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Market Update Tsys yields 1-2 bps higher on very light volume (223k TY fut),  10Y 2.954 (+1.5bps), S&P futures higher (+5.25) as Chinese stocks rose 1.5% after the S&P rose back to the  Jan highs yest.  USD index lower, USD/JPY at one-week lows as BOJ is considering raising rates this year according to BB. The GBP rose off the lows, concerns over no Brexit deal continue to weigh on the xcy while the Turkish lira is stronger. The US auctions $34bln in 3Y notes this aft, ahead of $44bln in 10Y & 30Y supply tomorrow and Thursday.  GOCs lower in line with tsys, 1bp tighter in 10s, very little movement in provis despite higher GOC yields, no supply. 

News headlines

Saudi Blowback Over Women’s Rights Gives Trudeau a Rare Boost (Bloomberg) Justin Trudeau’s attempts to export his “sunny” progressive ways have hit another roadblock, this time with Saudi Arabia. Yet unlike in recent spats with China and India, Canada’s prime minister may get a slight boost at home for his support of women’s rights. Saudi Arabia suspended diplomatic ties and halted new trade dealings late Sunday following comments by Canadian Foreign Minister Chrystia Freeland criticizing the kingdom for arrests of women’s rights activists. The standoff pits Trudeau, an outspoken champion of women’s advancement, against a Saudi government that’s taking a harder line more recently after making some reforms to help women.

Banks After Tax Cuts: Loan Growth Slows and 3,200 Jobs Disappear (Bloomberg) Banks were among the top beneficiaries when Republicans slashed corporate taxes in December to stoke the U.S. economy. So how are the nation’s largest financial institutions treating employees, customers and investors? Twenty-three firms deemed most important by the Federal Reserve saved, on average, $388 million each in the first half of this year, based on declines in their reported tax rates. Over the same period, members of the group said they collectively eliminated 3,200 jobs.

Trump’s Iran Sanctions Spook Europe as Daimler Halts Investments (Bloomberg) U.S. President Donald Trump’s desire to isolate the Iranian economy seems to be working. Within hours of Washington unveiling its first round of restrictions, German carmaker Daimler AG dropped plans to expand sales of Mercedes Benz vehicles in the Islamic republic. That even after the European Union, trying to salvage the Iran nuclear deal, introduced measures to protect firms from Trump’s assault.

Stocks Jump as Focus Turns to Results; Dollar Dips: Markets Wrap (Bloomberg) Most major stocks gauges advanced on Tuesday as earnings season continued, helping buoy investor sentiment against a backdrop of trade angst and geopolitical noise. The dollar slipped and Treasuries edged lower. Futures on the Dow, S&P and Nasdaq all pointed to a higher open, while miners were among the big winners in the Stoxx Europe 600 Index as commodities climbed. Chinese stocks led a broad rally in Asia, with the Shanghai Composite Index posting its biggest gain in two years on hopes for more policy support for investment. The greenback headed for the largest drop in more than a week while the British pound trimmed some of its recent losses. The lira — which has been rocked by a diplomatic spat between Turkey and the U.S. — clawed its way back from a record low, only to later give up most gains. The country’s 10-year bonds touched a record high yield.

Futures gain on higher oil prices (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices rose with renewed U.S. sanctions against Iran that are expected to tighten global crude supply. The new sanctions took effect on Tuesday, and U.S. President Donald Trump, who defied Washington’s allies to impose them, pledged that firms doing business with Tehran would be barred from doing business with the United States. September futures on the S&P/TSX index SXFc1 were up 0.33 percent at 7:15 a.m. ET. Ivey PMI data for July is due at 10:00 a.m. ET. Canada’s main stock index edged lower on Friday, dragged by losses in financial names and as China’s retaliatory tariffs on U.S. goods revived trade war concerns.

‘Realm of ridiculousness’: Top Aimia shareholder slams Air Canada’s Aeroplan offer (BNN) Aimia Inc.’s top shareholder has picked apart Air Canada’s attempt to buy its loyalty program Aeroplan as “blatantly inadequate.” Christopher Mittleman, chief investment officer of Mittleman Brothers – which holds 17.6 per cent of Aimia’s shares – made his argument in an open letter to Aimia’s board less than a week after it rejected the approach by Canada’s largest airline and its buyout partners. “The offer for Aeroplan from the Air Canada-TD-CIBC-Visa consortium was misleading, coercive, and blatantly inadequate,” Mittleman wrote in the letter. “I applaud the board for note acquiescing and continuing negotiations.”

Why China may be Tim Hortons’ most challenging global expansion yet (BNN). Tim Hortons wants to transport “the best of Canada” to China with its aggressive expansion plan, but with many players already jockeying for a bigger share of the Chinese coffee market, the Canadian coffee-and-doughnut chain may be facing its most challenging global expansion yet. The Oakville, Ont.-based company said in July it will partner with Cartesian Capital Group in a joint venture that aims to open 1,500 Tim Hortons restaurants in China over the next decade. The expansion into the world’s second-largest economy is part of a global strategy that has seen Tim Hortons open more than 4,700 restaurants around the world, entering Spain, Philippines, the U.K. and Mexico last year. 

