Commentaires

Market Update US tsys higher on below avg volume in TY futures (330k ), 10Y 2.94%, early bid on back of weak Australian CPI data (2.1% vs 2.2%). Equities weaker, thou off the lows (S&P futures -4), crude/USD slightly weaker. Key talks on US/EU trade today with EU Commission President Juncker meeting in Washington, while the US auctions $18bln in 2Y FRNs & $36 5Y notes later today. Core EGBs higher, outperforming tsys, bunds little changed despite stronger IFO sentiment survey. GOCs little changed before 10Y auction at noon – $3.0bln in new June 2029 bonds, with the WI roll (new 29/28) ~2bps (1.9/ this morn) vs 1.2bps for the current 10Y roll. The outstanding 5.75/29s trade 2.8bps back of 10s, so at first glance the WI roll looks tight, particularly given the new 2029 bond will have a duration closer to 9.6s vs ~8.5 for the high coupon 5.75/29.  Keep in mind the new 29s will eventually become the 10Y benchmark. 

News headlines

Nafta Talks to Pick Up Again as Threat of Auto Tariffs Looms (Bloomberg) High-level talks for a new Nafta are picking up again this week following two months of limited negotiations that were instead marred by tit-for-tat tariff battles and diplomatic fallout. Canadian Foreign Affairs Minister Chrystia Freeland will discuss the North American Free Trade Agreement on Wednesday when she meets in Mexico City with officials from the incoming and outgoing Mexican administrations. On Thursday, Mexican Economy Minister Ildefonso Guajardo is traveling to Washington to discuss the status of Nafta talks with U.S. Trade Representative Robert Lighthizer. The bilateral gatherings mark the most activity on Nafta negotiations since May.

Trump Says U.S., EU Must Cut All Tariffs Ahead of Key Talks (Bloomberg) President Donald Trump said that the U.S. and the European Union should eliminate all tariffs, barriers and subsidies, with the bloc’s trade chiefs set to present him with proposals in that direction in a crunch meeting at the White House later Wednesday. “I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies!” Trump said in a Tuesday night tweet. “That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!”

Coke Profit Beats Estimates on Sales Boost From Healthier Drinks (Bloomberg) Coca-Cola Co. is getting a boost from its healthier beverages, with its resurgent zero-sugar soda brands buoying the company’s results. Profit beat analysts’ estimates in the second quarter, helped by double-digit growth for its Coca-Cola Zero Sugar brand and efforts to cut costs, it said in a statement. The results drove the shares up as much as 1.7 percent in early trading Wednesday.

Stocks Turn Lower Before Trade Talks; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures turned lower with European stocks as investors digested the latest raft of earnings, and before key trade talks between America and the European Union. The dollar declined against most of its major peers. Futures for the S&P 500 and Dow edged lower, while those for the Nasdaq erased a gain amid a mixed bag of earnings. Coca Cola’s results beat forecasts, while Fiat Chrysler’s came in below expectations, triggering declines in pre-market trading. The picture was similar in Europe, and the Stoxx Europe 600 Index retreated. Asian equities advanced earlier, though Shanghai stocks edged lower as positive sentiment spurred by Beijing’s willingness to support the Chinese economy showed signs of fading.

Singapore buys trains from Canada’s Bombardier in up to $880 million contract (Reuters) Singapore has bought 66 new trains from Canada’s Bombardier Inc to replace an older fleet on its metro rail service in a contract worth up to S$1.2 billion ($880 million), the city-state’s Land Transport Authority said on Wednesday. The LTA’s contract with Bombardier includes an option under which the firm can provide long-term service support for the new fleet, set to arrive from 2021.

Canadian grocery chain Loblaw’s profit beat estimates (Reuters) Canadian grocery and pharmacy chain Loblaw Cos Ltd’s (L.TO) quarterly profit topped analysts’ estimates on Wednesday, driven by higher food and drug same-store sales. The company, which sells everything from grocery to wireless mobile connections, said food retail same-store sales grew 0.8 percent while drug retail same-store sales rose 1.7 percent. The Brampton, Canada-based company, like other retail stores, has been refurbishing and expanding its online presence to carve out more market share in the face of stiff competition from companies such as Amazon.com Inc (AMZN.O).

OECD urges Canada to review tax system, boost competitiveness (BNN) The Organisation for Economic Cooperation and Development is warning that Canada risks being left behind in the global race for investment dollars if it doesn’t respond to U.S. tax reform, joining a growing chorus of voices that are sounding the alarm on the country’s competitiveness. The OECD said in a report Monday that tax reform in the United States has made Canada a less attractive place to do business, and urged the Canadian government to reassess its own tax system.

Ontario accountability officer to probe Ford’s cancellation of cap and trade (BNN) Ontario’s fiscal watchdog said Tuesday it will examine the new Progressive Conservative government’s cancellation of the cap-and-trade program in order to determine how much that decision will end up costing the province. Financial Accountability Officer Peter Weltman said the work on the review, which was requested by Opposition Leader Andrea Horwath, was already underway. « There are some key considerations with cap-and-trade, » Weltman said. « We need to get more detail from the government as to how they intend to manage those considerations. »

Overnight markets

Overview: US 10yr note futures are up 0.052% at 119-20, S&P 500 futures are down -0.18% at 2816, Crude oil futures are up 0.01% at $68.53, Gold futures are up 0.6% at $1242, DXY is down -0.14% at 94.476, CAD/USD is down -0.25% at 0.7621.

