Commentaires

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

Market Update Stronger than expected ADP leads to Tsy trading lower, moderate volume, curves steepening, reversing Tuesdays bull flattening; dealers see lighter buying from overseas accounts as weakness; Tsy ylds higher 10Y 99-01.5 (2.986%) vs. 99-08 (2.962%) late Tuesday; 30YY 3.113, lighter data today with ADP and FOMC announcement leading todays outlook. US Tsy to announce next week’s 3s, 10s and 30s auction details at 8h30. Markets starting to feel more confident that there will be a 4th Fed rate hike this year as odds rise for a December hike after the one in September. European markets have started to think of the possibility that ECB may raise hikes earlier than expected as inflation ticks higher. 

News headlines

China Slams U.S. ‘Blackmailing’ as Trump Weighs Higher Tariffs (Bloomberg) China warned the U.S. against « blackmailing and pressuring » it over trade as the Trump administration mulls trying to force officials back to the negotiating table through threats of even higher tariffs. President Donald Trump’s officials are considering more than doubling planned tariffs on $200 billion in Chinese imports, people familiar with the deliberations said. The U.S. had threatened an additional $200 billion with levies of 10 percent, a level the administration may raise to 25 percent in a Federal Register notice in coming days, one of the people said.

Factories From Asia to Europe Put on the Brakes Amid Trade Spats (Bloomberg) Manufacturers in some of the world’s biggest economies are putting the brakes on production as they watch trade disputes with the U.S. unfold. Reports on Wednesday showed factory activity from the Asia Pacific region to Europe slowed last month. With companies issuing warnings about the impact of tit-for-tat battles over import tariffs on their profits, the data suggest that protectionist threats are starting to weigh on global growth.

Stocks Slip, Bonds Drop as Trade Fears Hit Metals: Markets Wrap (Bloomberg) Stocks struggled on Wednesday as the world’s two biggest economic powers once again ratcheted up rhetoric over trade, sinking commodities in the process. The dollar strengthened and Japanese bonds led sovereign debt lower. Futures for the Dow fell and contracts for the S&P 500 edged lower, tracking losses in the Stoxx Europe 600 Index after China vowed to retaliate if the U.S. follows through on threats to increase its import tariffs. Nasdaq futures bucked the trend, pointing to a higher open in the wake of Apple Inc.’s strong results.

Encana adjusted operating profit rises on higher production (Reuters) Canadian oil and gas producer Encana Corp (ECA.TO) on Wednesday posted a 10 percent rise in adjusted operating profit, helped by an increase in production and higher selling prices for crude. Total oil and gas production rose 7 percent to 337,900 barrels of oil equivalent per day (boe/d). Its four core assets – Montney and Duvernay oilfields in western Canada and Eagle Ford and Permian in the United States – contributed 96 percent of total volumes in the second quarter, the company said.

Canada’s Enercare to be bought by Brookfield Infrastructure for C$4.3 billion (Reuters) Canadian homeservices company Enercare Inc (ECI.TO) said on Wednesday it would be bought by Brookfield Infrastructure Partners (BIP.N) for C$4.3 billion ($3.30 billion) as the asset management firm looks to expand its business across Canada. Brookfield Infrastructure’s offer of C$29 per Enercare share represents a 53 percent premium to Enercare Tuesday’s close. On Tuesday, Brookfield Infrastructure’s parent company, Brookfield Asset Management Inc (BAMa.TO), said it would buy Forest City Realty Trust Inc (FCEa.N) in a deal valued at $11.4 billion.

Molson Coors teams up with Hydropothecary on pot drinks (BNN) Molson Coors has found its pot partner. The brewer announced early Wednesday it’s teaming up with The Hydropothecary Corporation on a joint venture to develop cannabis-infused, non-alcoholic beverages. BNN Bloomberg recently reported Molson had engaged in talks with as many as four marijuana producers over a six-month period to explore opportunities in Canada’s soon-to-be legal recreational cannabis market.

Canada not getting frozen out of NAFTA: Former industry minister (BNN) A former Canadian industry minister thinks too much is being made about the country being ‘frozen out’ of NAFTA talks as the U.S. and Mexico have planned head-to-head discussions. “I think the news out of yesterday that’s being covered today about Canada being frozen out is not frankly quite the truth,” James Moore, who served as federal industry minister from 2013-2015 told BNN Bloomberg in an interview on Tuesday. “These are complex and intense negotiations with a lot at stake.” “Any time there’s a tripartite agreement, there’s always going to be voices domestically, I can assure you, in Mexico, in the United States and in Canada who are going to say that we’re being bullied by the other two partners… There’s certainly maneuvering and debate amongst all three partners.” 

Overnight markets

Overview: US 10yr note futures are down -0.17% at 119-07, S&P 500 futures are up 0.01% at 2817.25, Crude oil futures are down -1.32% at $67.85, Gold futures are down -0.19% at $1231.2, DXY is down 0% at 94.552, CAD/USD is up 0.14% at 0.7677.

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