Commentaires

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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Market Update Tsys lower, 10Y 2.88% (+1bp), above avg volume in TY futures (378k), yields creeping higher with the USD since the start of Powell’s testimony, with a new high for the DXY index (95.55 +0.47). Prices weakening further after drop in weekly claims (lowest since 1969!), stronger Phili Fed. The Chinese Yuan fell to a one year low on trade tensions, the PBOC unwilling to step in at this point to protect the currency.  Weaker stocks (S&P fut- 9.5) not impacting tsys. Gilts continuing to push higher, 10Y yield new low since May 31st @ 1.21%, new low also in the 10Y gilt/tsy spd.  GOCs higher, outpeforming tsys 1-2 bps, data calendar picks up tommorow with CPI/Retail Sales. CIXCN 5Y yest @ 145.4 looked right on the screws (~15bps/yr), now 146/144.

News headlines

Trump Faces Growing Storm Over Car Tariffs as Lobbying Ramps Up (Bloomberg) The procession of industry groups and foreign governments lining up to oppose President Donald Trump’s car tariffs is starting to look like a rush-hour traffic jam. The Commerce Department will hold public hearings Thursday on its probe into whether imports of passenger vehicles imperil U.S. national security. Judging from the list of speakers, the administration will find little if any support for the idea that foreign cars undermine America’s ability to defend itself.

America’s Largest Aluminum Maker Is Getting Hit by U.S. Tariffs (Bloomberg) U.S. aluminum tariffs that were meant to protect the industry from foreign competitors are instead taking a bite out of the earnings of the nation’s largest producer. Alcoa Corp. lowered its 2018 profit projection as tariffs on imported aluminum present what Chief Executive Officer Roy Harvey is calling a “significant” headwind. The manufacturer has been hit with $15 million so far on material it produced mostly in Canada and shipped to the U.S. The company also cited higher energy costs and lower aluminum prices for the cut.

China’s Yuan Tumbles as PBOC Weakens Fixing, Easing Bets Mount (Bloomberg) China’s yuan slumped to a one-year low as the central bank showed little sign of intervening to slow the currency’s descent and bets for monetary policy easing mounted. The yuan dropped as much as 0.85 percent to 6.8032 per dollar in offshore trading, the lowest level since July 2017. The People’s Bank of China weakened its fixing beyond 6.7 on Thursday for the first time since the currency began tumbling in June. Signs of further monetary easing are also adding strains, with China Business News reporting policy makers have made efforts to encourage bank loans and investment in lower-rated corporate debt.

Dollar Extends Advance on Upbeat Fed; Stocks Drop: Markets Wrap (Bloomberg) The dollar extended gains in the wake of Federal Reserve signals that the American economy is on solid footing. A downbeat mood gripped equities, where U.S. futures and European stocks slipped, tracking Asian peers as the corporate earnings season continued to ramp up. The greenback strengthened a third day following Fed Chairman Jerome Powell’s upbeat assessment of the domestic economy, and after the Beige Book economic report showed growth holding up. The move was in stark contrast to that of the Chinese yuan, which fell to a one-year low as the country’s central bank showed little sign of intervening to slow the currency’s descent.

Canada PM shuffles Cabinet, seeks to reduce reliance on U.S. (Reuters) Canadian Prime Minister Justin Trudeau shuffled his Cabinet on Wednesday ahead of a challenging 2019 election, stressing the need to diversify trade away from the United States while leaving key ministers in place. Polls show the ruling Liberals are facing an increasing threat from the official opposition Conservatives, and Trudeau made 11 changes to freshen up his front bench. In a move designed to shore up domestic support, trade minister Francois-Philippe Champagne was shifted to the infrastructure portfolio, where he will oversee plans to spend billions of dollars on major projects.

TSX futures fall on lower oil prices (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Thursday as oil prices fell after government data showed an unexpected rise in U.S. crude stockpiles. The U.S. Energy Information Administration said on Wednesday U.S. crude production had reached 11 million barrels per day (bpd) for the first time. The country has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling.

Uganda Airlines eyes Bombardier, Airbus jets to revamp carrier (BNN) Bombardier Inc. said Uganda Airlines signed a firm order for four new CRJ900 jets as the East African nation seeks to resuscitate its moribund carrier after two decades. The country also signed a memorandum of understanding for two A330neo, Airbus SE said in a statement on its website, without providing cost details. “Based on the list price for the CRJ900 aircraft, the firm order is valued at approximately $190 million,” Montreal-based Bombardier said in a statement on its website.

CP Rail Q2 profits hurt by labour uncertainty (BNN) Canadian Pacific Railway Ltd. () says service interruptions related to labour negotiations and strike notices caused its net income to decrease 10 per cent in the second quarter despite higher revenues. The rail service experienced two labour disruptions during its second-quarter that created some inconvenience, additional cost and slowed momentum, said CP Rail CEO Keith Creel during a conference call with analysts Wednesday. The labour issues also curtailed revenue, he said.

Overnight markets

Overview: US 10yr note futures are down -0.052% at 120-00, S&P 500 futures are down -0.31% at 2807.25, Crude oil futures are down -0.76% at $68.24, Gold futures are down -1.06% at $1214.9, DXY is up 0.41% at 95.472, CAD/USD is up 0.6% at 0.7549.

