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Market Update

US tsys trading slightly higher on avg volume (330k TY futures), 10Y 1.84%, US equity futures paring earlier losses (S&P -3.75). JPM up ~2.0% pre-mkt on stronger Q4 fixed income & trading revenues, eps $2.57 vs $2.36 est. US Dec CPI on tap – 0.3% m/m, 2.4% y/y and 2.1% core expected.  Core EGBs higher, UK gilts continue to outperform, 2Y UK/German spread at two-year lows, GBP extending its decline on speculation of BOE easing this month in the wake of negative Nov GDP.  GOCs higher in line with tsys, BOC Business Outlook survey indicator rose to the highest since 2018, 0.7% in Q4 vs 0.3% prev.  while inflation expectations over the next year fell to the lowest since 2017.

News headlines

U.S. Futures, Europe Stocks Fluctuate; Bonds Rise: Markets Wrap (Bloomberg) American equity-index futures fluctuated with European stocks on Tuesday as U.S. earnings season kicked off and officials prepared to sign the China trade deal in Washington. The yuan held close to its strongest level since July.

CANADA STOCKS-TSX futures drop ahead of Phase 1 U.S-China trade deal (Reuters) Canada’s main stock index futures fell on Tuesday, as investors remained cautious before the U.S.-China Phase 1 trade deal is signed on Wednesday.

Futures pause after rally, JPMorgan results draw cheer (Reuters) U.S. stock index futures were flat to slightly lower on Tuesday, as investors took a breather following a record rally, even as JPMorgan’s quarterly results set a positive tone for big bank earnings.

Phase 1 commodity targets likely more than China can chew: analysts (Reuters) Commodity traders and analysts are struggling to map out how China will reach the eye-popping amounts it is committing to buy from the United States under Phase 1 of their trade deal.

China’s yuan gains after U.S. drops China FX manipulator label (Reuters) China’s yuan climbed to its highest level since July on Tuesday and the Japanese yen plumbed eight-month lows as the U.S. Treasury Department reversed its decision in August to designate China as a currency manipulator.

China posts strong December exports as world awaits Sino-U.S. trade deal signing (Reuters) China’s exports rose for the first time in five months in December and by more than expected, signaling a modest recovery in demand as Beijing and Washington agreed to defuse their prolonged trade war.

Switzerland rejects U.S. allegations of currency manipulation (Reuters) Switzerland is not manipulating the Swiss franc for competitive gain, the country’s government said on Tuesday after the United States added it to a watchlist of currency manipulators.

Gold Falls Again as Demand for Havens Wanes (Bloomberg) Gold nudged lower, extending declines from last week’s peak, as the soon-to-be clinched U.S.-China trade pact undermines the case for havens. Palladium hit a fresh record.

Market Overview: US 10yr note futures are up 0.024% at 128-31, S&P 500 futures are down -0.06% at 3287.75, Crude oil futures are up 0.72% at $58.5, Gold futures are down -0.5% at $1542.9, DXY is up 0.13% at 97.468, CAD/USD is up 0.1% at 0.7651.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.666%	2 Year	1.586%
5 Year	1.616%	5 Year	1.646%
10 Year	1.61%	10 Year	1.842%
30 Year	1.712%	30 Year	2.3%

US Economic Data

06:00 AM	NFIB Small Business Optimism, Dec  Survey: 104.6  Actual: 102.7 Prior: 104.7
08:30 AM	CPI MoM, Dec  Survey: 0.30%  Prior: 0.30%
	CPI Ex Food and Energy MoM, Dec  Survey: 0.20%  Prior: 0.20%
	CPI YoY, Dec  Survey: 2.40%  Prior: 2.10%
	CPI Ex Food and Energy YoY, Dec  Survey: 2.30%  Prior: 2.30%
	CPI Core Index SA, Dec  Survey: 266.111  Prior: 265.620
	CPI Index NSA, Dec  Survey: 257.169  Prior: 257.208
	Real Avg Weekly Earnings YoY, Dec  Survey: —  Prior: 1.10%
	Real Avg Hourly Earning YoY, Dec  Survey: —  Prior: 1.10%

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, 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