US Economic Data

Canadian Economic Data

There is 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 slightly weaker, 10Y 2.96% , prices near bottom of o/n  4 tick range in TY futures on better than avg volume (~382k).  Equities firmer, (S&P +5, Nasdaq +21), core EGB yields higher as well on stronger PMIs (German 57.3 vs 55.5), while 10y JGBs are 2 bps lower after yesterday’s BOJ inspired rout. US $35bln 2Y auction at 1:00PM, followed by $36bln 5Y & $30bln 7Y Wed and Thurs, the WI 2Y 1.638% or ~10bps cheaper than June auc.  The long end of the tsy curve should benefit rom m/e extension (BB index +0.6yrs). GOCs trading lower, 0.5bps wider vs tsys , provis closed 0.5bps tighter on the selloff in GOCs – the BOC auctions $3bln in new June 2029 bonds tomorrow – the current 5.75/29 ~2.272% . The last 10Y auction on June 20th was for $2.2bln June 28s, so this is an $800mln/36% increase – which could weigh on the sector. 

News headlines

China Unveils New Measures to Aid Growth Amid Trade Uncertainty (Bloomberg) China unveiled a package of policies to boost domestic demand as trade tensions threaten to worsen the nation’s economic slowdown, sending stocks higher. From a tax cut aimed at fostering research spending to special bonds for infrastructure investment, the measures announced late Monday following a meeting of the State Council in Beijing are intended to form a more flexible response to “external uncertainties” than had been implied by budget tightening already in place for this year.

Alphabet Results Support Confidence in Face of EU Curbs (Bloomberg) Google executives projected confidence in Android and other businesses, giving investors no signal that a costly regulatory crackdown in Europe would curb sales and profit anytime soon. Parent company Alphabet Inc. posted second-quarter results that walloped Wall Street expectations, while Chief Executive Officer Sundar Pichai hinted at new untapped advertising opportunities and highlighted growth at video service YouTube and the cloud arm. The shares rose 4.5 percent in pre-market trading Tuesday, putting them on course for a record. 

Trump and Iran Leader Swap Taunts as Sanctions Loom (WSJ) After Iran leader refers to ‘the mother of all wars,’ president warns of consequences such as ‘few throughout history have ever suffered’. The Trump administration exchanged threats with Iran, turning to a longstanding security concern and a top foreign-policy focus of President Donald Trump’s key supporters. In a Twitter message addressed “To Iranian President Rouhani,” Mr. Trump wrote: “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”

Bitcoin has now gained 35% from recent lows as prices rally back above $US8,000 (Business Insider) Bitcoin climbed back above the $US8,000 mark in Asian trade this afternoon for the first time since late May. The world’s biggest cryptocurrency has now rallied by around 35% since dipping below $US5,900 at the end of June.

Alphabet jumps after big earnings beat (CNBC) Google parent company Alphabet reported its Q2 earnings Monday afternoon, with a big beat sending its stock jumping after-hours. Wall Street will be paying close attention to the company’s traffic acquisition costs and capital expenditures. 

World markets rally on strong US corporate earnings (Financial Post) World markets rallied on Tuesday, gaining momentum from an upbeat day in Asia and from U.S. corporate earnings. But downbeat purchasing managers’ index readings hinted at underlying worries. This week brings earnings from Facebook and Twitter, both of which remain under fire for their abilities to handle fake accounts and false information on their respective platforms. Facebook reports Wednesday afternoon, and Twitter reports on Friday morning. Amazon.com Inc. is on the docket for Thursday afternoon, and can also be considered an advertising giant as it pulls in billions from selling ads on its site.

Goldman says an all-out trade war would lower earnings for US companies by 15% (CNBC) If « tensions spread » and a 10 percent tariff were imposed on all U.S. imports, Goldman says, it would lower its 2019 EPS estimate by 15 percent to $145 a share. Goldman economists now assign a 60 percent probability that the U.S. imposes tariffs on the recently targeted $200 billion of imports from China. Certain tactics, such as investing in companies with higher domestic sales, would likely outperform if the trade dispute worsens, Kostin added. 

Overnight markets

Overview: US 10yr note futures are up 0.013% at 119-16, S&P 500 futures are up 0.41% at 2823.5, Crude oil futures are up 0.71% at $68.37, Gold futures are up 0.13% at $1236, DXY is down -0.16% at 94.48, CAD/USD is down -0.21% at 0.7607.

US Economic Data

Canadian Economic Data

There is no Canadian Economic Data for today.

