Commentaires

Market Update Tsys trading higher, 10Y 2.895%, long end lagging tsy curve 1bps steeper on light volume in TY futures overnite (245k), prices  moving higher after weaker August ADP (163k vs 200k exp) ahead of non-farm payrolls tomorrow (195k est). Equities firmer (S&P fut +1), crude slightly higher. GOCs slightly higher, lagging the rally in tsys post ADP – provi supply rumoured (Quebec 10Y, long Alberta)

News headlines

Canada’s Dairy Farmers Could Be Trudeau’s Nafta Bargaining Chip (Bloomberg) Henry Holtmann has seen this before – Canada carving off access to its dairy market as a bargaining chip, and using it in trade talks. Now it could happen again. More than 2,500 kilometers (1,500 miles) from Washington, the third-generation Canadian dairy farmer is closely watching North American Free Trade Agreement talks, where U.S. President Donald Trump has taken aim repeatedly at his sector. Canada could once again barter away a piece of its restricted – and lucrative – dairy market, over outcry from farmers like Holtmann. 

Things Are Not Going to Plan in Trump’s U.S. Trade Deficit Wars (Bloomberg) The numbers are not looking good for a president who has made reducing the U.S. trade deficit one of his main economic goals. Worse still, signs are emerging that President Donald Trump’s trade wars are starting to hit economic growth, not just at home but around the world. New data out Wednesday showed the U.S. trade deficit in July widening at its fastest rate since 2015 as monthly deficits with China and the European Union both hit new records. In the year so far, the U.S.’s overall goods and services deficit is up by $22 billion, or 7 percent, versus the same period last year.

Trump Says He May Sign New South Korea Trade Deal This Month (Bloomberg) President Donald Trump said he has finished negotiating a new trade deal with South Korea and may sign it at the United Nations General Assembly that starts this month. “The deal is done,” Trump told reporters at the White House on Wednesday. “It’s been done with South Korea for a long time. It’s been done for about two months. We’ll do a ceremonial signing over the next very short period of time.”

Stocks Struggle for Foothold as EM Fears Linger: Markets Wrap (Bloomberg) U.S. stock futures and European equities swung between gains and losses as they grappled for direction amidst turmoil in emerging markets. The yen climbed and the dollar was steady. Futures on the Dow, S&P 500 and Nasdaq pointed to a steady open, while the Stoxx Europe 600 Index edged lower after two days of losses. Earlier, the MSCI Asia Pacific Index was down for a sixth straight session, as Japan underperformed in the wake of a powerful earthquake. The Turkish lira and South African rand helped lead a recovery in emerging market currencies, while the MSCI Emerging Markets Index of stocks headed for a seventh consecutive fall. Ten-year Treasuries were little changed and European bonds were mixed.

NAFTA talks make progress; U.S., Canadian officials to work into night (Reuters) The United States and Canada have made progress in talks to revise the North American Free Trade Agreement, and officials from the two sides will work together into the night to flesh out areas for further discussion, Canadian Foreign Minister Chrystia Freeland said on Wednesday. Freeland sounded upbeat as she emerged from a day of talks with top U.S. trade negotiator Robert Lighthizer, although she cautioned that no trade deal was done until the last issue was nailed down.

Bank of Canada leaves rates unchanged; markets mull October hike (Reuters) The Bank of Canada held interest rates steady on Wednesday as expected and said more hikes would be needed to keep inflation on target, boosting speculation it could tighten monetary policy next month. The overnight interest rate remains at 1.50 percent. The central bank, which maintains a 2 percent inflation target, has raised rates four times since July 2017 amid a strengthening economy.

Metro Vancouver home prices edge lower for 2 straight months (BNN) The Real Estate Board of Greater Vancouver says prices for detached homes, townhouses and condos have fallen for two consecutive months in Metro Vancouver. The board says the benchmark price for all types of properties is currently $1,083,400 — up 4.1 per cent compared to August 2017, but down 1.9 per cent since May 2018. Detached home prices fell 2.8 per cent since May to $1,561,000, which is also down 3.1 per cent compared to the previous August. Attached home prices fell 0.8 per cent to $846,100 since May, but rose 7.9 per cent compared to August 2017.

