Market Update
Tsys higher, 10Y 2.37 (-1bp), curve 0.5bps flatter, narrow range on avg volume in TY futures (230k) and before Case Shiller & Cons Confidence as well as $34bln 5Y auction at 1:00ET. Core Euro bonds mixed – UK gilts lower & steeper wit the 5Y outperforming on solid auction of reopened June 2022 Gilt. Bunds higher, 10Y 0.388% (-1.7bps) with the 2Y lagging after weak 2Y Schatz auction. Rally in Italian debt led by the 10Y with yields at three week low on reduction of hedges related to Eurozone political risk. GOCs higher, outperforming tsys by ~1bp out to 10 yrs and the 10Y below key 1.60% resis , 1.58% (-2.5bps). BOC Poloz speaking at 10:00 on economic history & Quebec budget at 4:00pm.
News headlines
Stocks, Crude Advance as Calm Returns; Rand Slumps: Markets Wrap (Bloomberg) Stocks climbed and the dollar steadied as the selloff stemming from U.S. policy uncertainty abated. The rand tumbled on the prospect of South Africa’s President Jacob Zuma firing his finance minister.
British bonds buoyed by Brexit risks, but prone to inflation burn (Reuters) Fast-rising inflation and growing talk of tighter monetary policy from the Bank of England may spell the end of a winning streak for British gilts, among the best performers in major government bond markets this year.
Iranian oil minister says global oil cuts deal likely to be extended (Reuters) Iranian Oil Minister Bijan Zanganeh told reporters on Tuesday that a global oil cuts deal is likely to be extended, but that time is needed to discuss the subject thoroughly first.
Canada, Bakken Light Oil Jump as Supply Cut Meets Demand Surge (Bloomberg) Light crude surged in Canada and the northern U.S. after an oil-sands upgrader shut for maintenance because of a fire and Energy Transfer Partners LP said it was preparing to place the Dakota Access pipeline into service.
Poll shows Macron win in French election in shadow of ‘Penelopegate’ (Reuters) Centrist Emmanuel Macron would trounce far-right leader Marine Le Pen in France’s presidential election if, as seems increasingly likely, the two face off in the second and final round of the contest on May 7, a poll showed on Tuesday.
Former CEO Pearson sues Valeant over withheld shares (TheGlobeAndMail) Valeant Pharmaceuticals International Inc.’s former chief executive officer accused the drug maker of failing to deliver 3 million shares promised him as part of an exit package. Ex-CEO Michael Pearson stepped down in May after Valeant’s shares plummeted and it became the subject of U.S. Justice Department and congressional investigations. In his lawsuit filed Monday, he claimed the company promised him 580,676 restricted shares and 2.46 million performance shares.
Best Canada Bond Fund Awaits Trump-Driven Junk Opportunities (Bloomberg) Can Donald Trump deliver? That’s the question Canada’s best-performing bond fund this year is asking as it seeks to extend its advantage in a low-yield world. The Renaissance Corporate Bond Fund, managed by Canadian Imperial Bank of Commerce’s CIBC Asset Management unit, has returned 2.1 percent year to date, the best result for the first quarter among 36 funds focused on Canadian bonds, according to data compiled by Bloomberg. The average return is 1.1 percent. The C$1.2 billion ($900 million) Renaissance fund has a one-year total return of 7.1 percent, compared with a 2.3 percent average return for the group.
Overnight markets
Overview: US 10yr note futures are up 0.063% at 124-24, S&P 500 futures are down -0.15% at 2335, Crude oil futures are up 1.17% at $48.29, Gold futures are up 0.11% at $1260.2, DXY is up 0.04% at 99.202, CAD/USD is up 0.09% at 0.7469.
US Economic Data
| 8:30 AM | Advance Goods Trade Balance, Feb, -$64.8b , est. -$66.4b (prior -$69.2b, revised -$68.8b) |
| Wholesale Inventories, m/m, Feb P, 0.4%, est. 0.2% (prior -0.2%, revised -0.3%) | |
| Retail Inventories, m/m, Feb, 0.4%, (prior 0.8 %, revised 0.9%) | |
| 9:00 AM | S&P Case-Shiller Home Price Index, m/m, est. 0.7% (prior 0.93%) |
| S&P Case-Shiller Home Price Index, y/y, est. 5.6% (prior 5.58%) | |
| 10:00 AM | Conference Board Consumer Confidence Index, est. 114.0 (prior 114.8) |
| Richmond Fed Manufacturing Index, est. 15 (prior 17) |
Canadian Economic Data
There is no major economic news release 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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230