Market Update

Treasuries bounced off lows amid dip buying, after early slide on tax-plan-news speculation/digestion selling, also pre-auction shorts into 1pm ET. $34B 5Y auction and 11:30am ET 2Y FRN auction. Treasuries opened NY mildly weaker after drift off session high 7am ET after overnight 2way flows. All await Trump admin tax plan announcement; could include 10% repatriation tax on overseas earnings and 15% corporate tax rate. Tax plan announcement time eyed early afternoon. Canada Feb Retail sales -0.6% vs 0.0% expected. Ex autos -0.1% vs-0.3% expected. Ex autos and gas +0.5%. Mostly price effect as total sales volume -0.1%.  June Bund future slips back into negative territory following comments from US’s Mnuchin on tax reform. June Bund last 6 ticks lower at 160.92.

News headlines 

Dollar Climbs With Bonds as Trump Tax Plan in Play: Markets Wrap (Bloomberg) The dollar climbed with U.S. government bonds before President Donald Trump unveils his tax cut plan that could breathe new life into flagging reflation trades. The greenback wrested back some strength in early business hours on the continent, gaining against most group-of-10 currencies. Treasuries reversed a five-day losing streak, signaling not all investors are getting behind the risk rally.

Oil Trades Below $50 Amid Mixed Signals on U.S. Crude Stockpiles (Bloomberg) Oil traded below $50 a barrel in New York amid conflicting signs on whether U.S. crude stockpiles are retreating. Futures were little changed, having fallen to a three-week low on April 24. The industry-funded American Petroleum Institute was said to report U.S. crude supplies increased by 897,000 barrels last week. Meanwhile, a Bloomberg survey forecasts stockpiles probably fell by 1.75 million barrels before an Energy Information Administration report Wednesday.

Congress moves closer to deal to avert government shutdown (Reuters) The U.S. Congress was moving closer to crafting a deal to avoid shutting down at the stroke of midnight on Friday, but the details and even broad strokes of an agreement were still murky. Some lawmakers are optimistic they can hammer out a budget bill to take the government to the end of the current fiscal year on Sept. 30, while others see Congress putting a short-term spending resolution in place for a week, while talks continue.

Trump administration to brief full U.S. Congress on North Korea policy (Reuters) U.S. lawmakers want to leave briefings on North Korea on Wednesday with something many think has been absent in the Trump administration so far: a clear strategy for dealing with a major national security threat. As a standoff escalated over the reclusive Asian nation’s development of nuclear weapons and long-range ballistic missiles, President Donald Trump invited all 100 members of the Senate to attend the session with Secretary of State Rex Tillerson, Secretary of Defense Jim Mattis, Director of National Intelligence Dan Coats and Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff.

Oil Seen Falling Below $40 a Barrel If OPEC Doesn’t Extend Cuts (Bloomberg) Crude will probably drop to less than $40 a barrel unless OPEC and allied producers extend their collective cuts in output beyond June, according to the Abu Dhabi Investment Authority’s head of research. The six-month cuts that took effect in January have set a floor for prices, but an increasing supply of U.S. shale oil together with record-high inventories are keeping the per-barrel price of crude from rising beyond the upper $50s, Christof Ruehl said Wednesday at a conference in Dubai.

U.S. commerce chief says Canada trade disputes show need to rework NAFTA (Reuters) U.S. Commerce Secretary Wilbur Ross said on Tuesday that trade disputes with Canada over lumber and dairy products illustrate a need to renegotiate the North American Free Trade Agreement.

Tim Hortons owner sees revenue rise, profit flat (TheGlobeAndMail) Restaurant Brands International Inc , the owner of Burger King and Tim Hortons, reported better-than-expected quarterly profit and revenue as the two chains opened more restaurants. Net restaurant growth at Burger King was 5.1 per cent, while it rose 4.6 per cent at Tim Hortons.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-12, S&P 500 futures are up 0.02% at 2385.5, Crude oil futures are down -1.01% at $49.06, Gold futures are down -0.12% at $1265.7, DXY is up 0.3% at 99.078, CAD/USD is up 0.04% at 0.7364.

US Economic Data

10:00 AM Revisions: Retail Sales

Canadian Economic Data 

8:30 AM Retail Sales, m/m, Feb, -0.6%, est. 0.0% (prior 2.2%, revised 2.3%)
Retail Sales Ex Auto, m/m, -0.1%, est. -0.3% (prior 1.7%, revised 2.3%)


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