Commentaires

Market Update Tsys trading lower, limited reaction to lower than exp ADP (177k vs 190k), 10Y 2.85%, above avg volume in TY futures (422k). ‘Risk on’ rally in stocks(S&P futures +21, Nasdaq fut +62) as EU officials are considering reducing tariffs on imported cars from the US, despite tomorrows scheduled implementation of $34bln in tariffs on Chinese goods.  ISM Non-Manufacturing and FOMC Minutes still on deck. GOCs recovering earlier losses along with the bounce in tsys, spds 1-2bps tighter vs US. The BOC auctions $3.0bln in reopened 2% Sep 1 2023s with the roll vs current 5s 3.0/2.8 -fairly steady over the last few weeks despite 20bp flattening in the underlying 2s10s curve since the last 5Y auction May 17^th. 

News headlines

Toronto Home Sales Post Biggest Jump Since 2004 (Bloomberg) Toronto home sales jumped the most in more than a decade last month, a sign that Canada’s biggest housing market is rebounding from the chill brought on by tighter lending regulations and higher borrowing costs in the past few months. Sales in June rose 2.4 percent from the same period a year ago, according to data released Thursday from the Toronto Real Estate Board. Seasonally adjusted sales climbed 18 percent from May, the biggest monthly gain since 2004.

The China-U.S. Power Struggle Is Just Beginning (Bloomberg) Chinese President Xi Jinping has an ambitious master plan for his country’s transformation into a wealthy, technology-driven global economic power. And U.S. companies need not apply. That’s why the current trade rumble between the U.S. and China, in which the Trump administration is threatening to slap tariffs on $34 billion of Chinese imports and Beijing promises to respond in kind, is far more than just a spat over market restrictions, intellectual property rights and the epic U.S. deficit.

May Fights for Brexit Plan as Austria Raises Idea of Extension (Bloomberg) As U.K. Prime Minister Theresa May fights to win Cabinet backing for her Brexit plan with the clock ticking down to exit day, Austria raised the prospect than an extension to the negotiating deadline could be considered. Austria holds the European Union’s rotating presidency, a role it will keep through the end of the year — a crucial period in Brexit talks. Chancellor Sebastian Kurz said on Thursday a no-deal Brexit must be avoided at all costs. Asked if that meant extending the March 2019 deadline for negotiations, he said: « We will see. »

U.S. Stock Futures Follow Europe Jump; Euro Rises: Markets Wrap (Bloomberg) U.S. equity futures rallied alongside European peers, while Asian shares dropped to a nine-month low as traders prepare for the implementation of fresh trade restrictions between America and China. The euro advanced on the prospect of earlier-than-anticipated monetary tightening. Futures on the S&P 500, Nasdaq and Dow all jumped, while European automakers headed for the biggest gain in two years on hopes of a cross-Atlantic tariff deal. That helped spur the Stoxx Europe 600 Index after gauges in Tokyo, China and Hong Kong all fell. The dollar and Treasuries both dropped, while the yuan held steady. Commodities, heavily exposed to international trade, edged lower. Iron ore futures in Singapore hit the lowest since November.

TSX futures rise on higher oil prices (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Thursday as oil prices rose due to potential disruptions to flows from Iran and the Middle East. Crude prices had earlier dropped after U.S President Donald Trump demanded OPEC to cut prices. However, an Iranian threat to block shipments through the Strait of Hormuz, a major route for transporting crude in the Gulf, supported prices.

Canadians ‘ready to go to war’ with U.S. over tariff fight (BNN) A majority of Canadians are ready to boycott the U.S. in response to the Trump administration’s recent trade actions, according to a new poll. The Nanos Research survey, conducted for CTV News, reveals the majority of Canadians are likely to cut back on travel to the U.S. (73 per cent) and boycott goods made south of the border (72 per cent). Furthermore, 68 per cent of respondents said they’re likely to avoid U.S. retailers in Canada. Canadians are “ready to go to war,” Nik Nanos, one of the country’s top public opinion pollsters, told CTV News’ Melanie Nagy.

New finance minister declares Ontario is ‘open for business’ (BNN) Ontario’s new finance minister wants to get the message out that the province is open for business. In his first television interview since being appointed Ontario’s finance minister, Vic Fedeli told BNN Bloomberg on Wednesday that he expects his new government to create a better investment environment in the province. “We are lowering corporate taxes, we are lowering small business taxes, we are lowering hydro costs, eliminating cap-and-trade,” Fedeli told BNN Bloomberg. “Those are all key signals to the business community that Ontario is open for business.”

Overnight markets

Overview: US 10yr note futures are down -0.117% at 120-06, S&P 500 futures are up 0.76% at 2734, Crude oil futures are up 0.12% at $74.23, Gold futures are up 0.21% at $1256.1, DXY is down -0.27% at 94.273, CAD/USD is down -0.13% at 0.7618.

