Commentaires

Market Update Tsys trading slightly higher, 10Y 2.823 (-0.7bps), on above avg volume in TY futures (500k). So far only modest ‘risk off’ tone following Tuesday’s political news (Manafort conviction, Cohen plea), S&P futures -4.25 after the S&P set record high yesterday, while the USD index remains near recent lows(DXY -0.24) Crude higher for 5th day (67.11 +1.9%) after API crude inventories fell 5.17mln bbls last week. EIA data due at 10:00ET.  Core EGBs higher yet off well off o/n highs, 10Y bund weakening after German 10Y bund auction barely covered (1.0 vs 1.4 Aug 1st auction). GOCs higher in line with tsys before June Retail Sales & 5Y auction at noon. Rumours of Ontario/Quebec supply – Ontario spreads have been widening while 10s/30s curve steepens (14.5 last trade) 

News headlines

RBC Reins in Canadian Banking Costs as Profit Tops Estimates (Bloomberg) Royal Bank of Canada has kept costs at bay, even with elevated spending on digital initiatives to woo more customers. Revenue growth in Canadian banking outpaced expenses in the fiscal third quarter, pushing operating leverage at the lender’s biggest division closer to its financial target for the year. Operating leverage — the difference between revenue and expense growth rates — was 5 percent for the period ended July 31, up from 0.7 percent in the second quarter, the Toronto-based bank said Wednesday in announcing earnings that beat analysts’ estimates. The gain helped lift profit from Canadian banking 11 percent to C$1.49 billion ($1.14 billion).

America’s Booming Economy Comes With a Cost for Global Growth (Bloomberg) Making America great again isn’t proving so great for other parts of the world. With the rise in the dollar and interest rates already squeezing emerging economies just as President Donald Trump’s trade war threatens China, the U.S. is set to be the only Group of Seven nation to see economic growth accelerate this year as Trump’s tax cuts kick in.

Fed Minutes May Drop Clue About How Long Powell Will Hike Rates (Bloomberg) The last published record of internal deliberations at the Federal Reserve ended on a cliffhanger. An update this week may illuminate U.S. central bankers’ thinking on what is becoming an increasingly controversial topic: the outlook for interest rates next year. That conversation, along with any hints about how they are judging progress as they unwind part of the Fed’s $4.2 trillion balance sheet, will be the main focus for investors when minutes of the policy-setting Federal Open Market Committee’s July 31-Aug. 1 meeting are released Wednesday at 2 p.m. in Washington. Chairman Jerome Powell may provide more color when he speaks Friday at the Kansas City Fed’s annual gathering in Jackson Hole, Wyoming.

U.S. Futures Slip on Trump Legal Woes; Euro Rises: Markets Wrap (Bloomberg) U.S. equity futures edged lower while stocks in Europe and Asia were mixed as traders tried to gauge the fallout from the latest legal drama engulfing Donald Trump’s presidency. Treasuries held steady, while the euro advanced after data showed wages surged. The guilty plea by Trump’s former attorney to illegal campaign-finance charges over hush money helped send U.S. equity futures lower and initially sparked mild demand for haven assets, though many moves pared and there was little sign of a pronounced impact in markets beyond America. Futures on the Dow and S&P 500 slipped, while they nudged higher on the Nasdaq. Germany’s DAX Index pared gains after tiremaker Continental AG cut its guidance, and the single currency rallied after data on last quarter showed the biggest jump in wages since 2012.

Cohen testifies Trump told him to commit crime by paying off women (Reuters) U.S. President Donald Trump’s former personal lawyer Michael Cohen testified on Tuesday that Trump had directed him to commit a crime by arranging payments ahead of the 2016 presidential election to silence two women who said they had affairs with Trump. Cohen’s voice cracked several times as he pleaded guilty to eight criminal charges in federal court in Manhattan, including tax evasion, bank fraud and campaign finance violations. Facing up to five years in prison, the admissions were a dramatic change from Cohen’s earlier boasts that he was Trump’s “fixer” and would “take a bullet” for the president.