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update Tsys slightly higher, narrow overnite range on avg volume in TY futures, US 10Y 2.89%, equity futures paring losses (S&P +1, Nasdaq -13). Risk off tone after Trump tweet on Iran,   Tsy curve little changed after Trump’s comments on the Fed & rates led to the largest weekly steepening since Feb (+5bps 5s30s ). Fed is blackout through August 1st FOMC, slow data week with Q2 GDP Friday. Bunds/gilts lower & steeper, G20 focus on trade tensions, weakness in Chinese currency. GOCs trading lower, 1bp wider vs tsys – May Wholesale Sales +1.2% vs 0.7% exp. GOC yields 3-5bps higher on the week after strong CPI/Retail Sales prints. 

News headlines 

One Dead, 13 Wounded After Gunman Opens Fire in Toronto (Bloomberg) A man firing a handgun into restaurants and cafes as he walked along a Toronto street shot 14 people, killing one of them, before dying after an exchange of gunfire with police late Sunday, police said. Police Chief Mark Saunders did not rule out terrorism as a motive in the shooting in the city’s Greektown neighborhood.

BOJ Policy Change Speculation Roils Markets (Bloomberg) A dramatic day for Japan’s debt market saw yields surge on media reports of possible changes to the nation’s ultra-loose monetary policy, spurring the central bank to offer to buy an unlimited amount of bonds. The yield on 10-year government securities soared as much as six basis points to 0.09 percent, its biggest increase in almost two years, pulling the yen higher and weighing on stocks. While the yield came down after the purchase offer by the Bank of Japan, it then bounced back to just one basis point below the day’s high.

U.S. 4% GDP Growth Seen More ‘Luck of the Draw’ Than New Reality (Bloomberg) The U.S. economy may have hit 4 percent growth in the second quarter, the fastest since 2014 and a feat President Donald Trump will tout as a sign of his success. It’s more like a winning hand that doesn’t come up often. Gross domestic product expanded at a 4.3 percent annualized rate in the April-June period, according to the Bloomberg survey median, with forecasts ranging as high as 5.4 percent. The stars were aligned following 2 percent growth in the first quarter: The biggest tax overhaul since the Reagan era delivered another boost to consumer spending and business investment, and the volatile categories of inventories and trade probably juiced the number — helped by a likely temporary jump in soybean exports ahead of retaliatory tariffs.

Stocks Slip as Investors Mull Growth; Yen Climbs: Markets Wrap (Bloomberg) U.S. equity futures pointed to a lower open and European stocks fell on Monday as investors digested warnings from the world’s financial leaders about the impact of protectionism on growth. The yen rose and Japanese government bonds slid amid speculation over Bank of Japan stimulus. Futures on the Dow, S&P 500 and Nasdaq were in the red in the after Group of 20 finance chiefs said trade tensions threaten expansion as leading economies fall out of sync. The Stoxx Europe 600 Index retreated after sudden changes in leadership at Fiat Chrysler helped sink carmakers, while travel companies also declined after Ryanair posted a 20 percent decline in first-quarter profit.

TSX falls 0.65 percent, down for the week (Reuters) The Toronto Stock Exchange’s S&P/TSX fell 107.55 points, or 0.65 percent, to 16,435.46, the index also closed the week down 0.65 percent, snapping a two-week winning streak. Leading the index were Cameco Corp, up 4.1 percent, Eldorado Gold Corp, up 3.5 percent, and Labrador Iron Ore Royalty Corp , higher by 3.1 percent. Lagging shares were West Fraser Timber Co Ltd, down 8.1 percent after its quarterly results, Interfor Corp, down 6.1 percent, and Canopy Growth Corp, lower by 5.5 percent.

China says it won’t devalue currency to bolster exports (Reuters) China said on Monday the value of its currency is driven by market forces and that it has no intention to devalue the yuan to help exports, after Washington said it was monitoring the currency’s weakness amid the escalating bilateral trade row. The Chinese Foreign Ministry also said that threats and intimidation on trade would never work on China, after U.S. President Donald Trump said he was ready to impose tariffs on all $500 billion of goods imported from the country.

Canada to respond to U.S. tax reform challenge in fiscal update (BNN) Canada’s Liberal government will seek to address competitiveness challenges faced by the nation’s businesses in a budget update later this year amid pressure to respond to U.S. tax reform. Finance Minister Bill Morneau, in an interview with Bloomberg News in Buenos Aires on Saturday, said the key themes emerging for his fiscal update — a document the finance department typically releases in October or November — will include business taxation, oil pipelines and the renegotiation of the North American Free Trade Agreement.

JetBlue eliminates jobs as part of $300M cost-cutting push (BNN) JetBlue Airways Corp. (JBLU.O) is eliminating an unspecified number of jobs in the latest phase of its campaign to cut as much as US$300 million from operating costs by 2020. The reductions follow a reorganization of certain teams within the airline to streamline operations, the carrier said in a statement Friday. JetBlue declined to say how much it will save with the changes, while calling it a “meaningful step toward our corporate structural cost goal.”

Overnight markets

Overview: US 10yr note futures are up 0.039% at 120-01, S&P 500 futures are down 0% at 2800.75, Crude oil futures are up 1.07% at $68.99, Gold futures are up 0.01% at $1231.2, DXY is down -0.05% at 94.425, CAD/USD is down -0.08% at 0.7615.

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

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