Market Update

Tsys trading higher, avg volume in TY futures (lowest this week ~ 300k), 10Y 2.2.632% (-1.5bps).  Core Euro bonds higher since mid morning, 10Y bund 1.5bps lower, prices bid after ECB left rates unch but stmt dovish in that ECB ready to increase app ‘if conditions warrant’. Draghi press conference at 8:30 -look for any reference to QE taper, Draghi may want to cool speculation of early QE exit given rapid appreciation in the EUR. GOCs  maintaining slight gains after retail sales rose 0.2% in Nov vs 0.8% gain exp, as sales of cars/parts fell 3.6% reversing October’s gains. 

News headlines

ECB Debates If 270 Billion-Euro QE Pledge Will Be Enough (Bloomberg) When Mario Draghi addresses reporters on Thursday, he’ll probably repeat that returning inflation to target relies on the European Central Bank’s pledge to add at least another 270 billion euros ($330 billion) in stimulus. 

Mnuchin Defends Weaker Dollar Comments as ‘Clear,’ ‘Consistent’ (Bloomberg) Treasury Secretary Steven Mnuchin said he isn’t concerned about short-term fluctuations in the dollar and that there are economic pros and cons to where the exchange rate now is, a day after he suggested a weaker U.S. currency would help trade.

Mueller Almost Done With Obstruction Part of Trump Probe, Sources Say (Bloomberg) Special Counsel Robert Mueller is moving at a far faster pace than previously known and appears to be wrapping up at least one key part of his investigation — whether President Donald Trump obstructed justice, according to current and former U.S. officials.

Dollar Extends Drop; Euro Steady as ECB Holds Rate: Markets Wrap (Bloomberg) The dollar’s miserable week continued, with the greenback slipping against most major peers as traders digest the latest comments from White House officials. The euro was steady and European stocks rose as the region’s central bank kept interest rates unchanged, while crude gained.

Oil Extends Three-Year High After Record Pullback in Stockpiles (Bloomberg) Futures added as much as 1.3 percent in New York after climbing 1.8 percent on Wednesday.  A weaker U.S. dollar helped to underpin oil’s gain. Supplies slid to the lowest level since February 2015 and edged toward the five-year average, according to Energy Information Administration data. American producers are pumping crude at the highest rate in more than three decades.

Canada unveils ideas to save NAFTA, Trudeau lobbies U.S. firms (Reuters) Canadian negotiators at the NAFTA talks on Wednesday unveiled ideas to address contentious American demands for revamping the 1994 pact while Prime Minister Justin Trudeau urged top U.S. executives to back free trade.

Caterpillar profit beats estimates as sales surge 35 percent (Reuters) Caterpillar Inc beat estimates for fourth-quarter profit on Thursday as revenues surged 35 percent compared to a year earlier on the back of strong global demand for its construction and mining equipment.

Poloz says even he doesn’t know future of rate hikes (BNN) Bank of Canada Governor Stephen Poloz said on Thursday that even he did not know what potential there may be for further interest rate hikes this year, reiterating that policymakers remained both data dependent and alert to developments with NAFTA.

Overnight markets

Overview: US 10yr note futures are up 0.115% at 122-11, S&P 500 futures are up 0.29% at 2849.25, Crude oil futures are up 0.99% at $66.26, Gold futures are up 0.22% at $1364.4, DXY is down -0.12% at 89.102, CAD/USD is down -0.2% at 0.8115.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.814% 2 Year 2.076%
5 Year 2.05% 5 Year 2.422%
10 Year 2.252% 10 Year 2.632%
30 Year 2.362% 30 Year 2.911%

US Economic Data

8:30 AM Initial Jobless Claims, Jan 20th 233k est 235k (220k prior)
  Continuing Claims, Jan 13th 1937k est 1925k (1952k prior)
9:45 AM Bloomberg Consumer Confidence, Jan 21st (53.8 prior)
10:00 AM New Home Sales, Dec est 675k (733k prior)
  New Home Sales MoM, Dec est -7.9% (17.5% prior)
  Leading Index, Dec est 0.5% (0.4% prior)
11:00 AM Kansas City Fed Manf. Activity, Jan est 14 (14 prior)

Canadian Economic Data

6:27 AM CFIB Business Barometer, Jan 62.7 (59.1 prior)
8:30 AM Retail Sales MoM, Nov 0.2% est 0.8% (1.5% prior)
  Retail Sales Ex Auto MoM, Nov 1.6% est 0.9% (0.8% prior)


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