Commentaires

Market UpdateTsys trading stronger, off London morning highs, tale of two sessions w/much of O/N action occurring in London hours, Tsys steadily extending top of range, futures volume rather heavy at appr 475k in TYU. Light data day,Fed VC Quarles on International Regulations at 11h00, Bos Fed Pres Rosengren at 12h15. Trade concerns hitting global equities, geopol tension European divisions on immigration and reform lifted EGBs and Tsys in-turn. May durable goods new orders -0.6% vs -0.8% exp, led down by -1.0% in transport. Durables orders were revised upward -1.0% in April (prev -1.6%). Durable goods ex-trans orders -0.3% vs +0.4% exp after three straight gains. This weaker-than-expected reading reflected declines in primary metals, fabricated metals, computers and electronic products, and electrical equipment. There were gains in machinery and the all other durables category. 

News headlines

China’s Yuan Tumble Blindsides Traders, Spurs Worry Over Impact (Bloomberg) Global investors might shrug at a bear market in Chinese domestic stocks — largely walled off from the rest of the world. But a tumble in the yuan that’s blindsided currency forecasters is now triggering warnings of potential contagion. Greg McKenna, a three-decade foreign-exchange market veteran, said “I don’t talk about the yuan much” in morning notes to clients. But that wasn’t the case Wednesday. “Folks you have to watch emerging markets and the Chinese yuan,” he wrote.

Tech Stocks Are Killing It in Canada (Bloomberg) Canadian technology stocks are trading near a decade-high as they ride booming U.S. demand for everything from e-commerce to office software and stay far from the global trade fray. The S&P/TSX Composite’s technology index has gained about 23 percent this year, trouncing the 6.1 percent rise of its nearest competitor, industrials. Tech now sports a 4 percent weighting in the benchmark equity index, the highest since 4.2 percent in 2009 when BlackBerry Ltd. ruled the smartphone market.

Trump Seeks to Bolster Government Panel to Curb China Investment (Bloomberg) The White House will push Congress to strengthen an inter-agency panel that it will employ as its main tool to curb Chinese investments in sensitive U.S. technologies, according to senior Trump administration officials. The strategy is a less confrontational approach toward China than many had expected. The administration had considered employing a little-used national emergency law called the International Emergency Economic Powers Act of 1977 to curb prospective investments, people familiar with the plan said earlier this month.

Stocks Erase Decline as Trump Trade Talk Softens: Markets Wrap (Bloomberg) U.S. equity futures erased a drop and European stocks gained as President Donald Trump appeared to step back from the brink of a trade war with China. Oil built on gains after the U.S. stepped up pressure on Iran. U.S. equity-index futures reversed course and the Stoxx Europe 600 Index rallied as senior Trump administration officials said the U.S. will take a less confrontational than expected approach toward the Asian nation. Earlier stocks in Asia had dropped, with Chinese equities extending their decline as the nation’s currency slipped. West Texas Intermediate crude traded at a one-month high as America demanded that Iran’s customers halt imports.

U.S. tariffs funnel Asian steel to Canada’s oil industry (Reuters) Steel pipes and tubes used in drilling and transporting crude oil flooded into Canada this spring, a Reuters analysis shows, as U.S. President Donald Trump’s steel tariffs forced producers from Asia to Europe to seek new markets. Canada is a major steel producer in its own right and the biggest supplier to the United States, but the country is swamped by supply from India and South Korea which underscores the global shift in trading patterns following the Trump administration’s decision to place tariffs on steel and aluminum imported to the United States.

Corus Entertainment’s quarterly revenue misses estimates (Reuters) Canada’s Corus Entertainment Inc (CJRb.TO) on Wednesday reported quarterly revenue that missed Wall Street estimates, hit by weakness in its television business. Revenue from its television business, which includes brands such as Shaw Media and HistoryGo, fell nearly 5 percent to about C$403 million ($303 million), missing analysts’ estimate of C$416 million, according to Thomson Reuters I/B/E/S.

Morneau vows to support Canadian businesses amid trade war (BNN) Finance ministers from across the country weighed the consequences Tuesday of Canada’s intensifying trade dispute with the United States as the federal government worked to finalize details of its retaliation against Donald Trump’s tariffs. The twice-yearly gathering of finance chiefs took place in Ottawa just days before Canada is set to impose retaliatory tariffs on products from the U.S., which is by far its largest trading partner. The federal government’s move, a tit-for-tat response to the Trump administration’s stinging levies on steel and aluminum imports, will take effect Sunday.

