Market Update Tsys trading lower in recent trade, 10Y 2.99% (+1bp) after rangebound o/n session. Equity futures higher (S&P +14.75), earnings from Caterpillar, Verizon & UTX beat exp – Cat +6% higher pre-mkt. Crude follow thru after yesterday’s rebound, now 68.85 (+0.20) before API inventories this aft (-2.25m bbl exp) . Core EGBs mixed, gilts higher, having given up early gains after the UK DMO raised its estimate for planned gilt issuance by GBP3.1bln for 2018-19. Same story for bunds, 10Y unch, weighed by supply from Germany, Italy and Finland, despite weaker German April IFO sentiment. GOCs lower, lagging the decline in tsys, provi spds opening 0.5bps wider this morn, Ont 27 63.5/63. CWB reopened the 2.788% 2021 @99, a 3bp concession from second lvls.
News headlines
After Weeks of Chaos, U.S. Throws Aluminum Industry Lifeline (Bloomberg) After two weeks of convulsions caused by U.S. sanctions against United Co. Rusal, the metals market was braced for more mayhem: many traders were betting the Russian aluminum giant was just days away from having to shut plants from Sweden to Jamaica.
How 3% Yields Could Reshape the Investing Landscape (Bloomberg) Ten-year Treasury yields sit closer to 3 percent than at any time in the past four years, prompting investors to dust off their playbooks for how to trade in an era of relatively higher rates. Rising rates isn’t exactly a new problem for markets — the 10-year yield jumped 30 basis points in January alone — but this time the spike’s driven by surging commodity prices, not heady economic gains. And that’s thrown a wrinkle into the discussion, particularly when it comes to equities.
Deutsche Bank Is Weighing Massive Cuts in Its U.S. Cash Equities Unit (Bloomberg) Barely two weeks into the job, Deutsche Bank AG’s Chief Executive Officer Christian Sewing is considering a retreat that could mark the end of the bank’s two-decade quest to compete with Wall Street. Sewing is weighing extensive cuts to the lender’s cash equities business in the U.S. and may announce details as part of a wider restructuring of its investment bank when he reports earnings on Thursday, people familiar with the matter told Bloomberg. They asked not to be identified because the details are confidential.
Bonds Steady as Dollar Rally Cools; Stocks Mixed: Markets Wrap (Bloomberg) The rise in U.S. Treasury yields appeared to stall on Tuesday, with the benchmark rate trading sideways after a selloff this week took it to within a whisker of 3 percent. Stocks in Europe struggled for traction following gains for most Asian markets as the earnings season gathered pace.
Xi Ready to Respond as China Rattled by Trade, Debt Risks (Bloomberg) China’s leaders are giving their strongest signal since 2015 that growth in the world’s second-largest economy could slow — and that they’re prepared to tweak policy if trade or financial risks threaten a sharp deceleration.
At least 10 dead, multiple people injured in ‘horrific’ Toronto van attack (BNN) The death toll rose to at least 10 late Monday following a “horrific attack” in which a young man drove a van into a crowd of pedestrians along a stretch of one of Toronto’s busiest streets, authorities said. The federal public safety minister said the incident, which also left 15 people injured, did not appear to be connected in any way to national security. However, the city’s police Chief Mark Sanders said investigators would be exploring all avenues and asked for any witnesses to contact the force with information.
Bank of Canada sees economy improving, plays down inflation risk (Reuters) Bank of Canada Governor Stephen Poloz on Monday gave an upbeat assessment of the economy’s prospects after a sluggish first quarter and said that while inflation this year would rise above the central bank’s target, it would be temporary.
TSX futures higher as oil prices rise (Reuters) Canada’s main stock index looked set to open higher on Tuesday as oil prices rose above $75 per barrel to their highest since November 2014. June futures on the S&P TSX index SXFc1 were up 0.34 percent at 7:15 a.m. ET. Canada’s benchmark stock index ended higher on Monday, with gains in the price of U.S. crude oil driving up shares of companies in the energy sector. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.57 percent at 7:15 a.m. ET, while S&P 500 e-mini futures Esc1 were 0.53 percent higher and Nasdaq 100 e-mini futures NQc1 rose 0.54 percent. [.N].
Overnight markets
Overview: US 10yr note futures are down -0.013% at 119-10, S&P 500 futures are up 0.58% at 2686.75, Crude oil futures are up 0.32% at $68.86, Gold futures are up 0.28% at $1327.7, DXY is down -0.07% at 90.881, CAD/USD is down -0.15% at 0.7795.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.915% | 2 Year | 2.483% |
| 5 Year | 2.169% | 5 Year | 2.824% |
| 10 Year | 2.346% | 10 Year | 2.97% |
| 30 Year | 2.438% | 30 Year | 3.132% |
US Economic Data
| 9:00 AM | FHFA House Price Index MoM, Feb est 0.6% (0.8% prior) |
| S&P CoreLogic CS 20-City NSA Index, Feb (205.10 prior) | |
| S&P CoreLogic CS 20-City MoM SA, Feb est 0.68% (0.75% prior) | |
| S&P CoreLogic CS 20-City YoY NSA, Feb est 6.35% (6.40% prior) | |
| S&P CoreLogic CS US HPI NSA Index, Feb (196.31 prior) | |
| S&P CoreLogic CS US HPI YoY NSA, Feb (6.18% prior) | |
| 10:00 AM | New Home Sales, Mar est 630k (618k prior) |
| New Home Sales, Mar est 1.9% (-0.6%) | |
| Richmond Fed Manufact. Index, Apr est 16 (15 prior) | |
| Conf. Board Consumer Confidence, Apr est 126.0 (127.7 prior) | |
| Conf. Board Present Situation, Apr (159.9 prior) | |
| Conf. Board Expectations, Apr (106.2 prior) |
Canadian Economic Data
There is no Canadian economic data for today.
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