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 US tsys  lower, 10Y 2.877%, as equity markets are strong (S&P fut +11, while crude has reached multi year highs despite Saudi reaffirming 1mln bbl production increase. Light data day in the US with auto sales, factory orders and early close for July 4^th holiday.  Bunds/gilts lower – Eurozone producer prices rose 3% in May above 2.7% exp and the largest increase in a year. The Chinese currency (CNY) pared losses after the Chinese central bank made comments meant to reassure investors, saying that China’s fundamentals were strong. GOCs trading slightly higher, underperforming tsys by ~1bp, 10Y 2.15%.  Odds of a rate hike at next week’s BOC have risen to ~84% based on OIS, from 58% a week ago. The latest Business Outlook Survey (BOS) released Friday showed Business optimism rising to the second highest level on record in Q2, even as NAFTA uncertainty , trade tarrifs are expected to weigh on activity somewhat going forward. 

News headlines

Canada Strikes Back at Trump, and Condo Buyers Will Pay the Price (Bloomberg) Condo buyers in Canada’s already pricey markets may be the next to pay up as the trade battle with the U.S. radiates through the construction industry. Canada imposed a 25 percent tariff on U.S. steel imports on July 1, retaliating against levies President Donald Trump slapped on goods from its northern neighbor a month ago. Prime Minister Justin Trudeau’s government is also said to be preparing quotas and tariffs for other countries to prevent a flood of steel rushing in to undercut prices.

China Won’t Weaponize the Yuan in Trade War, PBOC Official Says (Bloomberg) Top Chinese central bank officials on Tuesday vowed to keep the nation’s currency stable, helping to reverse declines, and pledged that yuan devaluation won’t be used as a weapon in the trade conflict with the U.S. People’s Bank of China Governor Yi Gang said China will « keep the yuan exchange rate basically stable at reasonable and balanced level, » a repetition of standard language that helped stoke speculation that policy makers are prepared to take tougher actions to arrest the plunge in the currency.

China’s U.S. Exports Cooled in First Half as Tariffs Approach (Bloomberg) Growth in China’s exports to the U.S. slowed significantly in the first half of 2018, according to official data released Tuesday, indicating that the brewing trade conflict between the two nations may already be taking a toll. China’s exports to the U.S. expanded 5.4 percent in the first half, 13.9 percentage points lower than the same period last year, the General Administration of Customs said in a statement on its website. Chinese exports to the U.S. in June rose 3.8 percent, 23.8 percentage points lower than the same month in 2017.

Stocks Rally as China Talks Up Yuan; Oil Advances: Markets Wrap (Bloomberg) Most stock markets rebounded on Tuesday, with European shares and U.S. futures rallying following a mixed Asian session in which all eyes were on China’s yuan. The euro rose as Germany’s coalition government dodged a crisis over migration. Telecom companies led an advance in the Stoxx Europe 600 Index, while futures on the S&P 500, Dow Jones and Nasdaq all pointed to a firmer open. Miner Glencore Plc headed for the biggest decline in two years, however, after saying it has been subpoenaed by the U.S. Department of Justice. Hong Kong stocks slumped as the city returned from a holiday, but emerging-market shares pared declines as China’s central bank said it won’t use the yuan as a tool in a trade conflict.

Better-than-expected Canada growth boosts rate hike prospects (Reuters) Canada’s economy shrugged off the effects of bad weather to post unexpected growth in April and business optimism rose to near record levels in the second quarter, pushing up the Canadian dollar and boosting odds of an interest rate hike next month. Statistics Canada said on Friday that GDP rose by 0.1 percent from March, the seventh time in the last eight months that the economy has expanded. Analysts in a Reuters poll had predicted no change.

Canadian populist Doug Ford sworn in as Ontario province premier (Reuters) Populist leader Doug Ford was sworn in as Ontario’s new premier on Friday, ending 15 years of Liberal rule in Canada’s most populous province, and he promised to drop a program aimed at reducing greenhouse gas emissions. Ford and his Progressive Conservative party swept to power in Ontario’s parliamentary elections earlier this month with a vow to cut personal and corporate taxes. Ford, 53, is the brother of the late mayor of Toronto Rob Ford, who made headlines in 2013 when he admitted to smoking crack cocaine.

Element AI aims for unicorn status with record Canadian financing (BNN) Element AI Inc., a Montreal-based startup that deploys artificial intelligence software within businesses that don’t have experience with the technology, is looking to raise as much as $250 million in a new round of venture-capital funding, according to four sources familiar with the matter. The people said the Series B financing, if successful, would give Element AI a valuation of $1 billion, placing it among a special class of Canadian startups with valuations north of the billion-dollar mark. It would also be the biggest such venture-capital funding round ever for a startup in Canada and yet another sign of the maturation of the country’s technology sector.

Overnight markets

Overview: US 10yr note futures are down -0.104% at 119-31, S&P 500 futures are up 0.45% at 2739.5, Crude oil futures are up 1.05% at $74.72, Gold futures are up 0.57% at $1248.8, DXY is down -0.28% at 94.608, CAD/USD is down -0.17% at 0.7595.

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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