Market Update US tsys unch on avg volume , 10Y 2.977%, before advance Q2 GDP (4.2% exp). Market expecting a big number after Trump/Kudlow. USD index slightly higher, equities fut mixed (S&P -0.25, Nasdaq +7). A second BOJ bond buying operation this week to cap the rise in yields after the 10Y had reached an 18mth high early Friday morning above 0.10%. Core EGBs little changed as well, 10Y bund has retraced post ECB/Draghi gains, edging closer to 0.42% high from Monday. In Canada, GOCs lower before US data, underperforming tsys in 2s&5s. Provi spreads 1bp tighter over last couple of days, recent widening abating somewhat going into month end with credit curves flatter. Manitoba deal rumoured for today. CN Rail (A2/A) priced $800mln 2 tranche 10Y & 30Y deal which was well received despite rather tight spd , breaking 2-3 bps tighter.
News headlines
Nafta Optimism Doesn’t Necessarily Lessen Auto Threat to Canada (Bloomberg) Even with hopeful signs on Nafta and a trade detente between the U.S. and the European Union, Canada still isn’t out of the woods on auto tariffs. U.S. Trade Representative Robert Lighthizer said Thursday he hopes a deal in principle on the North American Free Trade Agreement is within reach, a day after Canadian and Mexican ministers indicated a pact could be signed in the next few months. President Donald Trump and European Commission President Jean-Claude Juncker also agreed Wednesday to suspend new levies while trade negotiations continue.
Trump Predicts Data Will Show U.S. Economy in ‘Terrific’ Shape (Bloomberg) President Donald Trump predicted data on Friday will show the U.S. economy is in “terrific” shape amid forecasts that growth topped 4 percent in the second quarter, the fastest since 2014. Speaking at a steel mill in Granite City, Illinois, on Thursday, Trump doubted the expansion would reach the 5.3 percent some economists have penciled in, but said that “if it has a four in front of it, we’re happy.” He called recent economic figures “unthinkable.”
Canada Cuts U.S., China Out of Talks on Reforming Global Trade (Bloomberg) Canada’s new Minister of International Trade Jim Carr has invited a dozen trade ministers to meet in October to discuss how to fix the World Trade Organization. But two countries have been left off the list: the U.S. and China.
Dollar Steady, Stocks Gain With U.S. GDP in Focus: Markets Wrap (Bloomberg) The dollar and Treasuries were little changed as traders awaited the release of data which President Donald Trump predicted will show the U.S. economy is in “terrific” shape. U.S. equity futures pared gains as European stocks climbed, with corporate earnings again taking a front seat. Futures on the S&P 500 and Nasdaq pointed to a marginally higher open even as Twitter Inc. tumbled in pre-market trading after saying monthly users had missed estimates. The Stoxx Europe 600 Index headed for its best week in almost two months as banks and telecommunications firms gained, with BT Group Plc and Banco Bilbao Vizcaya Argentaria SA reporting earnings that exceeded analysts’ estimates. In Asia, Japanese equities climbed for a fourth day, while benchmarks in China and Hong Kong ticked lower. The euro slipped after disappointing economic data from France, the region’s second-biggest economy.
Air Canada reports quarterly loss on rising fuel costs (Reuters) Air Canada (AC.TO) on Friday posted a quarterly loss compared to a year-ago profit, as the carrier faced margin pressure from rising fuel costs. The Montreal-based company reported a loss of C$77 million, or 28 Canadian cents per share, in the second quarter ended June 30, compared with a profit of C$311 million, or C$1.13 per share, a year earlier. The loss in the latest quarter included a charge of $186 million on the sale of assets and losses on foreign exchange of $25 million.
Twitter to prioritize fixing platform over user growth, shares plunge (Reuters) Twitter Inc (TWTR.N) on Friday reported fewer monthly active users than analysts expected and warned that the closely-watched figure could keep falling as it deletes phony accounts, sending shares sharply lower in early trading. The company said the work it was doing to clean up Twitter by purging automated and spam accounts had some impact on its user metrics in the second quarter, and that it would prioritize work to improve suspicious accounts and reduce hate speech and other abusive content over projects that could attract more users.
Amazon Q2 earnings stoke fires of cloud, advertising growth (BNN) Amazon.com Inc. () reported better-than-expected earnings in the second quarter and forecast more of the same in the current period, igniting investor optimism about cloud computing, advertising and other businesses that are more profitable than its main online retail operation. The world’s largest e-commerce company said third-quarter operating income will surge to as much as US$2.4 billion, compared with the average analyst estimate of US$1.28 billion, according to data compiled by Bloomberg. Second-quarter profit came in at a record US$2.53 billion, or US$5.07 per share, more than double analysts’ forecasts. The shares rose 4.1 per cent in extended trading.
Facebook’s US$120B Thursday loss worst single-day wipeout in U.S. history (BNN) It’s official. Facebook Inc. just had the biggest stock-market wipeout in American history. Shares tumbled 19 per cent on Thursday to close at US$176.26 after sales and user growth disappointed investors. The drop translates to a US$119.4 billion decline in market capitalization, the largest-ever loss of value in one day for a U.S. traded company. The social-media goliath’s financial performance had previously seemed immune to fierce critiques of its content policies, its failure to safeguard private data, and its changing rules for advertisers. But on Wednesday Facebook reported sales and user growth numbers for the second quarter that fell short of analysts’ projections, leaving investors reeling.
Overnight markets
Overview: US 10yr note futures are down 0% at 119-11, S&P 500 futures are down -0.02% at 2842, Crude oil futures are down -0.26% at $69.43, Gold futures are down -0.57% at $1228.2, DXY is up 0.1% at 94.882, CAD/USD is down -0.04% at 0.765.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.063% | 2 Year | 2.678% |
| 5 Year | 2.2% | 5 Year | 2.856% |
| 10 Year | 2.289% | 10 Year | 2.977% |
| 30 Year | 2.325% | 30 Year | 3.097% |
US Economic Data
| 8:30 AM | GDP Annualized QoQ, 2Q est 4.2% (2.0% prior) |
| Personal Consumption, 2Q est 3.0% (0.9% prior) | |
| GDP Price Index, 2Q est 2.3% (2.2% prior) | |
| Core PCE QoQ, 2Q est 2.2% (2.3% prior) | |
| 10 :00 AM | U. of Mich. Sentiment, Jul est 97.1 (97.1 prior) |
| U. of Mich. Current Conditions, Jul (113.9 prior) | |
| U. of Mich. Expectations, Jul (86.4 prior) | |
| U. of Mich. 1 Yr Inflation, Jul (2.9% prior) | |
| U. of Mich. 5-10 Yr Inflation, Jul (2.4% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230