Market Update

US tsys  trading much higher on FTQ bid, yields  5-7bps lower, curve 2bps flatter, 10Y 1.61% (-7bps), lowest since Oct 9th. Equities, crude tumbling o/n on Coronavirus fears, S&P futures -1.5%. crude down for a 5th day, -3.0% @ 52.46, while gold futures are at a two-week high. Core EGBs higher, German IFO came in below forecasts, Italian 10Y BTPs 18bps lower after Italian regional vote result bolstered PM Conte’s fragile coalition.  GOCs rallying, 2bps wider vs tsys, spreads still 7-8bps narrower on the week in the wake of dovish BOC.

News headlines

Virus Worries Batter Stocks and Oil as Bonds Surge: Markets Wrap (Bloomberg) Intensifying concern over the human and economic impact of the deadly coronavirus sent stocks, oil and China’s yuan tumbling Monday while spurring Treasuries and other havens. Italian bonds jumped after regional elections.

Futures lower as coronavirus fears push oil below $60 (Reuters) Canada’s main stock index futures fell on Monday, as oil prices declined on fears of slowing demand due to the potential economic fallout from the fast-spreading coronavirus.

Oil Falls to Three-Month Low as Virus Spread Raises Demand Fear (Bloomberg) Oil tumbled to the lowest in more than three months on fears China’s deadly coronavirus will hit demand in a market that already has plentiful supply.

Fed’s first hurdle in 2020: Dispensing with ‘QE Lite’ (Reuters) The Federal Reserve’s bond portfolio is swelling again at a pace not seen since the “quantitative easing” heyday in the early 2010s. Prices for stocks and other risky assets are also rising at a fast clip – a state of affairs that a growing chorus of investors, economists and former Fed officials say is no coincidence, and potentially a problem.

Trump’s ‘massive’ U.S.-UK trade deal faces big hurdles (Reuters) Britain is the United States’ closest ally but their long friendship may be sorely tested as the two countries try to forge a new trade agreement after Britain’s exit from the European Union.

Business survey suggests U.S. labor market may have peaked (Reuters) There is an even balance in the share of U.S. businesses reporting decreases and increases in employment for the first time in a decade, a survey showed on Monday, the latest suggestion that the labor market has likely peaked and job growth could slow this year.

Venezuelan rum maker offers shares in hope of China-style transition (Reuters) Rum distiller Ron Santa Teresa RST.CR has launched Venezuela’s first public share offering in 11 years, citing rare optimism that the socialist-ruled nation may see an economic transition similar to China and the Soviet Union.

Coronavirus fears wipe billions from European stocks (Reuters) Potential damage to business from China’s fast-spreading coronavirus knocked more than 2% off European stocks on Monday, after the world’s second biggest economy ramped up travel bans and extended the Lunar New Year holidays.

Market Overview: US 10yr note futures are up 0.444% at 130-28, S&P 500 futures are down -1.56% at 3242.25, Crude oil futures are down -2.86% at $52.64, Gold futures are up 0.77% at $1590.4, DXY is up 0.05% at 97.9, CAD/USD is up 0.34% at 0.7583.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.437% 2 Year 1.441%
5 Year 1.325% 5 Year 1.433%
10 Year 1.307% 10 Year 1.612%
30 Year 1.441% 30 Year 2.066%

US Economic Data

10:00 AM New Home Sales MoM, Dec  Survey: 1.50%  Prior: 1.30%
     New Home Sales, Dec  Survey: 730k  Prior: 719k
10:30 AM Dallas Fed Manf. Activity, Jan  Survey: -1.8  Prior: -3.2

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Jan 24  Survey: —  Prior: 56.1

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