Overnight markets

Overview: US 10yr note futures are down -0.117% at 119-19, S&P 500 futures are up 0.21% at 2856, Crude oil futures are up 1.09% at $69.76, Gold futures are up 0.38% at $1222.3, DXY is down -0.31% at 95.063, CAD/USD is down -0.3% at 0.7713.

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 slightly lower on a tight range and low volume, curves slightly steeper; The calendar is light this week following last weeks Fed, BoJ, and BoE meetings. US Treasuries are trading mixed in what has been a rather subdued trading session with limited data or official comments seen to direct markets. US 10-yr note is little changed from Friday closing level at 2.9469% with yield curve slightly steepening as 2-yr yield raises by 0.6bps. US Treasuries operated in a limited range during Asia with little in the way of fresh catalysts to generate any notable trading impetus, with the cash curve undergoing some minor bear flattening.

News headlines

China Meets Trump’s Tariff Hardball With Pledge to Endure (Bloomberg) After a weekend of claims by U.S. President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout. China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests, according to an editorial in the nationalist Global Times on Sunday evening. “Considering the unreasonable U.S. demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a U.S. economic vassal.”

Italy Builds Defenses Against Speculators Amid Budget Talks (Bloomberg) Matteo Salvini’s message: investors are welcome in Italy but speculators better take a hike. “The Italian economy is sound, so we will block” speculative attempts to influence growth trends, the country’s outspoken deputy premier said in an interview with newspapers including La Repubblica and La Stampa, without elaborating further. The next budget law will include measures aimed at easing fiscal pressure, which will attract foreign investments, Salvini said.

China’s Current Account Returns to Surplus on Trade Rebound (Bloomberg) China’s current account returned to a surplus in the second quarter of the year, with a rebound in the goods trade making up for the continued deficit in services trade and income from overseas. The current-account balance stood at $5.8 billion in the second quarter, according to a State Administration of Foreign Exchange report on Monday. The growing services trade deficit, which includes outbound tourism, education, entertainment as well as purchases of foreign technologies and patents, highlights the changing nature of China’s economy, even as it remains the world’s largest exporter.

Dollar Rises as Trade Gloom Lingers; Stocks Climb: Markets Wrap (Bloomberg) The dollar climbed against most of its major peers as China signaled it won’t flinch in a trade war. U.S. equity futures pointed towards gains and European shares edged higher in choppy, thin trading. The Bloomberg Dollar Spot Index climbed for the fourth day in five sessions, and the yuan reversed its gains following a rally that was triggered after China’s central bank on Friday made it more costly to short the currency. Sterling weakened against most major peers as Britain’s International Trade Secretary Liam Fox said a no-deal outcome for Brexit was more likely. The euro slipped after German manufacturers took a hit in June.

Canada ‘very keen’ on wrapping up year-old NAFTA talks (Reuters) Canada is “very keen” on concluding negotiations to renew the North American Free Trade Agreement as soon as possible, Foreign Minister Chrystia Freeland said on Saturday, amid signs of progress after months of delays. Talks to modernize the 1994 trade pact started in August 2017 but have dragged on much longer than expected as Canada and Mexico pushed back against far-reaching U.S. demands for reform. President Donald Trump has said he will walk away from NAFTA unless major changes are made.

Saudi Arabia freezes new trade with Canada for urging activists’ release (Reuters) Saudi Arabia froze new trade and investment with Canada after Ottawa urged Riyadh to free arrested civil society activists, in the top oil exporter’s latest retort to Western criticism of its human rights record. The Gulf Arab kingdom also recalled its ambassador and gave the Canadian ambassador 24 hours to leave the country, a Saudi foreign ministry statement said late on Sunday, adding it retained “its rights to take further action.”

‘Fantastically good’ Canadian economy shifts focus to rate hike (BNN) Canada’s economy is gaining strength instead of buckling amid a trade fight with the U.S. Exports rose to a record high in June even as President Donald Trump slapped tariffs on steel and aluminum, and gross domestic product expanded in May at its fastest clip in a year, according to data released this week by Statistics Canada. That has economists predicting second-quarter growth of more than 3 per cent and talking about the possibility of a second-straight rate increase from the Bank of Canada. Another move from the central bank next month was considered a long shot until now, as trade threats continue to cloud Prime Minister Justin Trudeau’s economic agenda.

Overnight markets

Overview: US 10yr note futures are down -0.026% at 119-19, S&P 500 futures are up 0.03% at 2840.25, Crude oil futures are up 1.36% at $69.42, Gold futures are down -0.59% at $1216, DXY is up 0.32% at 95.465, CAD/USD is up 0.26% at 0.7678.

