Market Update US tsys slightly lower, US 10Y 2.707% (+1.3bps), after moving above 2.73% overnite, prices seeing some support as equities weaken for a second day with S&P futures -12.5. Bund curve steeper, 10Y unch after weaker than exp German Jan CPI (1.6% vs 1.7%). GOCs lower in line with tsys, 10Y 2.295% , long outperformance bringing 10s30s below 6bps. Provis ~0.5bp narrower yest, expectations for long supply (Ont, QC, MP) – Ont 27/48 credit curve 2bps wider over the last week yet issuing longs here very attractive option given ~20bp narrowing in underlying GOC curve. National Bank issued $750MM 10NC5 NVCC @ 110.9 yest, closing 112/110.
News headlines
Euro-Area Economy Posts Strong 2017 Finish Buoyed by ECB (Bloomberg) The euro-area economy finished off last year with another quarter of robust growth, and confidence among businesses and households suggests there’s no slowdown in sight. Gross domestic product rose 0.6 percent in the three months through December, in line with forecasts and marking a 19th straight expansion. The French and Spanish economies, two of the bloc’s largest, both recorded similarly solid rates of growth.
Stocks Fall Most in 2018 as Treasury Yields Climb: Markets Wrap (Bloomberg) The Standard & Poor’s 500 Index declined by the most since September and yields on benchmark Treasuries touched the highest levels since early 2014 as traders gear up for a hectic week of data and policy announcements. The dollar strengthened against all its major rivals.
Trump’s Agenda Faces Tough Fiscal Reality After State of the Union (Bloomberg) President Donald Trump plans to promote the Republican tax overhaul he signed into law in his first State of the Union speech on Tuesday night, but fiscal headwinds mean he’s likely to have less legislative success in his second year in office.
U.S. Names Oligarchs, Kremlin Elite But Avoids New Sanctions (Bloomberg) The U.S. identified 210 Russian billionaires and top officials in a sweeping list required under last summer’s sanctions law, but underlined that those named aren’t being targeted for new restrictions.
U.K. Consumer Confidence Increases as New Year Brings Hope (Bloomberg) Britons are starting 2018 with renewed optimism as a measure of consumer confidence rose by the most in a year in January. The jump was driven by the biggest increase in households’ assessment of their financial position in the past month since November 2014, according to YouGov and the Centre for Economics and Business Research. The firms’ overall index of sentiment climbed to 108.2 in January, from 107.1 previously.
Blackstone in talks to buy majority stake in key Thomson Reuters unit (Reuters) U.S. private equity firm Blackstone Group LP is in advanced talks to buy an approximate 55 percent stake in the Financial and Risk business of Thomson Reuters Corp, a deal that would value the unit at about $20 billion including debt, three sources familiar with the matter said on Monday.
Amazon, Berkshire, JPMorgan team up to lower ‘hungry tapeworm’ healthcare costs (BNN) Amazon.com Inc (AMZN.O), Berkshire Hathaway (BRKa.N) and JPMorgan Chase & Co. (JPM.N) are teaming up in a new venture aimed at lowering healthcare costs for their U.S. employees, the companies said on Tuesday. The companies will create an independent firm “free from profit-making incentives and constraints” that will initially focus on technology solutions to provide employees and their families with healthcare “at a reasonable cost.”
Canada’s economy going from a ‘sprint to a marathon’ pace (CBC) The Canadian economy’s surprising run for most of 2017 will likely start to decelerate this year as the country reaches its peak capacity for rapid growth, experts say. Gross domestic product (GDP) figures for November, to be released Wednesday, are expected to show the Canadian economy grew 0.4 per cent from the previous month.
Overnight markets
Overview: US 10yr note futures are down -0.077% at 121-23, S&P 500 futures are down -0.39% at 2842.25, Crude oil futures are down -0.85% at $65, Gold futures are up 0.19% at $1347.7, DXY is down -0.2% at 89.126, CAD/USD is down -0.21% at 0.8121.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.83% | 2 Year | 2.122% |
| 5 Year | 2.089% | 5 Year | 2.5% |
| 10 Year | 2.297% | 10 Year | 2.709% |
| 30 Year | 2.358% | 30 Year | 2.958% |
US Economic Data
| 9:00 AM | S&P CoreLogic CS 20-City NSA Index, Nov (203.84 prior) |
| S&P CoreLogic CS 20-City MoM SA, Nov est 0.6% (0.7% prior) | |
| S&P CoreLogic CS 20-City YoY NSA, Nov est 6.3% (6.38% prior) | |
| S&P CoreLogic CS US HPI NSA Index, Nov (195.63 prior) | |
| S&P CoreLogic CS US HPI YoY NSA, Nov (6.17% prior) | |
| 10:00 AM | Conf. Board Consumer Confidence, Jan est 123.0 (122.1 prior) |
| Conf. Board Present Situation, Jan (156.6 prior) | |
| Conf. Board Expectations, Jan (99.1 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