Commentaires

Market Update It has been a rather uneventful Asian and start to European trading session with US Treasuries currently trading mixed, curve touch flatter as 30-yr outperforms the rest of the curve, on mild return to risk-on sentiment. 10-yr treasury yield is unchanged at 2.897% and the 5s/30s yield spread 1.2bp flatter at 24.8bps. Less risk on than cooling of risk-off tone, no new revelations on US/China tit-for-tat tariff-fest while EU slaps E2.8B tariffs on US, not much economic data seen to direct markets and therefore volumes have been low. With little US data due today as well attention will remain on UK and European politics, central bank officials at ECB forum and OPEC meeting in Vienna. Futures trade mildly lower, near low end narrow overnight range on modest volume, 10s lead decline. Fed Chair Powell participates in policy panel w/ECB Draghi and BoA Lowe from Portugal at 9h30 am. 

News headlines

Trump threatens China with new tariffs on another $200 billion of goods (CNN Money) President Donald Trump just raised the stakes in the fight with China over trade. The White House said Monday evening that if China goes through with its promise to retaliate against the US tariffs announced last week, the United States will impose tariffs on an additional $200 billion worth of Chinese goods. « Further action must be taken to encourage China to change its unfair practices, open its market to United States goods, and accept a more balanced trade relationship with the United States, » Trump said in a statement.

U.S. Quits UN Human Rights Council, Saying It’s Anti-Israel (Bloomberg) The Trump administration withdrew from the United Nations Human Rights Council on Tuesday, making good on a pledge to leave a body it accused of hypocrisy and bias against Israel. “For too long, the Human Rights Council has been a protector of human rights abusers, and a cesspool of political bias,” Nikki Haley, the American ambassador to the UN, said Tuesday at the State Department in Washington. She said the decision was an affirmation of U.S. respect for human rights, a commitment that “does not allow us to remain a part of a hypocritical and self-serving organization that makes a mockery of human rights.”

These Stocks Have Left Amazon Behind This Year (WSJ) Share prices of department stores like Macy’s and Dillard’s have risen more than 50%. Everyone knows that Amazon.com AMZN 0.64% has left retailers for dead. Just don’t tell investors in some stocks of big store chains. Shares of retailers are enjoying their biggest rally in years, an unexpected turnaround fueled by strong earnings, buoyant consumer confidence and a nationwide shopping spree.

Canada Senate approves recreational use of marijuana (Reuters)  Canada’s upper house of parliament on Tuesday approved a revised bill to legalize recreational marijuana, setting the stage for the country to become the first Group of Seven nation to legalize cannabis.  The Senate voted 52-29 in favor of the revised bill from the elected House of Commons, paving the way for a fully legal cannabis market within eight to 12 weeks. Prime Minister Justin Trudeau’s Liberals had made legalizing recreational use of marijuana part of their successful 2015 election campaign, arguing the new law would keep pot out of the hands of underage users and reduce related crime.

Starbucks closing cafes; CEO calls performance ‘not acceptable’ (Reuters) Starbucks Corp (SBUX.O) forecast on Tuesday slower sales growth than Wall Street expected this quarter and plans to close about 150 U.S. cafes next fiscal year to boost performance, sending its shares down 2 percent after hours. The world’s largest coffee chain is facing competition both from upscale coffee houses and lower-priced fast-food chains like McDonald’s Corp (MCD.N) and Dunkin’ Donuts (DNKN.O). It has missed analysts’ estimates for same-store sales in the U.S.-dominated Americas region in five of the last six quarters.

After surrendering CSeries, Bombardier pushes regional plane revival (Reuters) As Bombardier surrenders hopes of securing a top spot in commercial aviation with the sale of its money-losing CSeries jet program to Airbus , the Canadian company is now drawing up plans to breathe new life into its older regional planes. Bombardier is shoring up its loss-making regional jets and turboprops with a mixture of hard-sell, cost-cutting and outsourcing. It is also growing its line of business jets after a cash squeeze and production delays forced it to cede a majority stake in its high-tech CSeries which aims to break into the market for mainline jets dominated by Airbus and Boeing.

Overnight markets

Overview: US 10yr note futures are down -0.026% at 119-26, S&P 500 futures are up 0.27% at 2773.75, Crude oil futures are up 1.03% at $65.74, Gold futures are down -0.21% at $1275.9, DXY is up 0.06% at 95.068, CAD/USD is up 0.09% at 0.752.