Couche-Tard Q1 profit surges 25% despite lag in Esso loyalty program (BNN) Alimentation Couche-Tard Inc. () posted strong earnings and revenue growth from acquisitions in the first quarter of its fiscal year, even though a gap in the switch to the PC Optimum loyalty program from Aeroplan hurt sales at its Esso branded convenience store locations. The Quebec-based retailer said its net income attributable to shareholders surged 25 per cent to US$455.5 million for the period ended July 22. That was up from US$364.7 million a year earlier.

Overnight markets

Overview: US 10yr note futures are down 0% at 119-31, S&P 500 futures are up 0.11% at 2891.5, Crude oil futures are up 0.15% at $68.82, Gold futures are up 0.88% at $1211.9, DXY is down -0.11% at 95.079, CAD/USD is down 0% at 0.7588.

US Economic Data

Canadian Economic Data

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update Tsys trading higher, yields 0.5-1.5bps lower, 10Y 2.88%, prices recovering from yesterday’s selloff which saw the 10Y rise above 2.90% for the first time since August 10th. Emerging mkt extending weakness – Asian stock markets all lower – Hang Seng -2.6%, Jakarta comp -3.8% while USD strength continues DXY +0.24. Risk off with $200bln in US tariffs on Chinese goods expected to go into effect by the end of the week trade Crude lower after rising to 2014 highs yest 71.50 on Iran supply squeeze,oil analyst on CNBC yest saying sanctions could push crude back above $100. GOCs slightly lower, 1bp wider vs tsys, curve 1bp flatter before BOC decision (no change expected, no press conf). Yesterday looked like some short covering esp at the short end pre BOC, possibly a rethinking of odds for an October hike in light of the lack of progress on NAFTA. 

News headlines

Nafta Talks Restart Under Pressure from Trump and Congress (Bloomberg) Talks to revamp the North American Free Trade Agreement are set to resume as U.S. and Canadian negotiators push to strike a deal amid President Donald Trump’s threats to walk away. Canadian Foreign Affairs Minister Chrystia Freeland is scheduled to meet U.S. Trade Representative Robert Lighthizer in Washington Wednesday after a series of back-to-back meetings last week failed to yield an agreement. They were rushing to bridge their differences by the end of August so Canada could join a preliminary pact the U.S. had struck with Mexico just days earlier.

As Trump Weighs Tariffs, China’s Industrial Ambitions Loom Large (Bloomberg) Conflict over China’s industrial policies is at the center of a trade war that’s set to escalate should President Donald Trump go ahead with planned tariffs on another $200 billion of Chinese goods as soon as this week. The core of those industrial policies is the Made in China 2025 plan to dominate industries from robotics to new-energy vehicles and aerospace. A key element of that blueprint is an unofficial document that’s slipped largely under the radar: The Made in China 2025 Major Technical Roadmap, better known as the Green Book after the color of its original cover.

Democrats Poised to Grill Kavanaugh at Supreme Court Hearing (Bloomberg) Democrats spent the first day of Brett Kavanaugh’s U.S. Supreme Court confirmation hearings criticizing Republicans. Now they will turn to the nominee himself. Kavanaugh closed out a day of rancor among senators Tuesday by promising in his opening remarks to be a « neutral and impartial arbiter who favors no litigant or policy. » He said the court « must never be viewed as a partisan institution. »

Stocks Retreat Amid EM Turmoil; Dollar Advances: Markets Wrap (Bloomberg) U.S. stock futures followed European shares lower Wednesday after a broad sell-off in Asia, as enduring pressure in emerging markets intensified concerns of contagion. With investors seeing no let-up in trade tensions, the dollar strengthened for a fifth session and commodities slipped, led by oil. Futures on the S&P 500 pointed to losses after the Stoxx Europe 600 Index dropped to its lowest since April before paring some of the decline. A day after developing-market currencies tumbled, it was the stock market’s turn in the hot seat. Shares slid from Japan to Australia and were bruised most in Indonesia, where the nation’s benchmark lost almost 4 percent. The 10-year Treasury yield eased back to 2.89 percent, while the dollar strengthened. At the same time, an emerging-market currency gauge fell to a fresh one-year low, led for a second day by South Africa’s rand.

