Market Update Quiet start to what promises to be a busy week data wise in the US, with tsys slightly weaker, 10Y 2.96% (+0.5bps) on low volume in TY futures (~210k), equity futures higher, reflecting a string of better than expected earnings as well as the Sprint/T-Mobile, Sainsbury/Asda deals. McDonald’s Q1 eps beat highest estimates: $1.79 vs $1.67, comp sales +2.9% vs 2.7% exp. Core EGBs mixed, bunds weaker , curve 1.5bps steeper despite softer regional German CPI. Gilts are higher, with yield curve bull steepening and as a May BOE looks less likely after last week’s poor GDP figure. In Canada, GOCs are slightly lower, in line with tsys before monthly IPPI/Raw Materials data, while provis have traded down so far this morning, Ont 48s @ 78.0, Ont 27s @ 65 on expectations of more supply.
News headlines
Ross Says U.S. to Extend Duty Relief to Some Allies, Not All (Bloomberg) The Trump administration plans to extend relief from steel and aluminum tariffs to some countries, but not all, when their temporary exemptions expire on Tuesday, said Commerce Secretary Wilbur Ross. Ross, in an interview in Washington with Bloomberg late Saturday, declined to identify which nations would be spared from the tariffs. He said the announcement will be made right before the May 1 deadline for the duties to kick in. The secretary indicated on Friday that nations have been asked to accept import quotas in return for tariff-free access of the metals into the U.S.
Oil Pares Monthly Gain as U.S. Rigs Counter Iran-Deal Risk (Bloomberg) Oil fell as the U.S. oil rig count rose for a fourth week, but was still poised for a second monthly advance. Futures in New York are up 3.7 percent this month, even after a 1 percent drop on Monday, following data that showed an increase in U.S. drilling activity. A potential withdrawal in May by U.S. President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the Middle Eastern producer and curb its exports. Meanwhile, OPEC is trimming output even after concluding it has cleared 97 percent of the surplus that has weighed on prices.
Stocks Advance as Deals Greet Week; Dollar Climbs: Markets Wrap (Bloomberg) Stocks in Europe drifted higher, U.S. futures advanced, and equities across Asia gained as dealmaking activity brought some excitement to the start of a busy week. The dollar climbed while the pound faced pressure as Prime Minister Theresa May lost a key ally. Media and real estate companies led advances in Europe as most national gauges rose, while raw material providers were among the biggest losers as commodities fell. Shares in the FTSE 100 Index climbed to the highest in almost three months, with retailer J Sainsbury Plc jumping the most on record as it plans to buy Walmart Inc.’s U.K. arm, Asda. The pound dropped after Amber Rudd quit as U.K. home secretary, and Housing Secretary Sajid Javid was named her replacement.
Fed Far From Ready to Declare Mission Accomplished on Inflation (Bloomberg) The Federal Reserve is closing in on its elusive 2 percent inflation target but that doesn’t mean policy makers are ready to pronounce mission accomplished. The central bank’s preferred measure of inflation probably clocked in at that level last month after spending much of the past six years below target, government data due out on Monday are expected to show.
Canada stock market shutdown pushes investors to explore options (Reuters) A rare outage at Canada’s major stock exchanges could dent the credibility of operator TMX Group Ltd (X.TO) and encourage investors to explore alternative trading channels, fund managers and traders told Reuters. Canada’s stock market suffered a partial shutdown on Friday, forcing TMX to halt trading more than an hour early. TMX has since said the exchanges will resume trading on Monday after “internal technical issues” were resolved.
TSX set to open higher after Friday’s rare shutdown (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday after the world’s sixth largest exchange was forced to halt trading on Friday due to an outage. June futures on the S&P TSX index were up 0.27 percent at 7:15 a.m. ET. The operator of Canada’s stock exchange said over the weekend that it had fixed the error that halted the market for several hours on Friday afternoon.
U.S. economic growth slowed to 2.3% pace in Q1 (BNN) The U.S. economy slowed to a moderate 2.3 per cent annual growth rate in the first quarter as consumer spending turned in the weakest performance in nearly five years. Still, the January-March increase came in better than expected and was enough to propel growth over the past year to come close to the 3 per cent goal set by the Trump administration.
NAFTA ministers head home, plan to reconvene talks in a week’s time (BNN) The politicians leading the NAFTA negotiations left Washington without a deal on Friday, under a cloud of question marks about the continental trading relationship. Canada’s Chrystia Freeland and Mexico’s Ildefonso Guajardo returned home after a week-long round with plans to reconvene around May 7 in hopes of obtaining an agreement this spring.
Overnight markets
Overview: US 10yr note futures are down -0.039% at 119-15, S&P 500 futures are up 0.29% at 2679.25, Crude oil futures are down -1.01% at $67.41, Gold futures are down -0.74% at $1313.6, DXY is up 0.36% at 91.871, CAD/USD is up 0.3% at 0.7772.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.896% | 2 Year | 2.488% |
| 5 Year | 2.134% | 5 Year | 2.804% |
| 10 Year | 2.325% | 10 Year | 2.961% |
| 30 Year | 2.411% | 30 Year | 3.127% |
US Economic Data
| 8:30 AM | Personal Income, Mar est 0.4% (0.2% prior) |
| Personal Spending, Mar est 0.4% (0.2% prior) | |
| PCE Deflator MoM, Mar est 0.0% (0.2% prior) | |
| PCE Deflator YoY, Mar est 2.0% (1.8% prior) | |
| PCE Core MoM, Mar est 0.2% (0.2% prior) | |
| PCE Core YoY, Mar est 1.9% (1.6% prior) | |
| 9 :45 AM | Chicago Purchasing Manager, Apr est 58.0 (57.4 prior) |
| 10:00 AM | Pending Home Sales MoM, Mar est 0.5% (3.1% prior) |
| Pending Home Sales NSA YoY, Mar (-4.4% prior) | |
| 10:30 AM | Dallas Fed Manf. Activity, Apr est 25.0 (21.4 prior) |
Canadian Economic Data
| 8:30 AM | Industrial Product Price MoM, Mar est 0.7% (0.1% prior) |
| Raw Materials Price Index MoM, Mar (-0.3% prior) | |
| 10:00 AM | Bloomberg Nanos Confidence, Apr 27th (58.1 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