Market Update Tsys slightly higher, narrow overnite range on avg volume in TY futures, US 10Y 2.89%, equity futures paring losses (S&P +1, Nasdaq -13). Risk off tone after Trump tweet on Iran,   Tsy curve little changed after Trump’s comments on the Fed & rates led to the largest weekly steepening since Feb (+5bps 5s30s ). Fed is blackout through August 1st FOMC, slow data week with Q2 GDP Friday. Bunds/gilts lower & steeper, G20 focus on trade tensions, weakness in Chinese currency. GOCs trading lower, 1bp wider vs tsys – May Wholesale Sales +1.2% vs 0.7% exp. GOC yields 3-5bps higher on the week after strong CPI/Retail Sales prints. 

News headlines 

One Dead, 13 Wounded After Gunman Opens Fire in Toronto (Bloomberg) A man firing a handgun into restaurants and cafes as he walked along a Toronto street shot 14 people, killing one of them, before dying after an exchange of gunfire with police late Sunday, police said. Police Chief Mark Saunders did not rule out terrorism as a motive in the shooting in the city’s Greektown neighborhood.

BOJ Policy Change Speculation Roils Markets (Bloomberg) A dramatic day for Japan’s debt market saw yields surge on media reports of possible changes to the nation’s ultra-loose monetary policy, spurring the central bank to offer to buy an unlimited amount of bonds. The yield on 10-year government securities soared as much as six basis points to 0.09 percent, its biggest increase in almost two years, pulling the yen higher and weighing on stocks. While the yield came down after the purchase offer by the Bank of Japan, it then bounced back to just one basis point below the day’s high.

U.S. 4% GDP Growth Seen More ‘Luck of the Draw’ Than New Reality (Bloomberg) The U.S. economy may have hit 4 percent growth in the second quarter, the fastest since 2014 and a feat President Donald Trump will tout as a sign of his success. It’s more like a winning hand that doesn’t come up often. Gross domestic product expanded at a 4.3 percent annualized rate in the April-June period, according to the Bloomberg survey median, with forecasts ranging as high as 5.4 percent. The stars were aligned following 2 percent growth in the first quarter: The biggest tax overhaul since the Reagan era delivered another boost to consumer spending and business investment, and the volatile categories of inventories and trade probably juiced the number — helped by a likely temporary jump in soybean exports ahead of retaliatory tariffs.

Stocks Slip as Investors Mull Growth; Yen Climbs: Markets Wrap (Bloomberg) U.S. equity futures pointed to a lower open and European stocks fell on Monday as investors digested warnings from the world’s financial leaders about the impact of protectionism on growth. The yen rose and Japanese government bonds slid amid speculation over Bank of Japan stimulus. Futures on the Dow, S&P 500 and Nasdaq were in the red in the after Group of 20 finance chiefs said trade tensions threaten expansion as leading economies fall out of sync. The Stoxx Europe 600 Index retreated after sudden changes in leadership at Fiat Chrysler helped sink carmakers, while travel companies also declined after Ryanair posted a 20 percent decline in first-quarter profit.

TSX falls 0.65 percent, down for the week (Reuters) The Toronto Stock Exchange’s S&P/TSX fell 107.55 points, or 0.65 percent, to 16,435.46, the index also closed the week down 0.65 percent, snapping a two-week winning streak. Leading the index were Cameco Corp, up 4.1 percent, Eldorado Gold Corp, up 3.5 percent, and Labrador Iron Ore Royalty Corp , higher by 3.1 percent. Lagging shares were West Fraser Timber Co Ltd, down 8.1 percent after its quarterly results, Interfor Corp, down 6.1 percent, and Canopy Growth Corp, lower by 5.5 percent.

China says it won’t devalue currency to bolster exports (Reuters) China said on Monday the value of its currency is driven by market forces and that it has no intention to devalue the yuan to help exports, after Washington said it was monitoring the currency’s weakness amid the escalating bilateral trade row. The Chinese Foreign Ministry also said that threats and intimidation on trade would never work on China, after U.S. President Donald Trump said he was ready to impose tariffs on all $500 billion of goods imported from the country.

Canada to respond to U.S. tax reform challenge in fiscal update (BNN) Canada’s Liberal government will seek to address competitiveness challenges faced by the nation’s businesses in a budget update later this year amid pressure to respond to U.S. tax reform. Finance Minister Bill Morneau, in an interview with Bloomberg News in Buenos Aires on Saturday, said the key themes emerging for his fiscal update — a document the finance department typically releases in October or November — will include business taxation, oil pipelines and the renegotiation of the North American Free Trade Agreement.

JetBlue eliminates jobs as part of $300M cost-cutting push (BNN) JetBlue Airways Corp. (JBLU.O) is eliminating an unspecified number of jobs in the latest phase of its campaign to cut as much as US$300 million from operating costs by 2020. The reductions follow a reorganization of certain teams within the airline to streamline operations, the carrier said in a statement Friday. JetBlue declined to say how much it will save with the changes, while calling it a “meaningful step toward our corporate structural cost goal.”

Overnight markets

Overview: US 10yr note futures are up 0.039% at 120-01, S&P 500 futures are down 0% at 2800.75, Crude oil futures are up 1.07% at $68.99, Gold futures are up 0.01% at $1231.2, DXY is down -0.05% at 94.425, CAD/USD is down -0.08% at 0.7615.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.973% 2 Year 2.587%
5 Year 2.089% 5 Year 2.756%
10 Year 2.184% 10 Year 2.889%
30 Year 2.226% 30 Year 3.03%

US Economic Data

8:30 AM Chicago Fed Nat Activity Index, Jun 0.43 est 0.25 (-0.15 prior)
10:00 AM Existing Home Sales, Jun est 5.45m (5.43m prior)
  Existing Home Sales MoM, Jun est 0.2% (-0.4% prior)

Canadian Economic Data

8:30 AM Wholesale Trade Sales MoM, May 1.2% est 0.7% (0.1% prior)
10:00 AM Bloomberg Nanos Confidence, Jul 20th (54.2 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