Market UpdateTsys trading stronger, off London morning highs, tale of two sessions w/much of O/N action occurring in London hours, Tsys steadily extending top of range, futures volume rather heavy at appr 475k in TYU. Light data day,Fed VC Quarles on International Regulations at 11h00, Bos Fed Pres Rosengren at 12h15. Trade concerns hitting global equities, geopol tension European divisions on immigration and reform lifted EGBs and Tsys in-turn. May durable goods new orders -0.6% vs -0.8% exp, led down by -1.0% in transport. Durables orders were revised upward -1.0% in April (prev -1.6%). Durable goods ex-trans orders -0.3% vs +0.4% exp after three straight gains. This weaker-than-expected reading reflected declines in primary metals, fabricated metals, computers and electronic products, and electrical equipment. There were gains in machinery and the all other durables category.
News headlines
China’s Yuan Tumble Blindsides Traders, Spurs Worry Over Impact (Bloomberg) Global investors might shrug at a bear market in Chinese domestic stocks — largely walled off from the rest of the world. But a tumble in the yuan that’s blindsided currency forecasters is now triggering warnings of potential contagion. Greg McKenna, a three-decade foreign-exchange market veteran, said “I don’t talk about the yuan much” in morning notes to clients. But that wasn’t the case Wednesday. “Folks you have to watch emerging markets and the Chinese yuan,” he wrote.
Tech Stocks Are Killing It in Canada (Bloomberg) Canadian technology stocks are trading near a decade-high as they ride booming U.S. demand for everything from e-commerce to office software and stay far from the global trade fray. The S&P/TSX Composite’s technology index has gained about 23 percent this year, trouncing the 6.1 percent rise of its nearest competitor, industrials. Tech now sports a 4 percent weighting in the benchmark equity index, the highest since 4.2 percent in 2009 when BlackBerry Ltd. ruled the smartphone market.
Trump Seeks to Bolster Government Panel to Curb China Investment (Bloomberg) The White House will push Congress to strengthen an inter-agency panel that it will employ as its main tool to curb Chinese investments in sensitive U.S. technologies, according to senior Trump administration officials. The strategy is a less confrontational approach toward China than many had expected. The administration had considered employing a little-used national emergency law called the International Emergency Economic Powers Act of 1977 to curb prospective investments, people familiar with the plan said earlier this month.
Stocks Erase Decline as Trump Trade Talk Softens: Markets Wrap (Bloomberg) U.S. equity futures erased a drop and European stocks gained as President Donald Trump appeared to step back from the brink of a trade war with China. Oil built on gains after the U.S. stepped up pressure on Iran. U.S. equity-index futures reversed course and the Stoxx Europe 600 Index rallied as senior Trump administration officials said the U.S. will take a less confrontational than expected approach toward the Asian nation. Earlier stocks in Asia had dropped, with Chinese equities extending their decline as the nation’s currency slipped. West Texas Intermediate crude traded at a one-month high as America demanded that Iran’s customers halt imports.
U.S. tariffs funnel Asian steel to Canada’s oil industry (Reuters) Steel pipes and tubes used in drilling and transporting crude oil flooded into Canada this spring, a Reuters analysis shows, as U.S. President Donald Trump’s steel tariffs forced producers from Asia to Europe to seek new markets. Canada is a major steel producer in its own right and the biggest supplier to the United States, but the country is swamped by supply from India and South Korea which underscores the global shift in trading patterns following the Trump administration’s decision to place tariffs on steel and aluminum imported to the United States.
Corus Entertainment’s quarterly revenue misses estimates (Reuters) Canada’s Corus Entertainment Inc (CJRb.TO) on Wednesday reported quarterly revenue that missed Wall Street estimates, hit by weakness in its television business. Revenue from its television business, which includes brands such as Shaw Media and HistoryGo, fell nearly 5 percent to about C$403 million ($303 million), missing analysts’ estimate of C$416 million, according to Thomson Reuters I/B/E/S.
Morneau vows to support Canadian businesses amid trade war (BNN) Finance ministers from across the country weighed the consequences Tuesday of Canada’s intensifying trade dispute with the United States as the federal government worked to finalize details of its retaliation against Donald Trump’s tariffs. The twice-yearly gathering of finance chiefs took place in Ottawa just days before Canada is set to impose retaliatory tariffs on products from the U.S., which is by far its largest trading partner. The federal government’s move, a tit-for-tat response to the Trump administration’s stinging levies on steel and aluminum imports, will take effect Sunday.
Overnight markets
Overview: US 10yr note futures are up 0.065% at 120-03, S&P 500 futures are up 0.09% at 2731, Crude oil futures are up 1.01% at $71.24, Gold futures are down -0.1% at $1258.7, DXY is up 0.15% at 94.822, CAD/USD is down -0.09% at 0.7521.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.808% | 2 Year | 2.532% |
| 5 Year | 1.97% | 5 Year | 2.74% |
| 10 Year | 2.1% | 10 Year | 2.869% |
| 30 Year | 2.184% | 30 Year | 3.015% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Jun 22nd -4.9% (5.1% prior) |
| 8:30 AM | Advance Goods Trade Balance, May -64.8b est -69.0b (-68.2b prior) |
| Wholesale Inventories MoM, May 0.5% est 0.2% (0.1% prior) | |
| Retail Inventories MoM, May 0.4% (0.6% prior) | |
| Durable Goods Orders, May -0.6% est -1.0% (-1.6% prior) | |
| Durables Ex Transportation, May -0.3% est 0.5% (0.9% prior) | |
| Cap Goods Orders Nondef Ex Air, May -0.2% est 0.5% (1.0% prior) | |
| Cap Goods Ship Nondef Ex Air, May -0.1% est 0.3% (0.9% prior) | |
| 10:00 AM | Pending Home Sales MoM, May est 0.5% (-1.3% prior) |
| Pending Home Sales NSA YoY, May (0.4% 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