Market Update US tsys higher led by the long end , with the tsy curve 1.4bps flatter 2s10s, the 10Y 2.96 (-1.5bps). Prices sliding on Draghi comments, despite weaker June Durable Goods Orders. ECB left rates unch as expected, rates to be on hold ‘through the summer of 2019’ with very little initial reaction in bunds/euro, both close to yesterday’s lows. Stock futures lower, Facebook earnings/guidance disappointed, the stock is down20% pre-mkt. GOCs lower ,1bp wider vs tsys, 10Y 2.29% 9 (0.5bps). Provis unch despite higher all in yields, QC 48s issue yest @ 75, 75/74 on screen.
News headlines
ECB Keeps to Policy Path to End Bond Purchases (Bloomberg) The European Central Bank stuck to its plan to end bond purchases as the European Union and U.S. stepped back from a trade war and the currency bloc’s economic expansion remained solid. The Frankfurt-based institution reiterated it will continue buying 30 billion euros ($35 billion) of assets a month until the end of September, reduce the pace to 15 billion euros from October, and stop additional purchases at the end of the year.
Uranium Tariffs Threaten Nuclear Plants Trump Is Trying to Save (Bloomberg) The Trump administration’s decision to consider tariffs on uranium imports may raise the cost of fuel for nuclear reactors and undermine a separate initiative to shore up struggling electricity generators. The Commerce Department said Wednesday it will probe whether uranium imports “threaten to impair” national security. U.S. miners Energy Fuels Inc. and Ur-Energy Inc., which requested the probe in January, want 25 percent of the domestic market reserved for U.S. producers. Domestic companies supply less than 5 percent of U.S. consumption and would need about three years to ramp up production to meet that target.
Air Canada Unveils Back-to-the-Future Bid for Loyalty Plan (Bloomberg) Air Canada is trying to take its frequent-flyer program back to the future. The airline is teaming up with Visa Inc. and two Canadian banks on a C$250 million ($190 million) cash offer for Aimia Inc.’s Aeroplan rewards program. If accepted — and Aimia surged the most on record on the news — the deal would return the loyalty plan to Air Canada, which spun it off in 2005.
U.S. Stock Futures Slip on Facebook; Euro Weakens: Markets Wrap (Bloomberg) U.S. equity index futures fell on Thursday as investors braced for the impact of Facebook Inc.’s disappointing earnings, which looked set to overshadow a trade breakthrough between America and Europe. The euro stayed lower after the ECB held interest rates steady. The Nasdaq was set for a steep drop after Facebook Inc. tumbled more than 20 percent in pre-market trading as revenue and user growth missed estimates. S&P 500 futures also nudged lower, though contracts for the Dow edged up. In Europe, the Stoxx 600 Index climbed, led by industrials, after President Donald Trump agreed with European Commission chief Jean-Claude Juncker to suspend new tariffs while continuing to negotiate over trade.
NXP to repurchase $5 billion shares after Qualcomm deal falls through (Reuters) NXP Semiconductors NV (NXPI.O), whose buyout deal with U.S. chipmaker Qualcomm Inc (QCOM.O) fell through due to lack of approval from China, said on Thursday it would buy back $5 billion worth of shares. The company said Qualcomm has informed the company it would pay $2 billion breakup fee by 9 a.m., New York City time, on Thursday. NXP also reported second-quarter revenue of $2.29 billion, a 4 percent increase from last year, missing the average analyst estimate of $2.36 billion, according to Thomson Reuters I/B/E/S.
Carmakers surge after Trump agrees to put auto tariffs on hold (BNN) European carmakers climbed after President Donald Trump backed off his threat to levy tariffs on cars imported to the U.S. during a meeting with European Commission President Jean-Claude Juncker, averting for the time being an escalating trade war. Shares of BMW AG, Volkswagen AG, Fiat Chrysler Automobiles NV and Daimler AG jumped on Thursday following a pledge from the two leaders to “hold off on other tariffs” while they negotiate a deal to expand European imports of U.S. liquefied natural gas and soybeans and lower industrial levies. Germany’s VDA auto industry association called the meeting “a big step forward” and “good news for industry and consumers on both sides of the Atlantic.”
Apparent EU-U.S. trade truce ‘positive news’ for Canada: Freeland (BNN) The apparent trade truce agreement between European Commission President Jean-Claude Juncker and U.S. President Donald Trump is good news for Canada, Foreign Affairs Minister Chrystia Freeland told reporters in a conference call from Mexico City. The U.S. and the EU agreed to expand imports of U.S. liquefied natural gas and soybeans as well as lower tariffs on non-auto industrial goods on both sides. The U.S. and EU have also agreed to “hold off on other tariffs” while negotiations continue, said Juncker. “I really commend everyone involved for pulling back from an action – if that is indeed what is happening – from pulling back from an action that not only is not justified and illegal under WTO and NAFTA rules but actually has the potential to be really devastating for the global economy,” Freeland said on the conference call shortly after the U.S.-EU announcement. “We need to look at [the agreement] more closely, but it sounds certainly like some positive news.”
Precision Drilling loss rises 30.7% on higher compensation expense (BNN) Precision Drilling Corp. had a $47.2-million net loss in the second quarter, 30.7 per cent bigger than the same time last year, as stock-linked compensation expenses increased. The loss amounted to 16 cents per share compared with a net loss of $36 million or 12 cents per share in the second quarter of 2017. Analysts had estimated a loss of 14 cents per share, according to Thomson Reuters Eikon. The increase was largely fuelled by a $12-million increase in administrative expenses due to higher incentive compensation tied to the price of Precision Drilling’s stock price.
Overnight markets
Overview: US 10yr note futures are down -0.209% at 119-13, S&P 500 futures are down -0.11% at 2838.25, Crude oil futures are down -0.07% at $69.25, Gold futures are down -0.32% at $1237, DXY is up 0.06% at 94.286, CAD/USD is up 0.05% at 0.7661.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.057% | 2 Year | 2.669% |
| 5 Year | 2.199% | 5 Year | 2.846% |
| 10 Year | 2.283% | 10 Year | 2.965% |
| 30 Year | 2.315% | 30 Year | 3.093% |
US Economic Data
| 8:30 AM | Wholesale Invetories MoM, Jun est 0.3% (0.6% prior) |
| Retail Inventories MoM, Jun (0.4% prior) | |
| Initial Jobless Claims, Jul 21st est 215k (207k prior) | |
| Continuing Claims, Jul 14th est 1733k (1751k prior) | |
| Durable Goods Orders, Jun est 3.0% (-0.4% prior) | |
| Durables Ex Transportation, Jun est 0.5% (0.0% prior) | |
| Cap Goods Orders Nondef Ex Air, Jun est 0.5% (0.3% prior) | |
| Cap Goods Ship Nondef Ex Air, Jun est 0.4% (0.2% prior) | |
| 9 :45 AM | Bloomberg Consumer Comfort, Jul (58.8 prior) |
| 11:00 AM | Kansas City Fed Manf. Activity |
Canadian Economic Data
| 6:00 AM | CFIB Business Barometer, Jul 56.8 (62.2 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230