Market Update
US tsys opening higher, US 10Y 2.44% (-2bps), curve ~0.5bps steeper. Tsys bid in Asia after Trump inauguration & ensuing protest, thou the rally faded in Europe along with core EGBs. S&P futures off 0.17%, crude down 1.2% at 52.58, reversing some of Friday’s 2.0% gain. Core Euro bonds higher led by UK gilts prior to tomorrow’s Supreme Court ruling on article 50 (Brexit). The latest CFTC COT report for Jan17th showed specs scaling back shorts across the curve, paring record shorts in 5s & 10s. GOCs higher, outperforming tsys in 10s & longs. Nov wholesale sales came in below exp @ 0.2% vs 0.5%. Supply in the US & Cda this week- the US auctions 2,5 & 7 yr notes starting Tues for $88bln. The Bank of Cda auctions $3bln of 3Y notes Wed – 1.5% Mar 2020 reopening. Provis closed weaker on Friday led by Quebecs. The latter is expected to issue a 5Y USD global to be priced Tuesday, talk MS +46bps.
News headlines
Stocks, Dollar Dip as Metals Rise on Trump Jitters: Markets Wrap (Bloomberg) Shares in developed markets fell with the dollar, lifting metals and Treasuries after President Donald Trump offered little more on plans to boost growth and stirred concerns over protectionism in his first days in office. The Stoxx Europe 600 Index touched its lowest level this year, while U.S. futures slid and the dollar fell against all major peers. The weaker currency pushed aluminum to the highest in more than a year, while 10-year Treasury yields fell a second day.
Pound eyes $1.25 as traders bet British government to lose Brexit case (Reuters) Investors have largely priced in the British government losing its Supreme Court appeal on whether it can trigger Brexit talks without parliamentary approval, but traders – both human and computer models – will scour the ruling for clues on whether regional assemblies will get a say.
Bond Buyers Grab Disappearing Bank Debt Ahead of Canada Bail-In (Bloomberg) Bond investors are snapping up Canadian bank debt that’s likely to start disappearing under new government rules expected early this year to protect taxpayers from having to bail out a failing financial firm.
Canada Signals Possible U.S. Trade Deal That Excludes Mexico (Bloomberg) Canada’s government will consider bilateral trade measures during renegotiation of the North American Free Trade Agreement, a sign it could potentially move ahead at least in part without Mexico. The comments from David MacNaughton, Canada’s ambassador to the U.S., suggest Donald Trump’s protectionist pledges are splintering the continental pact as the U.S. leader prepares to meet Mexican President Enrique Pena Nieto late this month.
Equatorial Guinea has applied to join OPEC: OPEC source (Reuters) Equatorial Guinea has now applied to join the Organization of the Petroleum Exporting Countries, an OPEC source familiar with the matter said on Monday, which would bring the oil producer group’s membership to 14 countries.
Donald Trump Embarks on His First Week With a Heavy Slate (WSJ) President Donald Trump starts his first week with a packed schedule—from pushing through his slate of cabinet nominees to a raft of executive orders and setting the direction on foreign trade. Mr. Trump is planning executive actions early in the week on immigration and trade, two White House officials said, and will have a chance to lay the groundwork for a trade deal during a meeting Friday with British Prime Minister Theresa May , the first foreign leader to visit the new president in the White House. He also will meet with congressional leaders on Monday and attend a lawmakers’ retreat later in the week, where he could discuss his legislative agenda.
Overnight markets
Overview: US 10yr note futures are up 0.1887% at 124-15, S&P 500 futures are down -0.15% at 2262.5, Crude oil futures are down -1.54% at $52.4, Gold futures are up 0.78% at $1214.3, DXY is down -0.36% at 100.38, CAD/USD is down -0.08% at 0.7514.
US Economic Data
There is no major economic news for today
Canadian Economic Data
| 8:30 AM | Wholesale Trade Sales, m/m, Nov, 0.2%, est. 0.5% (prior 1.1%, revised 1.3%) |
| 10:00 AM | Bloomberg Nanos Confidence, Jan 20, (prior 56.2) |
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230