Futures flat ahead of retail sales data (Reuters) Futures for Canada’s main stock index were little changed on Wednesday as investors awaited June retail sales data. September futures on the S&P/TSX index SXFc1 were down 0.02 percent at 7:15 a.m. ET. Canada’s retail sales are expected to rise 0.1 percent in June, according to analysts polled by Reuters. Retail sales in May had clocked a 2 percent rise, their biggest increase in 7 month. The data is due at 8:30 a.m. ET. The Toronto Stock Exchange’s S&P/TSX closed down on Tuesday. Dow Jones Industrial Average e-mini futures 1YMc1 were down 0.04 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were down 0.09 percent and Nasdaq 100 e-mini futures NQc1 were up 0.04 percent.

U.S., Mexico near NAFTA framework, but obstacles remain (BNN) The U.S. and Mexico moved closer toward a consensus on how to forge a new North American Free Trade Agreement even though key hurdles remain, according to several people familiar with the matter on both sides of the talks. Progress has been made during five weeks of discussions between the U.S. and Mexico on issues including rules for cars, but there’s no broader agreement on reshaping NAFTA, two U.S. administration officials said Tuesday night. The Trump administration’s talks with Mexico are seen as an important precursor to a three-way final deal with Canada on a revised NAFTA. Earlier Tuesday, Politico reported that President Donald Trump was poised to announce a handshake deal with Mexico as soon Thursday, citing unidentified sources.

Overnight markets

Overview: US 10yr note futures are up 0.143% at 120-20, S&P 500 futures are down -0.15% at 2857.5, Crude oil futures are up 1.99% at $67.15, Gold futures are up 0.49% at $1205.9, DXY is down -0.25% at 95.022, CAD/USD is down -0.13% at 0.7679.

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 weaker, 10Y 2.84 (+2bps), heavy volume in TY futures(430k). Risk on with S&P futures on the verge of reaching above the highs of August, while in Europe peripheral spds narrow vs bunds. DXY index lower extending yesterday’s decline on Trump comments. Quiet day in terms of data, focus on FOMC minutes tomorrow & Fed Jackson Hole conference later this week. GOCs lower, outperforming tsys by 0.5bps, reversing part of yesterday’s ~2bp widening – BOC governor Wilkins speaking yest afternoon implied tighter monetary policy has been more impactful due to high debt levels. Provi spds wider again yest on little activity. Quebec released a pre lecection report outlining Quebec’s finances, which are ‘in good shape’ – the province ended the FY 2018 with a $2.3bln surplus vs $850mln projected in spring budget. 

News headlines

U.S. Heads for Best Growth Since 2005 on Robust Domestic Demand (Bloomberg) The U.S. economy looks set to forge ahead as fresh reservoirs of domestic demand carry it past turbulence overseas, keeping the Federal Reserve on course for further interest-rate hikes. Households have more cash to spend than thought, thanks to newly discovered pools of savings and President Donald Trump’s big tax cuts. Firms are ramping up production and rebuilding inventories after running them down by the most since 2009. And government spending finally looks set to swell, after Congress opened the floodgates in March with a $1.3 trillion package.

 China Reiterates It Won’t Use Yuan Rate as Tool in Trade War (Bloomberg) China won’t use competitive currency devaluation or the foreign exchange rate as a tool to cope with trade frictions, according to a senior central bank official. “The yuan’s exchange rate is decided by the market,” Li Bo, director of the People’s Bank of China’s monetary policy department, said at a press conference in Beijing. He said the currency has more flexibility this year and the central bank is confident of keeping the rate “basically stable at a reasonable equilibrium level.”

Microsoft Thwarts Russia Hackers Targeting GOP Critics of Trump (Bloomberg) Microsoft Corp. has detected and seized web domains created by cyber-attackers linked to the Russian military, in a potential attempt to manipulate and disrupt the U.S. midterm elections. The shadowy group, known as Strontium, created domains that mimicked organizations such as the International Republican Institute and Hudson Institute so intended victims would believe they were receiving emails or visiting real sites, Microsoft President Brad Smith said in a blog post. Microsoft said it’s sifting through evidence of the group’s intentions after getting a court order to take over those domains, effectively disrupting the hacking campaign.