US Economic Data

There is no US economic data for today

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, 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 steady/mixed ahead July jobs report (+190k est), rate futures loosely mirroring swings in US$ overnight (latest drop as PBOC changes policy on FX reserve requirements for FX forwards from 0.0 to 0.2%, effective Aug 6). Moderate volume on two-way flow includes fast$ selling in 5s and 10s early overnight, spec buying 30s, otherwise quiet ahead headline data. Other data today includes Average Hourly Earnings estimated at +2.7 annual rate. BOE Governor Mark Carney stated that Britain faces “uncomfortable high” risks leaving the EU with no deal. 

News headlines

Buyers Return to Toronto’s Housing Market (Bloomberg) Toronto’s housing market showed signs of continued stabilization as sales surged amid a decline in benchmark prices. Sales rose 19 percent in July to 6,961, from 5,869 in the same period a year earlier, the Toronto Real Estate Board reported Friday. Seasonally adjusted sales climbed 6.6 percent from June, making July the strongest month this year for resales, though it was still below the historical average.

Fed Describes Economy as ‘Strong’ for the First Time Since 2006 (Bloomberg) So long, modest, moderate and solid. Strength is making a comeback. The Federal Reserve described economic activity as “strong” in Wednesday’s statement, the first time it’s done so since it called it “quite strong” in May 2006 — in the late stages of the last economic expansion, shortly before the housing market drove the economy into meltdown. Morgan Stanley highlighted the change in a research note.

Trump Fury Over Mueller ‘Conflicts’ Dates to Oval Office Meeting (Bloomberg) President Donald Trump sat with Robert Mueller in the Oval Office in May of last year to interview him for a job: director of the FBI. The next afternoon, Trump was in another Oval Office meeting when an aide interrupted with news that Mueller had taken a different post: special counsel to investigate Trump’s campaign.

U.S. Futures Pare Gain on Trade Talk; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures pared advances after China threatened to slap tariffs on more American goods, ratcheting up trade rhetoric after Trump administration moves earlier in the week. The dollar retreated after the Chinese central bank moved to shore up the country’s currency. Contracts on the S&P 500 Index were little changed on the news of Chinese retaliation as investors await the 8:30 a.m. U.S. jobs report. The dollar turned lower on news the PBOC is adjusting the reserve requirement on currency forwards, effectively raising the cost of shorting the yuan. Futures and European equities earlier rose on the weaker yuan. Italian bonds pared a large drop before a budget meeting between populist leaders and the finance minister. The yield on 10-year Treasuries climbed toward 3 percent.

Enbridge tops quarterly profit estimates on cost controls (Reuters) Canada’s top pipeline operator Enbridge Inc (ENB.TO) beat analysts’ estimates for quarterly profit on Friday by reining in costs, and said it completed 40 percent of its Line 3 pipeline replacement work. In June, a Minnesota regulator approved Enbridge’s plan to rebuild its aging, corroded Line 3 oil pipeline that runs from Alberta in western Canada to Wisconsin in the United States.

Telus meets profit estimates despite fewer postpaid additions (Reuters) Canadian telecom company Telus Corp (T.TO) met analysts’ quarterly profit estimates on Friday despite fewer postpaid subscriber additions, as users opted for costlier internet and data connections. The company, among the biggest telecom providers in the country, said average monthly wireless bill rose to C$67.24 in the second quarter from C$66.87, helped by customers streaming more videos online.

Aimia rejects Air Canada’s takeover bid after negotiations break off (BNN) Takeover negotiations between Aeroplan operator Aimia Inc. and Air Canada have broken off hours before the midnight deadline Thursday. Aimia said Air Canada and its three financial partners raised their initial bid for its loyalty plan to $325 million, but Aimia wants $450 million. “Aeroplan is committed to protecting our members’ miles,” Aimia CEO Jeremy Rabe said in a statement Thursday.

Walmart edges into Whole Foods territory with premium coffee brand (BNN) Walmart Inc. is ramping up a battle with Amazon.com Inc. and its grocery arm Whole Foods as it starts to sell a new line of organic coffee made by a roaster in Colorado. Mash-Up Coffee, produced by Boyer’s Coffee, will be offered exclusively at more than 1,200 Walmart stores or on the Mash-Up website. The coffee sells for about $7 a bag — roughly the same price as Starbucks sold at Walmart, which is typically at the high-end of coffee at the retailer. Walmart contacted Denver-based Boyer’s Coffee last year seeking to learn more about the so-called “third wave” of coffee.

Overnight markets

Overview: US 10yr note futures are up 0.026% at 119-12, S&P 500 futures are up 0.11% at 2831.5, Crude oil futures are down -0.33% at $68.73, Gold futures are up 0.02% at $1220.4, DXY is down -0.01% at 95.164, CAD/USD is down -0.04% at 0.7682.

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