Market Update
US tsys higher, yields 2.5-3bps lower led by the long end, 10Y 2.355% (-2.5bps), yields across the curve at new lows, heavy volume in TY futures (~540k). The 3M 10Y curve inverted again down -3.67 bps at -2.34%. ‘Risk off’ on trade rhetoric, with China’s Commerce Ministry warning talks wont continue unless the US changes its approach, S&P futures -28pts, crude lower for a third day -1.7% 60.35. GOCs higher, in line with tsys, Can/US continues to cheapen, 5-6bps over the week.
News headlines
Stocks Slump, Dollar Rises as Trade Worries Deepen: Markets Wrap (Bloomberg) Stocks slumped globally on Thursday as the simmering trade dispute between the world’s two largest economies took a greater toll on markets. Safe assets were in demand, with gold and the yen gaining alongside the dollar and Treasuries.
Oil Extends Losses on Rising U.S. Inventories and Trade Tension (Bloomberg) Oil extended losses after a surprise jump in American crude inventories alleviated concerns over a supply crunch, while fears of a full-blown trade war between the U.S. and China weighed on the outlook for demand.
TSX futures fall on fears of endless trade war (Reuters) Stock futures for Canada’s main equity index fell on Thursday, tracking losses in global stocks over fears that the Sino-U.S. trade spat was fast developing into a technology cold war.
China says U.S. needs to correct wrong actions to continue trade talks (Reuters) The United States needs to correct its wrong actions if it wants to continue negotiations with China to end a damaging tariff war, China’s Commerce Ministry said on Thursday, adding that talks should be based on mutual respect.
German Economy Suffers Another Blow as Business Confidence Drops (Bloomberg) German business confidence fell to the weakest in more than four years as the escalation of global trade tensions weighed heavily on the outlook.
U.S. Fed minutes signal patience on rate moves for ‘some time’ (BNN) Federal Reserve officials judged at their latest meeting that their patient approach to interest-rate changes would be appropriate “for some time,” and many sided with Chairman Jerome Powell’s view that the recent dip in inflation was probably temporary.
Futures tumble on fears of possible U.S.-China tech cold war (Reuters) U.S. stock index futures slid on Thursday, as investors worried that the U.S.-China trade war could spiral into a technology cold war between the two countries, with no signs of resolution in sight.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.637% | 2 Year | 2.196% |
| 5 Year | 1.59% | 5 Year | 2.153% |
| 10 Year | 1.689% | 10 Year | 2.356% |
| 30 Year | 1.927% | 30 Year | 2.783% |
US Economic Data
| 08:30 AM | Initial Jobless Claims, May 18 Survey 215k Prior 212k |
| Continuing Claims, May 11 Survey 1666k Prior 1660k | |
| 09:45 AM | Bloomberg Consumer Comfort, May 19 Survey — Prior 59.9 |
| Bloomberg Economic Expectations, May Survey — Prior 50.0 | |
| Markit US Manufacturing PMI, May P Survey 52.7 Prior 52.6 | |
| Markit US Services PMI, May P Survey 53.5 Prior 53.0 | |
| Markit US Composite PMI, May P Survey — Prior 53.0 | |
| 10:00 AM | New Home Sales, Apr Survey 675k Prior 692k |
| New Home Sales MoM, Apr Survey -2.50% Prior 4.50% | |
| 11:00 AM | Kansas City Fed Manf. Activity, May Survey 6 Prior 5 |
Canadian Economic Data
| 08:30 AM | Wholesale Trade Sales MoM, Mar Survey 0.90% Prior 0.30% |
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