Dollar Weakens on Trump Remarks; U.S. Futures Rise: Markets Wrap (Bloomberg) The dollar dropped with Treasuries on Tuesday after President Donald Trump criticized Federal Reserve interest-rate hikes. U.S. equity futures tracked gains in Europe and Asia, setting the scene for a potential S&P 500 record. Metals broadly advanced. Contracts for the Dow and Nasdaq also rose, but all eyes will be on the S&P 500 Index as it may head toward the January all-time closing high and equals the longest bull market on record. The greenback’s fourth day of declines drove the euro above the key $1.15 level amid thin summer liquidity after Trump was said to have lamented rising borrowing costs and complained that Jerome Powell hasn’t proved to be a cheap-money Fed chairman. Treasuries gave back some of Monday’s gains and European bonds were mixed before a meeting of the world’s central bankers later this week, with peripheral debt outperforming.

Britain can’t afford to close door to EU banks after Brexit (Reuters) Britain is expected to keep the door open for European Union banks and investors after Brexit to try to preserve London’s global financial clout, irrespective of whether it gets a good trade deal from the bloc, bankers and industry officials say. Nerves in the City of London financial district were rattled last month when the UK government proposed future financial services trade with the EU based on “reciprocal” arrangements.

Futures flat, investors await Sino-U.S. trade talks (Reuters) Futures for Canada’s main stock index were flat on Tuesday as investors awaited trade talks between the United States and China due to start later this week. Speculation that lower-level trade talks between the two countries might help ease trade tensions has shored up the broader equity markets over the past few sessions. September futures on the S&P/TSX index SXFc1 were up 0.02 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE closed up on Monday.

Air Canada group reaches deal to buy Aimia’s Aeroplan for $450M (BNN) An Air Canada-led consortium has reached a deal in principle to buy the Aeroplan loyalty program from Aimia Inc. for $450 million in cash, the companies said Tuesday.  Air Canada (), along with Toronto-Dominion Bank (), Canadian Imperial Bank of Commerce () and Visa Canada Corp. (), will also assume approximately $1.9 billion in Aeroplan points liability as part of the transaction. The deal was unanimously approved by Aimia’s () board of directors and Mittleman Brothers, the Montreal-based company’s largest shareholder.

‘No safe harbour’ for Canadian workers as survey reveals 22% in precarious jobs (BNN) More than one-fifth of Canadian workers are in precarious jobs despite higher education and experience levels, according to a new survey from the Canadian Centre for Policy Alternatives. The report, released Tuesday, found that 22 per cent of Canadians are currently in jobs lacking economic security such as steady income, pension, benefits and sick pay. Of that group, 26 per cent work full time, 40 per cent are employed in the private sector, while 30 per cent are in the public sector.  The survey also found there was a higher rate of precarious workers aged 55 and older. “We tend to think of precarious work as something that happens in low-wage, low-skill jobs, but the findings from this national survey suggest that there is no safe harbour,” CCPA-Ontario Senior Researcher Ricardo Tranjan, said in a release. 

Overnight markets

Overview: US 10yr note futures are down -0.091% at 120-17, S&P 500 futures are up 0.15% at 2862.75, Crude oil futures are up 1.16% at $67.2, Gold futures are up 0.29% at $1198.1, DXY is down -0.26% at 95.649, CAD/USD is down -0.16% at 0.7678.

US Economic Data

There is no US economic data for today.

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: US tsys moving higher in recent trade 10Y below 2.84%(-2bps), light volume in TY futures, light data today with FOMC minutes on Wed along with Fed Jackson Hole Symposium. Stocks higher, S&P fur +5, Nasdaq +18, crude slightly lower 65.75. Core EGBs unch, German 10Y bund 0.30% low end of narrow 3bp range over the last two weeks with peripheral bonds narrower. GOCs higher, outperforming tsy by 0.5bps, curve 0.5bps flatter, the 10Y GOC @ 2.24% now below pre CPI levels. Provis unch to start, Ontario 10s @ 68bps –  where they issued last week. CMBs outpeforming since supply last week 10Y WI 40.5/ vs 41 at issue.

