Market Update

US tsys marginally lower, 10Y 1.734% , above avg volume in TY futures. US equity futures higher (S&P +8), crude close to recent lows (55.40 -0.20) Some curve flattening in tsys attributed to comments from Tsy sec Mnuchin in BBG interview – ‘ultra issuance no longer near-term plan’, also double auction on Monday $81bln in 2 and 5Y notes.  Core EGBs lower, bund curve 1bp steeper – Jan German PMI better than exp (45.2 vs 44.5), Eurozone Composite PMI slightly lower. UK gilts outperforming despite stronger Man PMI. GOCs close to unch, yesterday saw Can/US narrow another 1bp across the curve on top of Tuesday’s 8-10bps narrowing post BOC. Ontario 10Y issue yesterday – $1bln new June 2030s @ 64.5 vs C1.25/30 or 2bps vs Ont29s, opening 64.5/63.5

News headlines

U.S. Futures, Stocks Rise as Virus Fears on Hold: Markets Wrap (Bloomberg) U.S. index futures edged higher while stocks jumped in Europe as investors digested the latest corporate news and economic data, setting aside for now fears over a deadly virus spreading from China. Oil fell for a fourth day.

TSX futures rise as WHO says coronavirus not a global emergency (Reuters) Canada’s main stock index futures rose on Friday after the World Health Organisation stopped short of calling the coronavirus outbreak in China a global emergency.

European stocks climb as economic data fuels growth hopes (Reuters) European shares on Friday were set to post their first daily gain this week on signs of a recovery ahead for growth, with easing worries over the coronavirus outbreak in China also emboldening investors.

Oil Set for Weekly Slump as Asia Virus Adds to Demand Concerns (Bloomberg) Oil headed for a 5% loss this week amid fears that China’s coronavirus will erode fuel demand just as markets struggle with a fragile world economy and adequate supplies.

Bond, equity funds suck-in $25 billion as ‘irrational’ bull phase continues: BofA (Reuters) Global equity and bond funds saw more inflows in the week to Wednesday and the “irrational bullish phase” in markets was likely to continue in the first-quarter if the U.S. Fed continued to pump-in liquidity, BofA said on Friday.

Exclusive: U.S. pushing India to buy $5-6 billion more farm goods to seal trade deal – sources (Reuters) The United States wants India to buy at least another $5-6 billion worth of American farm goods if New Delhi wants to win reinstatement of a key U.S. trade concession and seal a wider pact, four sources familiar with the talks told Reuters.

Bank of England rate cut hangs in balance as Carney bows out (Reuters) The Bank of England is closer to cutting interest rates next week than at any time in the last three years, as governor Mark Carney chairs his last policy meeting and Britain finally leaves the European Union.

U.S. wants trade deal done with UK this year: Mnuchin (Reuters) The United States wants to conclude a trade deal with the United Kingdom this year, U.S. Treasury Secretary Steven Mnuchin said on Friday.

As Lebanese struggle to make ends meet, living costs set to soar higher (Reuters) Lebanese consumers feeling the pinch from rising living costs amid an economic crisis are likely to be squeezed even tighter as more local pounds and less U.S. dollars come into circulation, pushing up inflation.

Market Overview: US 10yr note futures are up 0.036% at 129-27, S&P 500 futures are up 0.23% at 3333.5, Crude oil futures are down -0.27% at $55.44, Gold futures are down -0.48% at $1564, DXY is up 0.21% at 97.897, CAD/USD is up 0.07% at 0.7613.

Cda BenchmarksYieldTsy BenchmarksYield
2 Year1.513%2 Year1.517%
5 Year1.426%5 Year1.547%
10 Year1.414%10 Year1.731%
30 Year1.551%30 Year2.174%

US Economic Data

09:45 AMMarkit US Manufacturing PMI, Jan P  Survey: 52.4  Prior: 52.4
       Markit US Services PMI, Jan P  Survey: 53.0  Prior: 52.8
       Markit US Composite PMI, Jan P  Survey: —  Prior: 52.7

Canadian Economic Data

08:30 AMRetail Sales MoM, Nov  Survey: 0.60%  Prior: -1.20%
       Retail Sales Ex Auto MoM, Nov  Survey: 0.50%  Prior: -0.50%

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