Market Update
US tsys rallying, yields 2-3bps lower, moving higher with German bunds, 10Y 2.54% (-2.5bps), TY futures near top of range on heavy volume (420k), block trade in 5Y futures 6K FVM9 ($283k DV01) at 8:11. Equity futures unch, DOW futures higher with Boeing (+1.7%), even thou the company missed estimates and announced it is pausing share buybacks. Bunds/Gilts higher after Apr IFO missed estimates, current conditions lowest in two years. GOCs higher, outperforming tsys out the curve by 1-1.5bps, 10Y 1.70% before BOC decision &MPR at 10:00ET. The overnight rate is expected to remain unch at 1.75%, with the statement likely to remove the tightening bias from March, along with downward adjustment to 2019 GDP growth from 1.7% in Jan. Provi spds unch, Ont 10Y deal yest @ 72 now 72.5/71.5, QC 10s or longs rumoured. Yest we pointed to the attractive all in pick selling Ont 23s to buy Ont 28s – 30.8 credit pick is top of 6 mnth range while the underlying 5s10s GOC curve (23s28s) has spiked since April 1st to 16bps (Z-2.8), so a decent flattener play involving Ontarios.
News headlines
Futures dip ahead of BoC’s interest rate decision (Reuters) Futures for Canada’s main stock index inched lower on Wednesday, ahead of Bank of Canada’s interest rate decision and amid a drop in oil prices and global equities.
Stocks Struggle; Bonds Gain as Dollar Strengthens: Markets Wrap (Bloomberg) U.S. equity futures drifted in the wake of Tuesday’s record close, European stocks fluctuated and Asian benchmarks were mixed as investors assessed corporate news and economic data. Treasuries climbed alongside European sovereign bonds and the dollar extended its rally to a six-week high.
Top U.S. officials to hold trade talks in China next week (Reuters) U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for trade talks beginning on April 30, the White House said in a statement on Tuesday.
New round of U.S. tariffs a ‘modest’ hit for euro area: ECB (Reuters) A new round of tariffs between the United States and its main partners would only cause a “modest decrease” in the pace of economic growth in the euro zone, according to research by the European Central Bank.
Bank of Canada’s Poloz poised to put rates on prolonged pause (BNN) Bank of Canada Governor Stephen Poloz is widely expected to cement expectations for a prolonged pause on interest rates on Wednesday, as the nation’s economy grapples with a slowdown.
Oil Slides as U.S. Supplies Allay Fears Over Iran Sanctions (Bloomberg) Oil pulled back from a six-month high as an industry report signaling a gain in U.S. crude inventories partly offset concerns over America’s campaign to halt Iranian exports.
European shares hit highest since August on Credit Suisse, SAP (Reuters) World shares pared back losses on Wednesday as positive earnings in Europe from Credit Suisse and investor support for SAP helped soothe worries that China has put broader stimulus on hold.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.541% | 2 Year | 2.332% |
| 5 Year | 1.526% | 5 Year | 2.329% |
| 10 Year | 1.707% | 10 Year | 2.538% |
| 30 Year | 2.021% | 30 Year | 2.959% |
US Economic Data
| 07:00 AM | MBA Mortgage Applications, Apr 19 Survey – Actual -7.3% Prior -3.50% |
Canadian Economic Data
| 10:00 AM | Bank of Canada Rate Decision, Apr 24 Survey 1.75% Prior 1.75% |
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