Commentaires

Market Update Tsys higher, near top of  narrow o/n range on light volume (250k TY), before non farm payrolls at 8:30 (+185k exp). USD index, equities slightly weaker, little reaction to imposition of tariffs between the US & China. GOCs higher, in line with tsys, before June Employment data, expected to show a 30k rebound in full time employment after May’s 31k decline.  Average hourly earnings, which showed the fastest rate of increase since April 2009 in May, are expected to  drop to 3.7% from 3.9%. 

News headlines

China’s Tariff Response Takes Effect After Trump Ignites Trade War (Bloomberg) President Donald Trump threatened to impose tariffs on every single Chinese import into America as the world’s two largest economies exchanged the first blows in a trade war that isn’t set to end anytime soon. After months of rhetoric, a 25 percent levy on $34 billion of Chinese goods entering the U.S. took effect just after midnight Washington time on Friday with farming plows and airplane parts among the products targeted. China hit back immediately via duties on U.S. shipments including soybeans and automobiles.

Payrolls Data Comes Up Against Trade War Artillery: Taking Stock (Bloomberg) With ink still drying on the U.S.-China tit-for-tat tariffs, S&P futures are sending the signal that the market is looking for the next shoe to drop, be it nonfarm payrolls due out shortly or a further ratcheting up of tensions. Trade rhetoric has been fatiguing markets for months, but what is different now is the follow-through from the administration. Strategists were mixed on how to play the development. Wells Fargo saw the damage as potentially “short-lived and contained,” whereas Credit Suisse was looking for the all-important details on implementation.

Stocks Slip as Tariffs Sour Mood Before Jobs Data: Markets Wrap (Bloomberg) European stocks edged lower and U.S. equity-index futures slipped after China said it’s retaliating to President Donald Trump’s trade tariffs that kicked in Friday. The dollar dipped as traders looked ahead to American jobs data, while Treasuries held steady. Carmakers and miners declined as the Stoxx Europe 600 Index inched toward its first drop in four days, while defensive stocks including utilities and food companies were among the gainers, underscoring the cautious mood. Deutsche Bank AG rose on speculation of takeover bids. Futures on the S&P 500, Dow Jones and Nasdaq declined ahead of the monthly U.S. payrolls figures due later on Friday. The euro posted a modest rise after a jump in German industrial production, while crude oil fell along with most industrial metals.

TSX futures down as oil slips due to Saudi boost, trade war (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Friday as oil prices dipped due to higher output from top exporter Saudi Arabia and under pressure from a trade war between the United States and China. Oil slipped towards $77 a barrel after Saudi Arabia told OPEC it raised production by almost 500,000 barrels per day last month. September futures on the S&P/TSX index were down 0.37 percent at 7:15 a.m. ET.

Deutsche Bank shares spike on report of interest from JPM and ICBC (Reuters) Shares in Germany’s troubled Deutsche Bank (DBKGn.DE) jumped by up to 6 percent on Friday following a magazine report that JPMorgan (JPM.N) and Industrial and Commercial Bank of China (ICBC) (601398.SS) may be interested in taking a stake. Business weekly WirtschaftsWoche, citing regional government sources, also said Chancellor Angela Merkel had met Axel Weber, the former Bundesbank head who is now chairman of Swiss bank UBS (UBSG.S), to sound out his views on Deutsche Bank.

Carbon tax proceeds to go directly to Ontario residents: Trudeau (BNN) Ontario residents, and not the newly elected Progressive Conservative government, will receive the proceeds of a carbon price imposed on the province by the federal government, Prime Minister Justin Trudeau said Thursday. Trudeau made the comments moments after he met with Ontario Premier Doug Ford, who has already begun the process of scrapping the province’s cap-and-trade system – in defiance of Ottawa’s insistence that all provinces put a price on greenhouse gas emissions.

Boeing’s US$4.75B Embraer deal leaves long to-do list (BNN) After Boeing Co. and Embraer SA spent months hammering out the framework for a US$4.75 billion plane making partnership, the companies are ready to take the next step: yet more talks. Crucial details about the financial underpinnings of the proposed venture announced Thursday still need to be figured out, a name needs to be chosen and a Brazil-based management team appointed. Officials are striving to finalize terms by late October or early November, and then they’ll seek the blessings of regulators in 10 countries.

Overnight markets

Overview: US 10yr note futures are up 0.078% at 120-11, S&P 500 futures are down -0.18% at 2733.5, Crude oil futures are down -0.6% at $72.5, Gold futures are down -0.24% at $1255.8, DXY is down -0.11% at 94.291, CAD/USD is up 0.01% at 0.7614.

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 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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