Market Update
Tsys trading higher, 10Y 2.835 (-1.8bps) curve slightly flatter, US equity futures pulling back from earlier highs, S&P futures +12.5, Euro Stoxx +1.4%. Short term rates continuing to move higher, US 3M libor 2.302% highest since 2008. The US sells $35bln in 5Y notes at 1:00PM. Core EGBs lagging the move in tsys, bund yields slightly lower after the 10Y tsy/bund spread hit 233.5 – widest spd in over 30 yrs while 10Y bund contract rose to the highest since Jan. In Canada, GOCs well bid, outperforming tsys across the curve, the CAD slightly lower yet recovering on positive NAFTA comments from US trade rep Lightizer. The BOC auctions $3.0bln in 2Y notes at noon – reopening the 1.75% May 2020 issue with the May 20/2Y roll wider 5.2/5.1. This could be the last reopening of the May issue as outstanding will reach $9.6bln. The 2Y @ 1.86% is just off the last Friday’s post CPI highs – close to a six year high. GTAA in the market with $500mln June 2037 ! 103 +/-3 vs 37s.
News headlines
U.S. Pushes China on Cars and Finance in Tariff Talks (Bloomberg) The Trump administration is urging China to lower tariffs on cars and open its market to U.S. financial services as part of talks to resolve a rise in trade tensions that has shaken global markets, according to a person familiar with the matter. Treasury Secretary Steven Mnuchin called China’s Liu He to congratulate Liu on his appointment this month as vice premier in charge of economic policy, said the person, who spoke on condition of anonymity because the discussions aren’t public. The two discussed the trade deficit between the two countries and committed to finding a mutually agreeable way to reduce the gap, the person said, adding they have exchanged correspondence.
Stocks Jump in Best Day Since 2015 as Dollar Falls: Markets Wrap (Bloomberg) U.S. equities surged back from the biggest weekly rout in two years, with major benchmarks climbing more than 2.7 percent on signs that an escalation of trade tensions was beginning to ease. Chipmakers and banks led gains as the S&P 500 Index posted its biggest one-day jump since August 2015, while 20 stocks climbed for every one that fell. The advance erased Friday’s drop, though the gauge still had a ways to go to make up all of last week’s losses. Facebook Inc. was a noticeable underperformer, ending just slightly higher after the Federal Trade Commission said it has an open, non-public probe into the company’s privacy practices.
GSK Gets Full Control of Sensodyne Maker for $13 Billion (Bloomberg) The new bosses of two of Europe’s largest drugmakers are pivoting in different directions, with GlaxoSmithKline Plc doubling down on consumer health as Novartis AG focuses on finding new prescription medicines.
Trump’s Russian Expulsions Leave Moscow Stunned (Bloomberg) The U.S. president often accused of cozying up to the Kremlin suddenly looks closer than ever to the European allies he’s sometimes snubbed.
‘Vulnerable’ Stocks and Record U.S. Debt Sales Dominate the Week (Bloomberg) A holiday-shortened trading week in the U.S. and much of Europe will see traders contend with more than just the end of the first-quarter.
TSX futures higher as trade war worries recede (Reuters) Canada’s main stock index on Tuesday looked set to extend its previous session’s gains as reports of talks to improve U.S. access to Chinese market eased trade war worries. June futures on the S&P TSX index SXFc1 were 0.35 percent higher at 7:15 a.m. ET. Canada’s main stock index rebounded on Monday from a five-week low, led by gains in consumer discretionary and energy shares. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.55 percent at 7:15 a.m. ET, while S&P 500 e-mini futures Esc1 rose 0.59 percent and Nasdaq 100 e-mini futures NQc1 were 0.96 percent higher.
Whistleblower says Canadian company worked on software to find Republican voters (Reuters) A Cambridge Analytica whistleblower said on Tuesday that Canadian company AggregateIQ worked on software called Ripon which was used to identify Republican voters ahead of the 2016 U.S. presidential election. AggregateIQ did not immediately respond to request for comment on the remarks by Christopher Wylie, a whistleblower formerly of British political consultancy Cambridge Analytica.
Quebec’s Leitao to table provincial budget today (BNN) Quebec Finance Minister Carlos Leitao is expected to table an election-themed budget today ahead of the fall provincewide vote. The government has said it intends to introduce measures to reduce the province’s debt by $10 billion over five years by dipping into a special fund that was created in 2006. The province believes it will save $1 billion in interest payments. Leitao says the budget will focus on the quality of life of Quebecers. The budget will be Leitao’s fifth budget and the final one before the provincial election on Oct. 1. The finance minister will table the document in the national assembly shortly after 4.
Overnight markets
Overview: US 10yr note futures are up 0.039% at 120-17, S&P 500 futures are up 0.48% at 2672.25, Crude oil futures are up 0.49% at $65.87, Gold futures are down -1.07% at $1346.3, DXY is up 0.56% at 89.526, CAD/USD is up 0.46% at 0.7751.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.871% | 2 Year | 2.294% |
| 5 Year | 2.08% | 5 Year | 2.627% |
| 10 Year | 2.21% | 10 Year | 2.839% |
| 30 Year | 2.331% | 30 Year | 3.076% |
US Economic Data
| 9:00 AM | S&P CoreLogic CS 20-City NSA Index, Jan 205.10 (204.45 prior) |
| S&P CoreLogic CS 20-City MoM SA, Jan 0.75% est 0.6% (0.64% prior) | |
| S&P CoreLogic CS 20-City YoY NSA, Jan 6.40% est 6.15% (6.30% prior) | |
| S&P CoreLogic CS US HPI NSA Index, Jan 196.31% (196.3 prior) | |
| S&P CoreLogic CS US HPI YoY NSA, Jan 6.18% (6.27% prior) | |
| 10:00 AM | Richmond Fed Manufact. Index, Mar est 22 (28 prior) |
| Conf. Board Consumer Confidence, Mar est 131.0 (130.8 prior) | |
| Conf. Board Present Situation, Mar (162.4 prior) |
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, Hugues Savard
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230