Market Update
US tsys higher, yields 1-3 bps lower, curve flatter led by the 7Y, 10Y 2.234 (-2.1bps), little reaction to upward revision to Q1 GDP, weaker durable goods. TY volume high on continued Jun-Sep rolls, prices rising in Europe as equities weakened thru the session led by energy & fin’l with crude off another 1.0% after yest 4.8% drop on skepticism over the latest OPEC extension of prod cuts. EGBs well bid, the 10Y bund 3.5bps lower @ 0.323%, gilts lagging 10Y 1.016% (-2bps) – no econ news, risk off tone in mkts Trump warning on North Korea at G7, lower crude… GOCs higher in line with tsys, curve 2bps flatter led by 10s on strong bid in CGBs, provis ended wider yest, PQ 48 deal @ 84 well received, 86/84 this morning.
News headlines
European Stocks Falter on Oil Slump; Pound Slides: Markets Wrap (Bloomberg) A slump in crude weighed on energy shares as global equity markets headed for a lower finish to the week. The British pound slid. Stocks from Tokyo to Europe fell, dragged down by oil producers. Crude headed for a weekly loss after falling the most in three weeks on Thursday as OPEC’s move to prolong supply cuts for nine months disappointed investors hoping for more.
Oil edges up after dip on disappointing OPEC meeting outcome (Reuters) Oil prices edged back up on Friday after a 5 percent fall in the previous session on disappointment that an OPEC-led decision to extend current production curbs did not go deeper. At Thursday’s meeting in Vienna the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) of output until the end of the first quarter of 2018. The initial agreement would have expired next month.
Corbyn Ties Terror to Foreign Wars as Labour Gets U.K. Poll Lift (Bloomberg) Jeremy Corbyn linked U.K. military action abroad to terrorism at home and criticized Prime Minister Theresa May’s government for squeezing police and prison budgets as election campaigning resumed four days after a suicide bomber killed 22 people in Manchester.
Higher Energy Costs Nudge Japanese Inflation Up to 0.3% in April (Bloomberg) Japan’s core consumer inflation gauge rose for a fourth month in April, the longest run of gains since mid-2015, but it’s far below target and weak underlying price pressures point to limited gains ahead.
Toronto area home sales sink after cooling measures (TheGlobeAndMail) House sales fell 26 per cent in the Toronto region in the month following the Ontario government’s introduction of a foreign-buyer’s tax as many potential purchasers stepped back and waited to assess the market impact. In the 30 days after the province announced the immediate introduction of a 15-per-cent foreign-buyer’s tax on April 20, the number of houses sold in the Greater Toronto Area fell 26 per cent compared with the same period last year, according to data compiled by Toronto realtor John Pasalis, president of Realosophy Realty Inc.
RBC says there’s no systemic risk from Home Capital as the bank, CIBC and TD all beat market forecasts (FinancialPost) Concerns about the state of the mortgage market can’t seem to stop Canada’s big banks. On Thursday, Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank all posted stronger-than-expected quarterly results, with earnings per share growth in the 10 to 12 per cent range.
Overnight markets
Overview: US 10yr note futures are up 0.124% at 126-11, S&P 500 futures are down -0.13% at 2410.25, Crude oil futures are down -0.31% at $48.75, Gold futures are up 0.82% at $1270.1, DXY is up 0.14% at 97.387, CAD/USD is down -0.24% at 0.7433.
US Economic Data
| 8:30 AM | GDP Annualized, q/q, 1Q S, 1.2%, est. 0.9% (prior 0.7%) |
| Personal Consumption, 1Q S, 0.6%, est. 0.4% (prior 0.3%) | |
| GDP Price Index, 1Q S, 2.2%, est. 2.3% (prior 2.3%) | |
| Core PCE, q/q, 1Q S, 2.1%, 2.0% (prior 2.0%) | |
| Durable Goods Orders, Apr P,-0.7% , est. -1.5% (prior 0.9%, revised 2.3%) | |
| Durable Ex Transportation, Apr P,- 0.4%, est. 0.4% (prior 0.0%, revised 0.8%) | |
| Cap Goods Order Nondef Ex Air, Apr P, 0.0%, est. 0.5% (prior 0.5%) | |
| Cap Goods Ship Nondef ExAir, Apr P, -0.1%, est. 0.5% (prior 0.5%, revised 0.3%) | |
| 10:00 AM | University of Michigan Sentiment, May F, est. 97.5 (prior 97.7) |
Canadian Economic Data
There is no major economic news 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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230