Market Update

US tsys lower, near overnight lows, risk on after comments from US tsy sec Mnuchin on possible trade deal with China, in advance of Trump/Xi meeting on Saturday at G20. S&P futures +12.5, crude +2% 58.94 highest since May 30th. Tsy curve 1bp flatter, 10Y 2.02% (+3.4bps), on heavy volume (465k) in TY futures. Core Euro bonds also lower, lagging the move in tsys by ~2bps. GOCs lower, in line with tsys. Two year auction at noon – reopening of August 21s with the Aug21/2Y roll -2.1/-2.4.

News headlines

U.S. Futures Advance on Trade Hopes; Bonds Retreat: Markets Wrap (Bloomberg) U.S. index futures gained while stocks in Europe fluctuated as comments by Treasury Secretary Steven Mnuchin tempered concern over the trade impasse with China. Government bonds retreated.

TSX futures up on higher oil prices (Reuters) Canada’s main stock index futures rose on Wednesday as oil prices jumped after data showed a decline in U.S. crude inventories and an outage at a major refinery on the U.S. East Coast.

China asks Canada to suspend all meat exports amid tensions (BNN) The Chinese Embassy said Tuesday it has asked Canada to suspend all meat exports, a surprise move that comes amid the diplomatic dispute over the December arrest of Huawei executive Meng Wanzhou in Vancouver.

U.S. aims to restart China trade talks, will not accept conditions on tariff use (Reuters) The United States hopes to re-launch trade talks with China after President Donald Trump and President Xi Jinping meet in Japan on Saturday, but Washington will not accept any conditions around the U.S. use of tariffs in the dispute, a senior administration official said on Tuesday.

Trump-Xi meet, Iran tension to overshadow G20 summit in Japan (Reuters) Concerns over trade, conflict and oil will dominate a summit of the Group of 20 major economies in Japan this weekend, with attention focused on a meeting between the leaders of the United States and China, embroiled in a lengthy trade war.

Oil Jumps to Four-Week High on Report of Falling U.S. Stockpiles (Bloomberg) Oil rose to a four-week high after an industry report signaled a bigger-than-forecast drop in U.S. crude stockpiles, adding impetus to a rally that’s been driven by a tense standoff between Washington and Tehran.

BoE makes case for flexible regulation after Brexit (Reuters) Britain needs independent financial regulators after Brexit that can respond swiftly to changes in the economy and continue to nurture innovation, a senior Bank of England official said on Wednesday.

Market Overview: US 10yr note futures are down -0.22% at 127-27, S&P 500 futures are up 0.41% at 2934, Crude oil futures are up 1.83% at $58.89, Gold futures are down -0.7% at $1408.7, DXY is up 0.16% at 96.293, CAD/USD is down -0.09% at 0.76.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.432% 2 Year 1.745%
5 Year 1.367% 5 Year 1.764%
10 Year 1.474% 10 Year 2.018%
30 Year 1.713% 30 Year 2.542%

US Economic Data

07:00 AM MBA Mortgage Applications, Jun 21  Survey: —  Actual: 1.30% Prior: -3.40%
08:30 AM Durable Goods Orders, May P  Survey: -0.30%  Prior: -2.10%
          Durables Ex Transportation, May P  Survey: 0.10%  Prior: 0.00%
          Cap Goods Orders Nondef Ex Air, May P  Survey: 0.10%  Prior: -1.00%
          Cap Goods Ship Nondef Ex Air, May P  Survey: 0.10%  Prior: 0.00%
         Wholesale Inventories MoM, May P  Survey: 0.50%  Prior: 0.80%

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, 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