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

Market Update Tsys sharply higher in risk off, heavy volume in treasury futures ( 645k TY), US 10Y 2.88% (-3.5bps) lowest since June 1^st. USD index firmer , DXY 95.26 (+0.51) , S&P futures -29 (-1.0%). China/US trade war intensified overnight with US announcing 10% tariff on USD 200bln in Chinese goods. Core EGBs also sharply higher, GOCs outperforming tsys by 0.5-1bps with the CAD at a new year low. Provincial spreads firm despite the move lower in GOC yields. 

News headlines

China Vows to Retaliate as Trump Targets $200 Billion in Tariffs (Bloomberg) Trade tensions between the world’s two biggest economies intensified, with China vowing to retaliate « forcefully » against President Donald Trump’s threatened tariffs on another $200 billion in Chinese imports. « If the U.S. loses its senses and publishes such a list, China will have to take comprehensive quantitative and qualitative measures, » according to a statement from the Ministry of Commerce. It labeled the move « extreme pressure and blackmail, » and said it would retaliate with counter measures.

U.S. Homes Are a Lot Cheaper Than They Look, Harvard Study Finds (Bloomberg) Despite the long, stratospheric rise of home prices in the U.S., the inflation-adjusted monthly payment on the median single-family home in 2017 was less than in 1987, when home prices were lower but interest rates were higher, Harvard University’s Joint Center for Housing Studies found.

Trudeau Has Billions of Reasons to Dig In Against Trump on Dairy (Bloomberg) Justin Trudeau’s defense of Canadian dairy tariffs isn’t just about farmers and politics — it’s about debt, too. The prime minister squared off with Donald Trump this month over Canada’s “supply management” system, which sets quotas for dairy, eggs and poultry and charges high tariffs above that threshold. Despite a U.S. surplus on dairy trade with Canada, the president wants to blow apart the Canadian system.

Deepening Trade Dispute Triggers Risk-Off Moves: Markets Wrap (Bloomberg) Investors dumped riskier assets and headed toward havens on Tuesday as a trade dispute between the world’s two largest economies showed signs of deepening and accelerating. Stocks dropped, Treasuries rallied and the dollar climbed with the yen. The Stoxx Europe 600 retreated for a third day and U.S. equity futures slumped, tracking losses across Asia, where Chinese shares plunged after reopening following a holiday. President Donald Trump warned America will slap tariffs on more Chinese goods, and the Asian nation threatened retaliation. The stock move in Europe was tempered by a weaker euro, however, which dropped after the latest’s dovish message from ECB President Mario Draghi. The British pound was also under pressure as U.K. Prime Minister Theresa May prepares for another knife-edge Brexit vote on Wednesday.

Canada mulls auto firms aid in response to U.S. tariffs threat (Reuters) Canada is considering all options, including providing financial aid to the auto industry, to cope up with possible U.S. tariffs, a senior federal minister said, even as officials expressed doubt Washington would follow through with a threat to impose the punitive measures. U.S. President Donald Trump last month said he might impose tariffs of up to 25 percent on foreign-built automobiles, which could cause major economic damage to Canada and a heavily integrated North American industry.

Futures lower as U.S.-China trade spat escalates (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Tuesday as the latest tariff threat on Chinese goods by the United States intensified a trade dispute between the world’s two largest economies. U.S. President Donald Trump on Monday threatened to impose a 10 percent tariff on $200 billion of Chinese goods to which Beijing warned it would fight back with “qualitative” and “quantitative” measures.

Bombardier shares top $5 for first time since 2013 on Goldman boost (BNN) Shares in Bombardier Inc. surged above $5 for the first time in nearly five years Monday, after a Goldman Sachs analyst upgraded the stock to a “buy” citing an “impressive” operational turnaround.   Goldman Sachs analyst Noah Poponak raised Bombardier’s price target to $7 per share after reinstating coverage of the stock, pointing to the growth potential in Bombardier’s large cabin business jets and high expectations for CSeries orders.

Bank of Canada calls on markets to prepare for benchmark changes (BNN) The Bank of Canada called on financial institutions to get up to speed on changes that global regulators are making to interest rate benchmarks that underpin trillions of dollars in securities. In an update on the Canadian central bank’s work on the issue of benchmarks, Deputy Governor Lynn Patterson said financial organizations need to begin considering their “readiness” for coming changes, including potential enhancements to the current benchmark regime in Canada.

