Market Update

Tsys trading higher, yields 1bp lower with the US 10Y 2.243 (-1.1bps), higher than avg volume in TY futures.  Tsy, EGB yields fell initially o/n on news of terrorist attack in UK, then gave much of it back after firm eco data & sov supply.  German IFO rose to the highest since 1991 in May while German Man PMI rose to 59.4 in May. GOCs higher, 10Y 1.46%, outperforming tsys in 10s & longs. Provi spds narrowed ~3bps last week , most of that on announcement of the Muskrat Falls deal. All in yields on provis lower by 12-15bps last week. CNQ (Baa3/BBB+) in the US mkt with benchmark 5,10 & 30Y – IPT 140,185 & 230. The CAD CNQ 22s @ 140 swap to USD @ tsys + 130 – so this looks to be 10bps concession for the 5Y.

News headlines

European Stocks Gain on Solid Data; Crude Retreats: Markets Wrap (Bloomberg) European stocks advanced as data from Germany and France signaled that the region’s economic recovery remains on track. U.K. assets showed resilience in the wake of a suicide bomb attack.

Oil prices fall on White House proposal to sell U.S. oil reserves (Reuters) Oil prices fell on Tuesday, weighed down by U.S. President Donald Trump’s plan to sell off half the country’s huge oil stockpile, threatening a future glut even as OPEC and its allies cut output to try and tighten the market.

China to open more sectors to foreign investors (Reuters) China will further open its economy to foreign investors, through measures such as allowing investment in more industries, such as services, state television said on Tuesday, citing a reform group meeting chaired by President Xi Jinping.

OPEC set to prolong oil cuts as delegates predict smooth meeting (Reuters) OPEC will likely agree to extend production cuts for another nine months, delegates said on Tuesday as the oil producer group meets this week to debate how to tackle a global glut of crude.

Bond market braces for impact of New York’s free tuition plan (Reuters) Little known private colleges that are already struggling to grow their revenues are facing a new threat that could further weaken their finances and make borrowing harder: free tuition at public universities.

HSBC Makes a ‘Big Bet’ on Canada in Bid for More Market Share (Bloomberg) HSBC Holdings Plc is getting aggressive in Canada — and one needs to look no further than its latest mortgage rate for proof of broader ambitions. HSBC Canada is offering five-year fixed-term mortgages at 2.39 percent, undercutting the lowest discretionary rates at the largest domestic lenders including Toronto-Dominion Bank and Royal Bank of Canada.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 126-07, S&P 500 futures are up 0.11% at 2395.5, Crude oil futures are down -0.04% at $51.11, Gold futures are down -0.01% at $1261.3, DXY is down -0.01% at 96.974, CAD/USD is down -0.26% at 0.7425.

US Economic Data

9:45 AM Markit US Manufacturing PMI, May P,  est. 53.0 (prior 52.8)
  Markit US Services PMI, May P, est. 53.3 (prior 53.1)
  Markit US Composite PMI, (prior 53.2)
  New Home Sales, Apr, est. 610k (prior 621k)
  New Home Sales, m/m, Apr, est, -1.8% (prior 5.8%)
  Richmond Fed Manufacturing Index, May, est. 15 (prior 20)

Canadian Economic Data 

8:30 AM Wholesale Trade Sales, m/m, 0.9%, est. 0.8% (prior -0.2%, revised 0.3%)
10:00 AM Bloomberg Nanos Confidence Index, May 19, (prior 58.1)


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