US Composite PMI, Apr (54.2 prior) | |
| 10:00 AM | Existing Home Sales, Mar est 5.55m (5.54m prior) |
| Existing Home Sales MoM, Mar est 0.2% (3.0% prior) |
Canadian Economic Data
| 8:30 AM | Wholesale Trade Sales MoM, Feb est 0.8% (0.1% prior) |
| 10:00 AM | Bloomberg Nanos Confidence, Apr 20th (57.7 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