News headlines

Trudeau Says 2019 Canada Election Is Fight Against Polarization (Bloomberg) Justin Trudeau said the 2019 Canadian election will be a contrast between his Liberal Party’s push for a cleaner environment and fighting inequality, and Conservatives who’ll attempt to exploit divisions created by a global wave of populism. The prime minister made the remarks late Sunday afternoon in his home district in Montreal, turning attention back to campaign politics a few days after he rejected the idea of calling an early election. Trudeau’s Liberals have lost their earlier lead in public opinion polling, and are now essentially tied with the Conservatives led by Andrew Scheer.

Venezuela’s 95% Devaluation Adds to Chaos After Drone Attack (Bloomberg) Venezuelan President Nicolas Maduro carried out one of the greatest currency devaluations in history over the weekend — a 95 percent plunge that will test the capacity of an already beleaguered population to stomach even more pain. One likely outcome is that inflation, which already was forecast to reach 1 million percent this year, will get fresh fuel from the measures. Prices are currently rising at an annualized rate of 108,000 percent, according to Bloomberg’s Café con Leche index. A massive exodus of Venezuelans fleeing the crisis to neighboring countries will likely increase and with it, tensions and restrictions like the ones seen over the past few days.

Inflation Unexpectedly Hits 3% in Test for Bank of Canada (Bloomberg) Canada’s inflation hit the 3 percent mark for the first time since 2011 in July, an unexpected surge that puts pressure on the Bank of Canada to accelerate interest-rate increases. The consumer price index recorded an annual pace of 3 percent, quickening from 2.5 percent a month earlier, Statistics Canada said Friday from Ottawa. Economists expected the inflation rate to remain unchanged.

U.S. Stock Futures Track Gains Across Europe, Asia: Markets Wrap (Bloomberg) U.S. equity futures and European stocks followed Asian shares higher on Monday as traders held onto hopes for an easing of the trade war ahead of a meeting of central bankers later in the week that may throw up clues on the outlook for markets. The dollar edged up and the euro fell. Contracts on the S&P 500, Dow and Nasdaq all pointed to a positive open, while miners climbed with metals to help the Stoxx Europe 600 Index gain in thin volumes. There were advances across most Asian equities, though Japan’s gauge bucked the trend. The dollar firmed after two days of declines and the 10-year Treasury yield was steady. The onshore yuan climbed amid signs China is propping up the currency just as it prepares to restart trade negotiations with the U.S. The euro slipped for the first time in four days.

Tesla sues Ontario over canceled electric vehicle rebate (Reuters) Electric vehicle-maker Tesla Inc is taking the Ontario government to court over the Canadian province’s cancellation of an electric vehicle incentive program, according to documents filed in court on Aug. 10. In July, shortly after coming to power in Ontario, the Progressive Conservative government under Doug Ford canceled a slew of green energy initiatives, including an Electric and Hydrogen Vehicle Incentive Program that provided rebates of up to C$14,000 ($10,640) for people who bought electric cars.

China shifts to Iranian tankers to keep oil flowing amid U.S. sanctions (Reuters) Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States. The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

Big banks poised for strong quarter amid housing stability, rate hikes (BNN) Canada’s biggest banks are expected to report yet another strong quarter as the country’s housing market shows signs of stability and rising interest rates add to their bottom line. Royal Bank of Canada is the first lender to report its fiscal third-quarter results on Wednesday, and most analysts are expecting « solid » growth across the industry, with estimates of earnings-per-share growth as high as 10 per cent year-over-year. « We believe the earnings environment sets up well for a strong second half… With the Canadian housing market behaving itself, investors can turn their attention away from that and towards earnings, which have been supported by (profit) margin expansion, operating leverage, and growth in the expansion segments, » said Robert Sedran, an analyst with CIBC Capital Markets in a research note. Canadian Imperial Bank of Commerce will be the next to report its earnings for the three-month period on Thursday, followed by Bank of Nova Scotia and Bank of Montreal on Aug. 28, National Bank of Canada on Aug. 29 and Toronto Dominion Bank on Aug. 30.

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-12, S&P 500 futures are up 0.15% at 2856.5, Crude oil futures are up 0.05% at $65.94, Gold futures are up 0.79% at $1193.6, DXY is up 0.12% at 96.22, CAD/USD is up 0.07% at 0.7651.

US Economic Data

There is no US economic data for today.

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