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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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Market UpdateTsy yields 0.5-1.5bps higher, decent volume in TY futures (350k), US 10Y 2.853%. Equities lower as Trump “ready to go” with tariffs on $500bln in Chinese goods.  UK gilts also lower after higher than exp public sector borrowing for June as well as hawkish comments from BOE member Tenreyro attributing Q1 slowdown to weather. GOCs lower before key May Retail Sales/ June CPI.  Retail Sales expected to see a rebound from May’s 1.2% decline, while the m/m June CPI  is expected to be held back by a ~2% drop in gas prices. With RRB breakevens at their lows for the year (~170 bps on RRB26s), b/e’s look cheap esp given the inflationary impact of tariffs on autos etc. 

News headlines

Trump Says He’s ‘Ready To Go’ With $500 Billion in Tariffs on All China Imports (Bloomberg) President Donald Trump said he’s “ready to go” with $500 billion in tariffs on Chinese imports, saying the U.S. has been taken advantage of for too long. “I’m not doing this for politics. I’m doing this to do the right thing for our country,” Trump said in a CNBC interview aired Friday. “We are being taken advantage of and I don’t like it.”

Putin Hedges Trump Bet by Dumping Treasuries to Safeguard Assets (Bloomberg) Russian officials are hoping Vladimir Putin’s rapport with Donald Trump will lead to rapprochement with the U.S. But they’re not taking any chances. A U.S. Treasury report this week appears to show Russia liquidating dollar assets at a record pace, selling four-fifths of its cache of U.S. government debt, $81 billion worth, over a two-month period. It started in April, when the U.S. imposed the most onerous sanctions yet on allies of Putin.

Stocks Slip After Trump Tariff Talk; Dollar Dips: Markets Wrap (Bloomberg) U.S. equity futures edged lower with European stocks after President Donald Trump said he was “ready to go” with import tariffs on $500 billion of Chinese goods. Earlier in Asia stocks had reversed losses amid signs the Chinese central bank stepped in to stem weakness in the yuan. S&P stock-index futures declined along with the Stoxx Europe 600 gauge after Trump told CNBC he was ready to ratchet up protectionist measures “to do the right thing for our country”. Earlier, the Shanghai Composite Index posted the largest gain in a week as the offshore yuan paused a slide amid reports of intervention. The dollar dipped along with Treasuries. Italian bonds fell on concern that the finance minister may resign, though they pared the decline after a Treasury spokeswoman denied the reports.

Futures flat ahead of inflation, retail sales data (Reuters) Futures for Canada’s main stock index were little changed on Friday as investors awaited inflation and retail sales data. Canada’s annual inflation data is due at 8:30 a.m. ET. The annual inflation rate is expected to have risen 2.4 percent in June. Also, May retail sales is likely to have risen 1.1 percent after dropping 1.2 percent in April. September futures on the S&P/TSX index were down 0.02 percent at 7:15 a.m. ET.

Canada plays down Trump comments on NAFTA, sees trilateral deal (Reuters) Canada on Thursday played down U.S. President Donald Trump’s suggestion that he might seek separate trade deals with NAFTA partners Canada and Mexico, noting he has made similar comments before. Trump said on Wednesday the United States might hammer out a trade deal with Mexico, and then do a separate one with Canada later. Talks to modernize the North American Free Trade Agreement are moving slowly.

Canada will respond to potential auto tariffs with ‘proportional’ move: Ambassador to U.S. (BNN) The federal government has sent a blunt warning to the Trump administration — if it slaps Canada with auto tariffs, Canada will hit back. Canada’s deputy ambassador to the U.S. delivered the message Thursday in Washington during testimony at U.S. Commerce Department hearings. The department is investigating whether duties should be applied based on the premise auto imports pose a national security risk to the U.S. Putting levies on the highly integrated, economically critical North American auto industry and its supply chains would lead to large-scale layoffs on both sides of the border, numerous experts have argued.

Trudeau hopes to reduce provincial trade barriers with fall meeting (BNN) With Canadian companies facing a hardening of the border with the United States, Justin Trudeau wants to talk with his provincial and territorial counterparts later this year about breaking down trade barriers from within. The prime minister announced Thursday he will host a first ministers meeting in the fall aimed at making the country’s economy more interconnected. The gathering will likely also be the first opportunity for long-time Liberal MP Dominic LeBlanc to sit down face-to-face with all of the premiers as the federal minister responsible for intergovernmental affairs, a portfolio he took on when Trudeau shuffled his cabinet Wednesday.

Overnight markets

Overview: US 10yr note futures are down -0.052% at 120-08, S&P 500 futures are down -0.11% at 2802.25, Crude oil futures are up 0.53% at $69.83, Gold futures are down 0% at $1224, DXY is down -0.17% at 95.006, CAD/USD is down -0.28% at 0.7557.

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

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