Market Update

US tsys trading lower, yields 2- 2.5bps higher led by the long end with the 10Y 1.84%, curve 2bps steeper. US equity futures higher, S&P +12, Nasdaq +44, crude unch. Risk-on tone with US-Iran conflict fading and Wednesday’s signing of the US-China ‘phase one’ deal. Core EGBs mixed, gilts higher on dovish comments from BOE member Vlieghe and poor UK data (Nov GDP -0.3% vs 0.0 exp). GOCs lower in line with tsys – Can/US close to cheapest levels since Friday’s solid Dec employment figures, 10Y ~5bps wider from Thursday’s close.  Quebec 10Y  unch from Friday’s new issue level (69.5).

News headlines

U.S. Futures Gain, Europe Shares Drop; Bonds Slip: Markets Wrap (Bloomberg) U.S. equity futures advanced with Asian shares on Monday while Europe stocks turned lower at the beginning of a busy week likely to be dominated by the start of earnings season and the signing of a partial China trade deal. Bonds, the yen and gold retreated.

CANADA STOCKS-TSX futures flat ahead of Phase 1 Sino-U.S. trade deal (Reuters) Canada’s main stock index futures stayed flat on Monday, ahead of the imminent signing of a preliminary Sino-U.S. trade deal.

The World’s Most Precious Metal Leaves Everything Else in the Dust (Bloomberg) Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

As businesses hold back, U.S. consumers seen boosting big banks’ profits (Reuters) Consumer lending is expected to propel profits for big U.S. banks when they unveil fourth-quarter results this week, though stress in corporate lending and uneven capital markets may cast a shadow over results.

U.S. Champagne drinkers should expect costs to pop with new tariffs (Reuters) Lovers of Champagne and other French sparkling wines should brace for big cost increases if the United States makes good on a threat to impose 100% tariffs on French goods in a dispute over the country’s planned digital services tax.

Auto industry cautious as China starts 2020 with forecast of a 2% sales decline (Reuters) Automakers in China need to get used to a new normal of “low speed growth” in the world’s largest car market, the country’s top auto body said on Monday, as it reiterated predictions that sales will likely shrink for the third consecutive year in 2020.

Deadline to end use of Libor in doubt as banks stall on software changes (Reuters) Many banks in Britain are unlikely to hit an October deadline to stop writing loans tied to the discredited Libor benchmark as they grapple with upgrading to crucial new software that allows them to use replacement reference rates, industry sources said.

Canadian gas gains after drilling cutbacks, pipeline rule change (BNN) Canadian natural gas is trading at the highest price relative to U.S. benchmarks in about 10 months after producers cut back on drilling and a rule change on a key Alberta pipeline system last year helped better manage flows of the fuel.

Market Overview: US 10yr note futures are down -0.073% at 128-32, S&P 500 futures are up 0.34% at 3275.75, Crude oil futures are down -0.05% at $59.01, Gold futures are down -0.28% at $1555.8, DXY is up 0.09% at 97.444, CAD/USD is down -0.05% at 0.7666.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.661%	2 Year	1.574%
5 Year	1.617%	5 Year	1.643%
10 Year	1.611%	10 Year	1.835%
30 Year	1.713%	30 Year	2.297%

US Economic Data

02:00 PM

Monthly Budget Statement, Dec  Survey: -$15.0b  Prior: -$13.5b

Canadian Economic Data

10:00 AM	Bloomberg Nanos Confidence, Jan 10  Survey: —  Prior: 56.5
	Bloomberg Jan. Canada Economic Survey
10:30 AM	BoC Overall Business Outlook Survey, 4Q  Survey: —  Prior: 0.4
	BoC Business Outlook Future Sales, 4Q  Survey: —  Prior: 23.00

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

Market Update

US tsys trading unch before Dec payrolls (160k exp vs 266 in Nov), 10Y 1.85%, avg volume in TY futures (~310k). US equity futures giving up most of o/n gains (S&P +4), crude moving lower as well.  GOCs outperforming tsys out the curve, 1.5bps tighter vs US 10s. Poloz yesterday took a more upbeat on recent economic developments, noting the tightness in the labor market and robust housing market, as well as the rebound in business investment.  Cdn employment expected to have rebounded 25k in Dec after a 71k decline, with the unemployment rate down a notch to 5.8% from 5.9% in nov.

