Commentaires

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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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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