Market UpdateUS tsys higher, 10Y 2.765% (-1.5bps), curve flattening to new cycle lows before PCE data, 2s10s below 50bps narrowest since Nov 2007. US equity futures higher, the USD index slightly lower, crude little changed 64.27. Core EGBs showing little direction, 10Y gilt 1.362%. This afternoon will likely see month end flow connected to extension in the Bloomberg-Barclays Sterling Agg 0.30Y. GOCs higher in line with tsys before Jan GDP, provi spreads unch after closing 1-1.5bps wider yest. The Broad TMX Universe sees small decline in duration today – 0.05 , with the provi index -0.08.
News headlines
Tech, Once Again, Weighs on Stocks as Dollar Jumps: Markets Wrap (Bloomberg) Megacap tech shares slumped again Wednesday as pessimism about the sector showed few signs of letting up. The dollar jumped while Treasury yields held below 2.8 percent as data showed American economic growth beat estimates. Volatility measures spiked as the Nasdaq 100 Index fell, with Netflix Inc. and Amazon.com Inc. among the biggest losers. The gauge is heading for its worst month in two years. The S&P 500 Index edged lower, hovering just above its average price for the past 200 days — a level that’s set a line in the sand in the selloffs last week and in early February.
Nissan, Renault in Talks to Merge, Create New Company (Bloomberg) Renault SA and Nissan Motor Co. are in talks to merge, seeking to solidify their two-decade-old alliance under a single stock as an unprecedented shift toward electric and shared cars transforms the industry, people with knowledge of the matter said. A deal would end the current alliance between the companies and marry them as one corporation, said the people, who asked not to be identified as the details aren’t public. Renault currently owns 43 percent of Nissan while the Japanese carmaker has a 15 percent stake in its French counterpart. Carlos Ghosn, the chairman of both companies, is driving the negotiations and would run the combined entity, the people.
Two Koreas Set April 27 for Kim Jong Un’s Historic Walk South (Bloomberg) Kim Jong Un could become the first North Korean leader in history to enter South Korea in just over four weeks, when he steps across the heavily fortified border for a summit with President Moon Jae-in. The April 27 meeting on the southern side of the demilitarized zone will be the first between leaders of the two nations in 11 years. Leaders of the two nations — which are still technically at war — have only met twice since the peninsula was divided in 1948.
How Theresa May Will Navigate the Perilous Road to Brexit (Bloomberg) Prime Minister Theresa May has nine months to define what Brexit will actually mean and she’ll have to do battle on three fronts to get there—in Brussels, in Parliament and with her own Conservative Party.
U.S. upbeat about fast NAFTA deal, Canada says much work is left (Reuters) U.S. Trade Representative Robert Lighthizer on Wednesday expressed optimism that talks to modify NAFTA could be wrapped up quickly, but a top Canadian official was more downbeat, saying much work remained.
TSX futures flat ahead of GDP data (Reuters) Canada’s main stock index futures were little changed on Thursday as investors awaited a report on gross domestic product for January to gauge the health of the economy. June futures on the S&P TSX index SXFc1 were down 0.04 percent at 7:15 a.m. ET. GDP data for January and producer prices data for February are due at 8:30 a.m. ET. The GDP data is expected to show a rise of 0.1 percent.
Ontario promises new spending, deficits as election looms (BNN) As it braces to fight for re-election this spring, Ontario’s Liberal government has rolled out a spending package that targets nearly every demographic while plunging the province back into deficit, with the books expected to stay in the red for six years. The 2018-2019 budget, tabled Wednesday by Finance Minister Charles Sousa, pumps billions into health care, child care, and support for seniors, though many of the spending promises had been announced by Premier Kathleen Wynne in recent days.
Overnight markets
Overview: US 10yr note futures are up 0.052% at 120-31, S&P 500 futures are up 0.31% at 2615.5, Crude oil futures are down -0.11% at $64.31, Gold futures are down -0.08% at $1328.9, DXY is down -0.1% at 89.97, CAD/USD is down -0.21% at 0.7754.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.796% | 2 Year | 2.282% |
| 5 Year | 1.99% | 5 Year | 2.584% |
| 10 Year | 2.107% | 10 Year | 2.766% |
| 30 Year | 2.241% | 30 Year | 3.001% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, Mar 24th est 230k (229k prior) |
| Continuing Claims, Mar 17th est 1870k (1828k prior) | |
| Personal Income, Feb est 0.4% (0.4% prior) | |
| Personal Spending, Feb est 0.2% (0.2% prior) | |
| PCE Core MoM, Feb est 0.2% (0.3% prior) | |
| PCE Core YoY, Feb est 1.6% (1.5% prior) | |
| PCE Deflator YoY, Feb est 1.7% (1.7% prior) | |
| 9:45 AM | Chicago Purchasing Manager, Mar est 62.0 (61.9 prior) |
| Bloomberg Consumer Comfort, Mar 25th (56.8 prior) | |
| 10:00 AM | U. of Mich. Sentiment, Mar est 102.0 (102.0 prior) |
| U. of Mich. Current Conditions, Mar (122.8 prior) | |
| U. of Mich. Expectations, Mar (88.6 prior) | |
| U. of Mich. 1 Yr Inflation, Mar (2.9% prior) | |
| U. of Mich. 5-10 Yr Inflation, Mar (2.5% prior) |
Canadian Economic Data
| 7:19 AM | CFIB Business Barometer, Mar 60.7 (62.4 prior) |
| 8:30 AM | GDP MoM, Jan est 0.1% (0.1% prior) |
| GDP YoY, Jan est 2.9% (3.3% prior) | |
| Industrial Product Price MoM, Feb (0.3% prior) | |
| Raw Materials Price Index (3.3% prior) |
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