Market Update Tsys trading higher, 10Y 2.95% (-2.5bps), FTQ bid for a third day, yields at a two-week low as equities futures slide, widening in EU peripheral spreads (Ita/Ger 10Y +15 @ 202, Spain/Germ +13). Core Euro bonds USD index rising since early NA trade close to Wednesday’s high 94.18. WTI crude sharply lower, (WTI -1.60 @ 69.12) on OPEC news they are looking to boost supply by ending excessive cuts. GOCs opening higher, in line with tsys, the CAD at a two week low following the decline in crude.
News headlines
Failed Trump-Kim Summit Is a Bitter Lesson for the White House (Bloomberg) A historic summit between Donald Trump and Kim Jong Un — abruptly agreed to with little plan for how events would unfold — collapsed as the leaders talked past each other on their goals, phone calls weren’t returned and rhetoric turned from hopeful to sour.U.S. officials insist they’re optimistic the meeting will happen, eventually. And North Korea’s Vice Foreign Minister Kim Kye Gwan said Friday that his country remains willing to meet the U.S. any time.
Trump Levies Would Hit Other Asia Economies Harder Than China’s (Bloomberg) Other Asian economies would suffer more than China’s if Donald Trump does deliver on his threats to slap $150 billion of tariffs on shipments from the world’s biggest trading nation. That’s according to Bloomberg economists Fielding Chen and Tom Orlik, who estimate that for every 10 percent drop in China’s exports, the gross domestic product growth rate of Asian economies would fall 1.1 percentage points on average. China’s would decrease by just 0.3 percentage point.
Iran Wants Oil and Bank Pledges by June After U.S. Deal Exit (Bloomberg) Europe needs to come up with a package of economic guarantees by June to prevent the crisis triggered by Donald Trump’s nuclear deal withdrawal from escalating further, according to a top Iranian official. Iran expects oil exports to remain at current levels, continued access to international finance and the completion of contracts signed with European companies, according to the person, who asked not to be named in line with diplomatic protocol. The official spoke Friday in Vienna ahead of talks with Chinese, French, German, Russian and U.K. diplomats about the fate of the Joint Comprehensive Plan of Action, as the 2015 accord is formally known.
Stocks Steady as Korea Concerns Cool; Oil Falls: Markets Wrap (Bloomberg) Stocks steadied after North Korea offered a measured response to President Donald Trump’s decision to cancel a summit with that country’s leader, though politics in Europe damped the appetite for risk. The dollar edged higher with U.S. Treasuries, while crude oil extended a decline. The Stoxx Europe 600 Index pared gains, with Spain’s benchmark gauge tumbling as the prospect of a snap election increased. S&P equity-index futures fluctuated between gains and losses after Thursday’s decline in U.S. benchmarks. Core European bonds advanced, while Italy led peripheral debt lower as worries mounted over the leadership there and in Spain. WTI crude dropped below $70 a barrel after a Saudi minister said supply would likely be boosted in the second half.
Two men set off bomb in restaurant in Canada; 15 wounded (Reuters) Two unidentified men walked into a restaurant on Thursday in the Canadian city of Mississauga and set off a bomb, wounding more than a dozen people, local police said. The blast went off in the Bombay Bhel restaurant at about 10:30 p.m local time. Fifteen people were taken to hospital, three of them with critical injuries, the Peel Regional Paramedic Service said in a Tweet. The two male suspects fled after detonating their improvised explosive device, Peel Regional Police said in a Tweet. No one has claimed responsibility, and the motive for the attack was not known.
Canada PM raps possible U.S. auto tariffs, says linked to NAFTA (Reuters) A move by the United States to explore tariffs on auto imports is based on flimsy logic and is part of the pressure from Washington to renegotiate the NAFTA trade pact, Canadian Prime Minister Justin Trudeau said on Wednesday. In an interview with Reuters, Trudeau said that while U.S. President Donald Trump had raised the idea of punitive measures, there was no guarantee they will happen. Trudeau also predicted talk of tariffs would likely disappear if slow-moving negotiations to update the North American Free Trade Agreement – currently stuck on autos issues – are successful.
IMF’s Lagarde tells Turkey to ensure central bank independence (BNN) International Monetary Fund Managing Director Christine Lagarde urged the Turkish government to preserve the independence of its central bank after confusion sent the lira sliding. Mixed signals about whether the central bank is free of political interference created a sense of uncertainty among investors, putting the currency under pressure, Lagarde said in an interview with Bloomberg Television in St. Petersburg.
Royal Bank: Canadian businesses borrowing to grow as commercial loan growth tops double digits (BNN) Rod Bolger, chief financial officer at RBC, tells BNN Bloomberg that commercial loan growth was up by double digits as business continue to invest in Canada and that the bank is seeing a strong consumer and healthy real estate market.
Overnight markets
Overview: US 10yr note futures are up 0.157% at 119-22, S&P 500 futures are down -0.23% at 2721.25, Crude oil futures are down -2.26% at $69.11, Gold futures are down -0.05% at $1309.2, DXY is up 0.38% at 94.133, CAD/USD is up 0.57% at 0.7719.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.981% | 2 Year | 2.496% |
| 5 Year | 2.211% | 5 Year | 2.792% |
| 10 Year | 2.38% | 10 Year | 2.951% |
| 30 Year | 2.398% | 30 Year | 3.102% |
US Economic Data
| 8:30 AM | Durable Goods Orders, Apr -1.7% est -1.3% (2.6% prior) |
| Durable Ex Transportation, Apr 0.9% est 0.5% (0.1% prior) | |
| Cap Goods Orders Nondef Ex Air, Apr 1.0% est 0.7% (-0.4% prior) | |
| Cap Goods Ship Nondef Ex Air, Apr 0.8% est 0.4% (-0.8% prior) | |
| 10 :00 AM | U. of Mich. Sentiment, May est 98.8 (98.8 prior) |
| U. of Mich. Current Conditions, May est 98.6 (113.3 prior) | |
| U. of Mich. Expectations, May (89.5 prior) | |
| U. of Mich. 1 Yr Inflation, May (2.8% prior) | |
| U. of Mich. 5-10 Yr Inflation, May (2.5% 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