Canada PM indicates he will not bend on key NAFTA demands at talks (Reuters) Canadian Prime Minister Justin Trudeau indicated on Tuesday that Canada would not compromise on key demands at high-level talks this week with the United States to update the North American Free Trade Agreement. Senior officials from both sides are due to meet in Washington on Wednesday in a bid to settle major differences amid pressure from Washington for a quick settlement. “There are a number of things we absolutely must see in a renegotiated NAFTA,” Trudeau told reporters in the Pacific province of British Columbia.

Canadian dollar to rally, say strategists betting on trade deal (Reuters) Canada’s dollar is likely to rally over the coming months, according to foreign exchange strategists in a Reuters poll, who forecast that trade uncertainty will fade and the Bank of Canada will continue to raise interest rates. The latest poll of more than 35 market strategists taken Sept 1-4 predicted the Canadian dollar would rally to C$1.30 against the U.S. dollar, or about 77 U.S. cents, in three months, from nearly a seven-week low of C$1.32 on Tuesday.

Canadians feeling weight of debt, despite better financial position (BNN) Many Canadians are feeling the debt crunch, despite two-thirds of the country being in a better financial position than previous years, according to a new study released Wednesday. The Canadian Payroll Association found that 66 per cent of Canadians surveyed said they are in a better financial position than they were one year ago, according to the study. However, 40 per cent of respondents said they feel overwhelmed by their current debt levels, the study found. “We would have hoped to see in the survey results that Canadians would do more to alleviate their debt and take control of their financial situation in strong economic times,” said Peter Tzanetakis, president of the Canadian Payroll Association, in a release.

Amazon joins Apple in climb to US$1 trillion market value (BNN) Amazon.com Inc. () shares rose as much as 1.9 per cent, pushing the company briefly beyond a market value of US$1 trillion, a milestone Apple Inc. () reached last month. It’s an historic accomplishment for Chief Executive Officer Jeff Bezos, who founded the company in his Seattle garage in 1994 as a small online book seller. Now Bezos is the world’s wealthiest person, running a diversified global enterprise with more than US$200 billion in annual sales and more than 575,000 employees. 

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-02, S&P 500 futures are down -0.23% at 2891.5, Crude oil futures are down -1.13% at $69.08, Gold futures are up 0.03% at $1199.4, DXY is down 0% at 95.437, CAD/USD is down -0.13% at 0.7592.

US Economic Data

Canadian Economic Data

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update Tsys weaker yet off the lows despite weak stocks/emer mkts, strong USD, 10Y 2.87(+0.5bps), heavy volume in Ty futures (508k). Emerging mkt stocks lower for a 4th day, MSCI index -0.84%, with the DXY +0.44% @ 95.53. Turkish lira 0.3% lower on doubts the central bank will hike rates to stem inflation. Core EGBs hanging on to slight gains, gilts rising after weak Aug Construction PMI, bund curve flattening 2s10s to 92.9 close to lows of last week. 10Y bund future reversing lower as Italy BTPs rallied on comments from Deputy PM saying 2% deficit rule will be respected. In Canada, GOCs mixed, short end higher before BOC, notable steepening in 10s30s 3bps over the past week as corp calendar builds for Sept. Expectations have the BOC holding rates steady tomorrow with a 25bp hike priced in for October 24th. Provis opening steady after spds widened 2bps last week. 

News headlines

Trump’s Fight With Canada Over Nafta Faces New Hurdles (Bloomberg) President Donald Trump’s effort to force Canada into signing on to a new Nafta on his terms is facing new hurdles thanks to growing opposition at home to his threat to proceed without the U.S.’s northern neighbor. Trump’s frustration spilled into the open over the holiday weekend as he railed against Canada on Twitter — as well as its many supporters in both political parties. The president has threatened to leave Canada out of a new trade deal already negotiated with Mexico, but without congressional support he lacks leverage to force Ottawa to make concessions in talks that are due to resume Wednesday.

