Market Update
US tsys moving to the lows of the o/n session, US 10Y 2.313% (+1bp). ECB left rates unch as exp, Draghi press conference coming up. German bunds slightly higher, 10Y bund spiked to day high after the decision, no reaction in tsys, as a result the 10Y tsy/bund spd is -197,~2bps off the recent narrows in the wake of steady bund underperformance. Draghi expected to acknowledge improved growth prospects (2017 GDP has been revised steadily upwards since last Aug and is now at 1.6%), and given the improvement in broad Eurozone indicators Draghi may drop the reference to downside risks. GOCs lower, underperforming tsys slightly, new 10Y benchmark June 27s as of today, new 10Y roll 9.7/9.6 which is 0.2bps tighter than at auction yst. Provis traded well to yest for the most part, despite the rally in GOCs, spds back to recent tights, Ont 27s @73.5, longs @85. Quebec issued E2.25bln in 10Y bonds yest @ MS +14. CMBs lagging as has been the patternin provi rallies, attributed in part to upcoming 5Y supply.
News headlines
Dollar Pares Decline After Nafta Anxiety Defused: Markets Wrap (Bloomberg) The dollar recovered early losses after U.S. President Donald Trump ruled out a withdrawal from Nafta. European stocks fell as investors absorbed a string of news from corporate earnings to central bank decisions and plans to overhaul U.S. taxes. The Mexican peso and Canadian dollar jumped, reversing earlier declines, as the White House said it won’t immediately terminate participation in the North American Free Trade Agreement. U.S. stock futures signaled a higher opening while European shares retreated from a six-day rally.
Trump Rules Out Swift Nafta Exit in Favor of Renegotiation (Bloomberg) President Donald Trump won’t immediately terminate U.S. participation in the North American Free Trade Agreement, the White House said, after he spoke with the leaders of Mexico and Canada about ways to renegotiate the accord. “Both conversations were pleasant and productive. President Trump agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the White House said in a statement late Wednesday. Mexico’s peso and Canada’s dollar jumped after the White House’s announcement.
Oil prices fall on oversupply (Reuters) Oil prices fell on Thursday, weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market. Benchmark Brent crude was down 60 cents at $51.22 a barrel by 0915 GMT, almost 10 percent below this month’s peak. U.S. light crude was down 55 cents at $49.07.
Le Pen, Macron spar as French presidential race narrows slightly (Reuters) Far-right French presidential candidate Marine Le Pen took a fishing-boat ride on Thursday as two polls suggested the underdog had made a more impressive start to the last lap of campaigning than the favourite, centrist Emmanuel Macron. Since last Sunday’s opening ballot sent them into a two-way runoff on May 7, the battle has intensified, notably on the public relations front, between two candidates who both say their adversary will ruin the country.
BOJ most upbeat on economy in nine years, but warns stimulus exit distant (Reuters) The Bank of Japan offered its most optimistic assessment of the economy in nine years at its policy meeting on Thursday and described recent weakness in inflation as temporary, signaling confidence a sustained recovery will help achieve its ambitious price target. The BOJ kept its policy unchanged, as expected, but Governor Haruhiko Kuroda conceded that public perceptions of future price rises remained subdued, suggesting the central bank will significantly lag its U.S. and European peers in exiting its massive stimulus program.
Greece will need debt relief: Eurogroup head Dijsselbloem (Reuters) Greece will need debt relief for its public finances and economic future to become sustainable, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Thursday, promising a deal between Athens and its lenders in May. His remarks are a departure from the line taken by euro zone finance ministers until now, that debt relief would be discussed, but only once the latest bailout ends and only if it turns out to be necessary
Overnight markets
Overview: US 10yr note futures are down -0.025% at 125-17, S&P 500 futures are up 0.09% at 2384.5, Crude oil futures are down -1.87% at $48.69, Gold futures are up 0.12% at $1265.7, DXY is down -0.18% at 98.862, CAD/USD is down -0.16% at 0.7355.
US Economic Data
| 8:30 AM | Advance Goods Trade Balance, Mar, -$64.8b, est. -$65.2b (prior -64.8b, revised -63.9b) |
| Wholesale Inventories, m/m, Mar P, -0.1%, est. 0.2% (prior 0.4%, revised 0.2%) | |
| Retail Inventories, m/m, Mar, 0.4% (prior 0.4%) | |
| Durable Goods Orders, Mar P, 0.7%, est. 1.3% (prior 1.8%, revised 2.3%) | |
| Durables Ex Transportation, Mar P, -0.2%, est. 0.4% (prior 0.5%, revised 0.7%) | |
| Cap Goods Orders Nondef Ex Air, Mar P, 0.2%, est. 0.5% (prior -0.1%, revised 0.1%) | |
| Cap Goods Ship Nondef Ex Air, Mar P, 0.4%, est. 0.1% (prior 1.0%, revised 1.1%) | |
| Initial Jobless Claims, Apr 22, 257k, est. 245k (prior 244k, revised 243k) | |
| Continuing Claims, Apr 15, 1988k, est. 2007k (prior 1979k, revised 1978k) | |
| 9:45 AM | Bloomberg Consumer Comfort Index, Apr 23, (prior 49.9) |
| 10:00 AM | Pending Home Sales, m/m, Mar, est. -1.0% (prior 5.5%) |
| Pending Home Sales NSA, y/y, Mar, (prior -2.4%) |
Canadian Economic Data
| CFIB Business Barometer, Apr, 64.4, (prior 62.9) |
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