Market Update

US tsys sharply lower on heavy volume, ~600k TY futures, after first round of French election Macron lead US 10Y 2.307% (+6.2bps). Core EGBs lower on ‘risk on’, 10Y bunds 10 bps higher @ 0.343%. UK gilts are lagging the decline in bunds with the 10Y gilt still 5.5bps higher @ 1.10% – weakening in April UK CBI trends survey (business spending) to 4 from 8 (6 exp). French yields lower, curve steeper 2Y 10bps lower @ -0.43%, reinvestment flows also supportive -E17bln BTP & 22.7bln OAT redemption today. Over the next week, Eurozone redemptions total E38.2bln. GOCs  lower , outperforming tsys by 1-4bps across the curve as GOC curve  2bps steeper led by 10s above 1.50% ahead of 10Y auction this Wed. BOC reopens June 27 bond for $3bln with the 27/10Y roll 10/9.8 . Provis opening 1bp tighter, long  Onts trading up at 87, 26s @ 73.5, Alta rumoured for today. New Parkland 5 5/8 25 opened 100.50/101.25  on Friday.

News headlines

European Stocks Rally With CAC 40 After French Election Result (Bloomberg) France led gains in European equities as investors speculated that pro-growth centrist candidate Emmanuel Macron will win the country’s presidential election after he made it through to the second round. Boosted by gains in French banks, the CAC 40 Index surged 4.4 percent at 11 a.m. in Paris, poised for its best advance since June 2012, while Germany’s DAX Index rallied to a record. The Euro Stoxx 50 Index jumped 3.2 percent, while the broader Stoxx Europe 600 Index rose 2 percent, both heading for their highest levels since August 2015.

Oil recovers some ground, rise in U.S. drilling caps gains (Reuters) Oil prices recovered some lost ground on Monday after big losses last week, driven by expectations that OPEC will extend output cuts till the end of 2017, although a rise in U.S. drilling capped gains. Brent crude futures LCOc1 rose 38 cents by 1148 GMT to $52.34 per barrel. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 added 41 cents to reach $50.03 a barrel.

OPEC panel recommends six-month extension of oil output cuts: source (Reuters) An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June, a source familiar with the matter said, in an effort to clear a glut of crude that has weighed on prices.

China Stocks Sink Most in Four Months Amid Leverage Crackdown (Bloomberg) A selloff in Chinese stocks deepened, with the benchmark gauge slumping the most in four months, amid concern authorities will step up measures to crack down on leveraged trading.

China clamps down on excess steel as Japan decries Trump ‘protectionism’ (Reuters) Twenty-nine Chinese steel firms have had their licenses revoked as Beijing kept up its campaign to tackle overcapacity in the sector and days after U.S. President Donald Trump said he would open a probe into cheap steel exports from China and elsewhere. Analysts say the revocations were unlikely to be a direct response to Trump’s plan, but rather a part of China’s reform measures aimed at reducing surplus steel capacity that many estimate at around 300 million tonnes, about three times Japan’s annual output.

Trump’s Wall Demands May Decide Whether 100th Day Is a Shutdown (Bloomberg) Nobody in Washington is saying they want a U.S. government shutdown when funding runs out at week’s end, but one person ultimately may get to decide: President Donald Trump. Trump’s biggest demand is a Democratic deal-breaker: money for his long-promised border wall with Mexico. Democrats hope he’ll blink to avoid an embarrassing milestone for a new president trying to prove he can govern. A partial shutdown would start on Saturday, Trump’s 100th day in office.

Overnight markets 

Overview: US 10yr note futures are down -0.421% at 125-17, S&P 500 futures are up 1.09% at 2373, Crude oil futures are up 0.34% at $49.79, Gold futures are down -1.36% at $1271.6, DXY is down -0.91% at 99.065, CAD/USD is down -0.39% at 0.7437.

US Economic Data

8:30 AM Chicago Fed Nat Activity Index, Mar, 0.08, est. 0.50 (prior 0.34, revised 0.27)
10:30 AM Dallas Fed Manf. Activity, Apr, est. 17.0 (prior 16.9)

Canadian Economic Data 

8:30 AM Wholesale Trade Sales, m/m, Feb, -0.2%, est. -1.0% (prior 3.3%, revised 3.0%)
10:00 AM Bloomberg Nanos Confidence, Apr 21 (prior 58.6)


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