U.K. Construction Growth Slows to Weakest in Three Months (Bloomberg) U.K. construction growth slowed more than forecast in August, providing further evidence that the nation’s economy is losing momentum. IHS Markit’s Purchasing Managers’ Index for the industry fell to 52.9 last month from a 14-month high of 55.8 in July, the firm said Tuesday. The reading was the lowest since May and below the 54.9 forecast by economists in a Bloomberg survey. A reading above 50 indicates expansion. Markit’s survey showed a “sharp slowdown” in house building in August, while work on civil engineering projects decreased for the first time in five months. New business growth also ebbed, with some respondents noting Brexit-related uncertainty was holding back investment.

ECB Endgame Has Governments Thinking About Rate-Hike Damage (Bloomberg) European finance ministers and central bankers will gather in Vienna this week to discuss a key test for the euro zone’s expanding economy — whether it can cope with interest-rate hikes. The debate reflects the currency bloc’s relatively solid economic health after a decade of crises and recessions, but also marks a new challenge. The European Central Bank’s plan to gradually unwind years of extraordinary monetary stimulus comes with the risk of destabilizing asset markets such as stocks and real estate if they’re bloated by cheap money.

Dollar Advances as Stocks Fall With EM Currencies: Markets Wrap (Bloomberg) The dollar advanced and stocks fell as trade tensions persisted and emerging markets came under pressure, with turmoil in currencies spreading from Turkey and Argentina to South Africa. Declines in the yen and gold left investors with few havens. Miners and chemical companies led declines on the Stoxx Europe 600 Index, and contracts on the Dow, S&P 500 and Nasdaq pointed to a lower open before U.S. trading resumes after Labor Day. Nike fell in the pre-market on a politically controversial advertising campaign. Stocks in Japan slipped with the yen. Italian 10-year notes jumped, extending Monday’s advance on the government’s more conciliatory stance toward European Union spending limits.

Pipeline politics leave Canada’s prime minister in peril (Reuters) With one surprise court ruling, Canadian Prime Minister Justin Trudeau faces the risk of contesting next year’s election with key pieces of his economic and environmental plans in ruins. The Federal Court of Appeal overturned on Thursday the Liberal government’s 2016 approval to expand Trans Mountain, a critical pipeline to link Canadian crude with foreign markets, followed hours later by Alberta’s tit-for-tat withdrawal from Trudeau’s climate plan.

Laurentian Bank buys back $103 million of mortgages after review (Reuters) Laurentian Bank of Canada (LB.TO) said on Tuesday it had repurchased mortgages worth C$135 million ($103 million) after a review found they had been incorrectly sold to Canada’s federal housing agency. The bank said in February that it was reviewing mortgages sold to the Canada Mortgage and Housing Corporation’s (CMHC) securitization programs after an audit found “documentation issues and client misrepresentations.”

Canadian Natural acquires Joslyn oil sands project for $225M (BNN) Canadian Natural Resources Ltd. has signed a deal to buy the Joslyn oil sands project for $225 million from Total SA and its partners. Paris-based Total, which is Joslyn’s operator, currently owns 38.25 per cent of the project, which is directly south of Canadian Natural’s Horizon oil sands operation. A further 36.75 per cent of Joslyn is owned by Calgary-based Suncor Energy, while the Joslyn Partnership holds 15 per cent and Inpex Canada Ltd. owns 10 per cent.

Alberta projects deficit drop of $1B in first-quarter update (BNN) Alberta’s finance minister says the court decision putting the Trans Mountain pipeline expansion in legal limbo won’t affect the long-term plan to rid the province of red ink by 2024. Joe Ceci says the province is relying on revenues not just from the Trans Mountain expansion but other pipeline projects as well, such as the Line 3 expansion from Alberta to Wisconsin and the Keystone XL line to the U.S. Gulf Coast. 

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-06, S&P 500 futures are down -0.17% at 2897, Crude oil futures are up 1.83% at $71.08, Gold futures are down -0.62% at $1199.2, DXY is up 0.42% at 95.543, CAD/USD is up 0.59% at 0.7591.

US Economic Data

Canadian Economic Data

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230