Market Update
Risk-off rally in tsys resumes after President Trump’s latest move to impose tariffs on Mexico, heavy volume in TY futures (925k), 10Y 2.16% (-4bps), rate cut prob 92%, with three rate cuts priced in over the next year based on FF futures. S&P futures -1.2% (GM -5%, Ford -4%) crude another 2% lower, -6% wk/wk lowest since March. GOCs higher in line with tsys, 10Y below 1.50% for the first time since June 2017. Provis opening 1-1.5bps wider, CMBs 1bp wider , 10Y Ontario still only 3 bps off recent tights.
News headlines
Stocks Sink, Havens Gain on Sparring Over Trade: Markets Wrap (Bloomberg) U.S. equity futures slumped as the trade-war rhetoric heated up, with Beijing saying it’s ready to restrict the sale of rare-earth minerals to America and President Donald Trump threatening to place escalating tariffs on Mexico. Bund yields sank to a record as investors sought havens.
TSX futures fall on lower oil prices (Reuters) Futures for Canada’s main stock index were lower on Friday as oil prices fell with U.S. President Donald Trump’s new trade threat weighing on the demand outlook.
Oil Heads for Biggest Monthly Slump This Year on Trade-War Fears (Bloomberg) Oil headed for its biggest monthly slump this year as fears that the U.S.-China trade war will hurt demand overshadowed concern over rising political tensions in the Persian Gulf.
Trump vows rapid, high tariffs on Mexico unless illegal immigration ends (Reuters) U.S. President Donald Trump, responding to a surge of illegal immigrants across the southern border, vowed on Thursday to impose a tariff on all goods coming from Mexico, starting at 5% and ratcheting much higher until the flow of people ceases.
China threatens corporate hit-list on eve of new tariffs on U.S. imports (Reuters) China threatened on Friday to unveil an unprecedented hit-list of “unreliable” foreign firms, groups and individuals that harm the interests of Chinese companies, as a slate of retaliatory tariffs on imported U.S. goods was set to kick in at midnight.
U.S. wants new trade pact with Canada, Mexico passed by summer: Pence (Reuters) U.S. Vice President Mike Pence said on Thursday he was pushing to get the U.S. Congress to ratify the new North American trade agreement this summer after both Canada and Mexico signaled they are ready to start the approval process.
Trump poised to lift curbs on E15 gasoline in latest boost to U.S. farmers (Reuters) The Trump administration will announce an end to a summertime ban on sales of higher ethanol blends of gasoline as early as Friday, a spokesman for a federal regulator said, keeping a campaign promise to farmers suffering from the trade war with China, but inviting a legal challenge from the oil industry.
Overnight markets
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.476% | 2 Year | 1.99% |
| 5 Year | 1.401% | 5 Year | 1.957% |
| 10 Year | 1.502% | 10 Year | 2.158% |
| 30 Year | 1.766% | 30 Year | 2.597% |
US Economic Data
| 08:30 AM | Personal Income, Apr Survey 0.30% Prior 0.10% |
| Personal Spending, Apr Survey 0.20% Prior 0.90% | |
| Real Personal Spending, Apr Survey 0.00% Prior 0.70% | |
| PCE Deflator YoY, Apr Survey 1.60% Prior 1.50% | |
| PCE Core Deflator MoM, Apr Survey 0.20% Prior 0.00% | |
| PCE Core Deflator YoY, Apr Survey 1.60% Prior 1.60% | |
| 09:45 AM | MNI Chicago PMI, May Survey 54.0 Prior 52.6 |
| 10:00 AM | U. of Mich. Sentiment, May F Survey 101.5 Prior 102.4 |
Canadian Economic Data
| 08:30 AM | Quarterly GDP Annualized, 1Q Survey 0.70% Prior 0.40% |
| GDP MoM, Mar Survey 0.40% Prior -0.10% | |
| GDP YoY, Mar Survey 1.20% Prior 1.10% | |
| Industrial Product Price MoM, Apr Survey 0.70% Prior 1.30% | |
| Raw Materials Price Index MoM, Apr Survey — Prior 2.80% |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230