Market Update

Tsys moving lower on higher core PCE which rose to the Fed’s target 1.8% from 1.7% for the first time since 2012, US 10Y 2.42%. Core Euro bonds mixed –  UK gilt curve 1bp flatter as UK gilts have 0.29yr month end extension based on BB data, compared to 0.07yrs for tsys. German bunds recovering from earlier losses , German unemployment fell to a new all time low of 5.7% in March as the no. of unemployed fell by 30k vs 10k exp. Euro zone inflation fell to 1.5% in Jan from 1.8%, 0.7% for the core . ECB Coeure said the balance of risks has shifted to neutral and that inflation remains subdued. GOCs lower, underperforming tsys after Cdn Jan GDP surprised to the upside in Jan, rising 0.6% vs 0.3% exp 2.3% y/y vs 1.9%- quite strong thou ‘whisper’ no. was already higher given the run of solid Jan data.

News headlines 

Global Stocks Drop on Final Day of Stellar Quarter: Markets Wrap (Bloomberg) Global stocks were poised to end a blockbuster quarter with a whimper, with investors seeing little reason to take shares higher amid political and economic uncertainty in the coming quarter. The rand tumbled after South Africa’s finance minister was fired.

Euro-Area Inflation Slows More Than Predicted on Oil, Food (Bloomberg) Inflation in the euro area slowed for the first time in nearly a year this month, which may reinforce the view among some European Central Bank policy makers that it’s too soon to start unwinding unconventional stimulus.

Japan output jump, low jobless rate yet to spark inflation (Reuters) Japanese factory output rose at the fastest pace in eight months and the jobless rate hit a two-decade low in February, a sign a rebound in overseas demand continued to brighten prospects for the country’s export-reliant economy. But household spending remained soft and consumer inflation was flat when stripping away the effect of rising energy costs, underscoring the challenges the Bank of Japan faces in generating sustained price rises backed by steady wage growth.

China’s factory activity hits 5-year high in March (Market Watch) An official gauge of Chinese factory activity hit a near five-year high in March as government stimulus spending and rising prices for factory goods bolstered the world’s second-largest economy. China’s official manufacturing purchasing managers’ index edged up to 51.8 in March from 51.6 in February, the National Bureau of Statistics said Friday. The March reading, slightly above a median forecast of 51.7 from a Wall Street Journal poll of by 12 economists, has remained above the 50 mark separating expansion from contraction for eight straight months.

EU offers Brexit trade talks, sets tough transition terms (Reuters) The European Union offered Britain talks this year on a future free trade pact but made clear in negotiating guidelines issued on Friday that London must first agree to EU demands on the terms of Brexit. Those include paying tens of billions of euros and giving residence rights to some 3 million EU citizens in Britain, the proposed negotiating objectives distributed by EU summit chair Donald Tusk to Britain’s 27 EU partners showed.

Credit Suisse Raided, Client Assets Seized in Tax Evasion Probe (Bloomberg) Credit Suisse Group AG, some of its employees and hundreds account holders are the subjects of a major tax evasion and money laundering probe that spans five countries. Investigators in the Netherlands arrested two individuals on Thursday, seizing a gold bar, paintings, jewelry and bank account information. They allegedly concealed millions of euros from authorities by placing them in Swiss bank accounts, the Fiscal Information and Investigation Service said in a statement Friday. Criminal investigations are also underway in Australia, Germany, the U.K. and France.

BCE, Rogers racing to new frontier in high-speed Internet (TheGlobeAndMail)  In their continuing fight for the home, BCE Inc. and Rogers Communications Inc. are racing to roll out faster networks while they capitalize on different strengths to win television and Internet customers. In separate announcements this week, the rivals underscored investments they’re making to support download speeds of one gigabit per second – the new frontier in high-speed Internet, crucial for the growing number of connected devices, data-hungry applications and advanced television platforms.

Overnight markets 

Overview: US 10yr note futures are down -0.038% at 124-10, S&P 500 futures are down -0.14% at 2361.25, Crude oil futures are down -0.2% at $50.25, Gold futures are down -0.42% at $1242.7, DXY is up 0.06% at 100.47, CAD/USD is down -0.31% at 0.7518.

US Economic Data

8:30 AM Personal Income, Feb, 0.4%, est. 0.4% (prior 0.4%, revised 0.5%)
Personal Spending, Feb, 0.1%, est. 0.2% (prior 0.2%)
PCE Core, m/m, Feb, 0.2%, est. 0.2% (prior 0.3%)
PCE Core, y/y, Feb, 1.8%, est. 1.7% (prior 1.7%, revised 1.8%)
9:45 AM Chicago Purchasing Manager Index, Mar, est. 56.9 (prior 57.4)
10:00 AM University of Michigan Sentiment, Mar F, est. 97.6 (prior 97.6)

Canadian Economic Data

8:30 AM GDP, m/m, Jan, 0.6%, est. 0.3% (prior 0.3%)
GDP, y/y, Jan, 2.3%, est. 1.9% (prior 2.0%,  revised 2.1%)


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