Overnight markets

Overview: US 10yr note futures are up 0.3% at 119-31, S&P 500 futures are down -1.07% at 2750, Crude oil futures are down -1.67% at $64.75, Gold futures are down -0.4% at $1275, DXY is up 0.49% at 95.22, CAD/USD is up 0.56% at 0.7533.

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

Market Update Tsys higher on avg volume (257k), US10Y 2.905% (-1.5bps), escalation in US/China trade , USD index slightly lower, equities weaker (S&P fut -18).  German bunds bid on back of Merkel immigration crisis, while trade war also supporting EGBs, 10Y bund below 0.40% @ 0.39% a two-week low.  Crude 65.00 rallying $2 over the course of the o/n session in advance of OPEC meeting , rumours of more modest output hike (300-600k), also Goldman sees oil back over $80 despite OPEC increase. GOCs higher in lines with tsys, Can/US 4-6bps tighter over the week, this week relatively quiet in terms of data unti Friday retail sales/CPI. Provis closed 1-1.5bps weaker Friday, this morning spds another 1-1.5bps wider. 

News headlines

OPEC Discusses Output Hike of Up to 600,000 Barrels a Day (Bloomberg) OPEC members are discussing a compromise agreement that would see an oil production increase of between 300,000 and 600,000 barrels a day over the next few months, according to people briefed on the talks.

Xi to Counter Trump Blow for Blow in Unwanted Trade War (Bloomberg) The first punches have been thrown in a potential trade war and now Xi Jinping is poised to match Donald Trump blow for blow. The next flurry of jabs may be imminent. In his announcement of tariffs on Chinese goods on Friday, Trump vowed additional duties if China retaliated — which Beijing immediately did. Details of U.S. restrictions on investments from China will follow in the next two weeks, according to Trade Representative Robert Lighthizer.

Head of VW’s Audi arrested in Germany over diesel scandal (Reuters) German authorities arrested the head of Volkswagen’s luxury arm Audi on Monday, the most senior company official so far to be detained over the carmaker’s emissions test cheating scandal.

China’s tariffs on U.S. oil would disrupt $1 billion monthly business (Reuters) China’s threat to impose duties on U.S. oil imports will hit a business that has soared in the last two years, and which is now worth almost $1 billion per month.

Emerging Asia hit by biggest foreign investor exodus since 2008 (BNN) A falling tide lowers all boats, it seems. Amid an exodus from emerging markets, investors are even pulling out of Asian economies with solid prospects for growth and debt financing. Overseas funds are withdrawing from six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 — yanking US$19 billion from India, Indonesia, the Philippines, South Korea, Taiwan and Thailand so far this year, according to data compiled by Bloomberg.

Magnitude 6.1 earthquake kills three people, shutters factories in Japan’s Osaka (CNBC) A magnitude 6.1 earthquake hit Japan’s Osaka on Monday morning, with three people reported dead, according to government officials and broadcaster NHK. No tsunami warning was issued. Prime Minister Shinzo Abe said authorities were assessing damage and that its top priority was the safety of residents.

Trump says he requested end to ‘war games’ in talks with North Korea’s Kim Jong Un (NBC News) “Holding back the “war games” during the negotiations was my request because they are VERY EXPENSIVE and set a bad light during a good faith negotiation,” Trump said on Sunday morning.

U.S. lawmakers warn Canada about Chinese telecom giant Huawei (The Globe and Mail) Senior lawmakers on U.S. intelligence committees are warning the Trudeau government that Chinese smartphone maker Huawei – which has turned Canada into a key research centre for next-generation mobile technology – is a national-security threat to a network of Canada’s allies.

U.S. auto tariffs could spark global trade war, Scotiabank warns (The Globe and Mail) U.S. tariffs on vehicles and auto parts would harm Ontario and key auto producing regions of the United States, but the greater danger is that they could spark an all-out trade war, Bank of Nova Scotia economists say.

Trump Policy of Separating Migrant Families Threatens to Engulf Immigration Talks (WSJ) Divided GOP lawmakers on Capitol Hill are trying to show results on the issue of illegal immigration ahead of midterm elections.

Overnight markets

Overview: US 10yr note futures are up 0.131% at 119-24, S&P 500 futures are down -0.69% at 2765.25, Crude oil futures are up 0.17% at $65.17, Gold futures are up 0.34% at $1282.8, DXY is down -0.02% at 94.768, CAD/USD is down -0.15% at 0.7584.

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