News headlines

U.S. Futures Climb Before Jobs Report; Bonds Drift: Markets Wrap (Bloomberg) American equity futures advanced while European stocks edged higher as all eyes turned to the U.S. jobs report after a tumultuous week in global markets. Treasuries drifted.

Stock Futures firm ahead of key jobs report (Reuters) U.S. stock index futures rose on Friday, helped by gains in high-growth technology names including Apple, while investors turned to the closely watched jobs report for confirmation that the world’s largest economy remains healthy.

TSX futures rise as Middle East conflict abates (Reuters) Canada’s main stock index futures rose on Friday as a de-escalation in U.S.-Iran tensions boosted appetite for riskier assets.

Oil Set for Biggest Weekly Loss Since July as Mideast Risk Eases (Bloomberg) Oil headed for its biggest weekly loss since July as the prospect of an immediate confrontation between the U.S. and Iran abated, allaying fears of disruption to Middle East energy supplies.

U.S. job growth seen slowing in December after robust gains (Reuters) U.S. job growth likely slowed in December, but the pace of hiring probably remains more than enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes.

As U.S. election heats up, investors brace for volatility (Reuters) A U.S. stock market that has weathered trade wars, weak corporate earnings, and now a U.S.-Iran conflict to continually hit record highs faces a new obstacle: the 2020 U.S. election season.

Dollar set for best weekly gain in two months on ‘galvanizing’ forces (Reuters) The U.S. dollar rose on Friday and is on track for its biggest weekly gain in two weeks as dissipating geopolitical tension prompted investors to buy riskier currencies, while the Japanese yen and the Swiss franc gave up all their recent gains.

‘Crucial’ jobs data to reveal extent of Canada’s economic slump (BNN) Jobs data on Friday are poised to reveal just how weak the Canadian economy is.

Poloz says Bank of Canada watching global trade impacts (BNN) The head of the Bank of Canada says the central bank will be watching for signs that fallout from trade disputes currently affecting Canada’s manufacturing sector has spilled over into additional industries.

Market Overview: US 10yr note futures are down 0% at 128-29, S&P 500 futures are up 0.22% at 3283.25, Crude oil futures are up 0.13% at $59.64, Gold futures are down -0.26% at $1550.2, DXY is up 0.05% at 97.494, CAD/USD is up 0.07% at 0.7655.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.635%	2 Year	1.578%
5 Year	1.595%	5 Year	1.653%
10 Year	1.588%	10 Year	1.851%
30 Year	1.706%	30 Year	2.322%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Dec  Survey: 160k  Prior: 266k
	Change in Private Payrolls, Dec  Survey: 153k  Prior: 254k
	Change in Manufact. Payrolls, Dec  Survey: 5k  Prior: 54k
	Unemployment Rate, Dec  Survey: 3.50%  Prior: 3.50%
	Average Hourly Earnings MoM, Dec  Survey: 0.30%  Prior: 0.20%
	Average Hourly Earnings YoY, Dec  Survey: 3.10%  Prior: 3.10%
	Average Weekly Hours All Employees, Dec  Survey: 34.4  Prior: 34.4
	Labor Force Participation Rate, Dec  Survey: —  Prior: 63.20%
	Underemployment Rate, Dec  Survey: —  Prior: 6.90%
10:00 AM	Wholesale Inventories MoM, Nov F  Survey: 0.00%  Prior: 0.00%

Canadian Economic Data

08:30 AM	Net Change in Employment, Dec  Survey: 25.0k  Prior: -71.2k
	Hourly Wage Rate Permanent Employees YoY, Dec  Survey: 4.20%  Prior: 4.40%
	Unemployment Rate, Dec  Survey: 5.80%  Prior: 5.90%
	Full Time Employment Change, Dec  Survey: —  Prior: -38.4
	Part Time Employment Change, Dec  Survey: —  Prior: -32.8
	Participation Rate, Dec  Survey: 65.6  Prior: 65.6

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