US Economic Data

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

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Market Update Tsys trading slightly higher on very light volume ( 216k TY fut), 10Y 2.85% (-1bp),  rallying in Europe with gilts after UK June inflation came in below exp (2.4% vs 2.6%).  Fed Powell delivers second part of Mon policy testimony before the US House this morning, Fed Beige Book at 2:00ET.  US equity futures lower, crude  at a three week low (67.55), the USD extending gains to close to highs of June 28th on the back of Powell’s bullish assessment of the US economy.  In Canada, GOCs are higher, continuing outperformance vs tsys with the GOC curve at new narrows across major segments , 2s10s 18.6bps the narrowest since Sep 2007. Yesterday Moody’s upgraded  Canadian bank deposit notes and NVCC, and raised the outlook to Stable from negative, reversing its downgrade of the banks last summer as the new ‘bail-in’ regime affords greater loss protection for senior debt.

News headlines

U.K. Inflation Miss Adds a Little Doubt to BOE August Rate Hike (Bloomberg) An anticipated pickup in U.K. inflation failed to materialize last month, a development that sent the pound lower as investors pared bets for a Bank of England interest-rate increase next month. Summer sales meant clothes prices dropped sharply in June, and there was also drag from computer games. Annual inflation stayed at 2.4 percent, surprising economists who had expected the rate to accelerate to 2.6 percent. Core inflation also surprised to the downside, slowing to a 15-month low of 1.9 percent.

Trump Yields to Pressure in Delayed Retreat From Putin Remarks (Bloomberg) Donald Trump was still dug in, unwilling to back down a day after siding with Vladimir Putin over U.S. intelligence agencies in accepting the Russian leader’s denial of interfering in the 2016 U.S. presidential election. That changed after a meeting between the president and Vice President Mike Pence and Secretary of State Michael Pompeo, according to a person familiar with the deliberations.

Airbus’s Bombardier Gambit Gets Boost With $5.4 Billion Jet Deal (Bloomberg) Airbus SE’s bet on a slow-selling Canadian jetliner is paying off. The European planemaker reached its second 60-plane deal in a week for the A220 aircraft, this time through a pact with a planned U.S. carrier backed by airline entrepreneur David Neeleman. The agreement is valued at $5.4 billion before customary discounts, the same as last week’s order by JetBlue Airways Corp.

Dollar Extends Advance After Powell; Stocks Climb: Markets Wrap (Bloomberg) The dollar advanced for a second day after Federal Reserve Chairman Jerome Powell gave an upbeat assessment of the U.S. economy, helping spur declines in raw materials prices and emerging-market currencies. Stocks in Europe rose and S&P 500 futures edged higher. The greenback outperformed its major peers, helping push down an index of developing-nation currencies by the most in two weeks. China’s yuan approached its weakest close in almost a year. The pound tumbled after U.K. inflation came in below expectations, while CPI for the eurozone matched forecasts. A Bloomberg commodities gauge was further weighed down by oil futures, which tumbled through a technical support level on rising inventories. Treasuries drifted higher while European sovereign bonds were mixed.

TSX futures point to slightly higher open (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Wednesday, gaining strength from U.S. Federal Reserve Chairman Jerome Powell’s upbeat view on the strength of the world’s largest economy. Powell, in his congressional testimony on Tuesday, said he believed the United States was on course for years of steady growth and played down the risks to the economy from an escalating trade dispute.

Canadian finance minister set to keep job during shuffle (Reuters) Canadian Finance Minister Bill Morneau is set to stay in his post when Prime Minister Justin Trudeau shuffles his cabinet, which could be as early as this week, political sources said on Tuesday. Foreign Minister Chrystia Freeland will also not be moving, said the sources, who declined to be identified given the sensitivity of the situation. The next election is scheduled for October 2019 and Trudeau wants to freshen up his cabinet amid an increasingly strong challenge from the official opposition Conservatives, said the sources. Trudeau’s office declined to comment.

U.S. plans uranium import probe that may lead to tariffs (BNN) The Trump administration plans to open an investigation into whether uranium imports are harming national security, a move that could lead to tariffs on foreign shipments of the metal, said three people familiar with the matter. U.S. uranium producers Energy Fuels Inc. and Ur-Energy Inc. filed a petition in January asking the Commerce Department to investigate the matter under Section 232 of the 1962 Trade Expansion Act, the same provision the president used to slap tariffs on steel and aluminum imports. U.S. industry wants the government to shield it from competition from state-owned companies in countries including Russia, Canada and Kazakhstan.

Avison Young to buy European real estate company after Caisse investment (BNN) Avison Young Canada Inc. will use a new, $250 million investment by a big Canadian pension fund to recruit talent and make global acquisitions, including the purchase of a European real estate services company, Chief Executive Officer Mark Rose said. The Toronto-based firm announced Monday that Caisse de Depot et Placement du Quebec, Canada’s second-largest pension fund manager, had made a preferred-equity investment in Avison Young. Caisse will be entitled to designate three members of the company’s nine-member board of directors.

Overnight markets

Overview: US 10yr note futures are up 0.052% at 120-06, S&P 500 futures are down -0.06% at 2809.5, Crude oil futures are down -0.71% at $67.6, Gold futures are down -0.42% at $1222.1, DXY is up 0.41% at 95.372, CAD/USD is up 0.48% at 0.7545.

US Economic Data

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

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