Overnight markets

Overview: US 10yr note futures are up 0.065% at 120-03, S&P 500 futures are up 0.09% at 2731, Crude oil futures are up 1.01% at $71.24, Gold futures are down -0.1% at $1258.7, DXY is up 0.15% at 94.822, CAD/USD is down -0.09% at 0.7521.

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 US tsys slightly higher on avg volume in TY futures (317k), 10Y 2.875%, off session highs as equity futures erase eralier losses. Data includes Richmond Fed , Case Shiller HP & Consumer Confidence. The US auctions $34bln in 2Y notes at 1:00ET. Focus on trade after Navarro said late yest there were no plans to impose investment restrictions on China, this morning Trump tweeted his frustration with Harley Davidson’s plans to shift production overseas to deal with EU retaliatory tariffs. GOCs opening well bid, outperforming tsys by 1 – 1.5bps across the curve, 10Y continues to outpeform, 10Y butt at a two month low, 7bps tighter on the week. Provis another 0.5bps weaker on the back of yesterday’s 1bp weakening. 

News headlines

Bear Market in Stocks, Weak Yuan Show China Problems Piling Up (Bloomberg) A deepening sense of unease is rippling through China’s financial markets. The benchmark Shanghai stock index has tumbled 20 percent in just five months to enter a bear market. The yuan is heading for its longest losing streak in four years in Hong Kong. Corporate defaults are mounting.

Mueller Poised to Zero In on Trump-Russia Collusion Allegations (Bloomberg) Special Counsel Robert Mueller is preparing to accelerate his probe into possible collusion between Donald Trump’s presidential campaign and Russians who sought to interfere in the 2016 election, according to a person familiar with the probe. Mueller and his team of prosecutors and investigators have an eye toward producing conclusions — and possible indictments — related to collusion by fall, said the person, who asked not to be identified. He’ll be able to turn his full attention to the issue as he resolves other questions, including deciding soon whether to find that Trump sought to obstruct justice.

Trump’s Tussle With Trudeau Wallops Canadian Consumer Confidence (Bloomberg) Escalating trade friction with the U.S. is spooking Canadian households and sending consumer confidence into a slide. Polling by Nanos Research for Bloomberg News shows a sharp deterioration in household sentiment gauges since Donald Trump and Prime Minister Justin Trudeau squared off over trade issues after a Group of Seven summit two weeks ago, which included a threat by Trump that the dispute is “going to cost a lot of money for the people of Canada.” The decline has been most acute in Canadians’ expectations for growth, which have fallen to the weakest levels in more than two years.

Dollar Advances as Stocks Grapple With Trade Fears: Markets Wrap (Bloomberg) The dollar climbed and U.S. stock futures turned lower as investors continued to fret over the outlook for global trade. European equities gave up half of their earlier gains while Treasuries edged higher as markets grappled for direction in the wake of Monday’s sell-off. Contracts for the S&P 500 Index fluctuated before falling while the Stoxx Europe 600 Index struggled to hold onto an advance even as the euro retreated. In Asia, Chinese equities entered a bear market on concern about the country’s ability to fight a trade war, though Japanese shares reversed losses to finish slightly higher. Brent crude rose above $75 a barrel after U.S. Energy Secretary Rick Perry suggested a planned production hike isn’t enough to stop a price spike. The pound weakened as a new Bank of England member spoke about the risks of raising interest rates too fast.

Bombardier, Toronto union reach new agreement, averting strike (Reuters) Bombardier Inc and its Canadian workers who assemble turboprops and the company’s new top-of-the-line business jet have reached a new labor agreement, averting a potential strike, the company said on Sunday. Bombardier and Unifor, the union representing more than 2,100 production and office workers, had reached a tentative deal just hours the strike deadline on Saturday. The union members ratified the agreement on Sunday, Bombardier said in a statement.

Canada rate hike in question as data disappoints (Reuters) An unexpected plunge in Canada’s retail sales in April and flat inflation figures for May drove the Canadian dollar to a year-low on Friday and cut expectations for a July rate hike to 50-50 at best. Retail sales fell 1.2 percent in April, the largest drop in more than two years, adding slowing consumer spending to a list of concerns facing the Bank of Canada as it tries to raise interest rates in the face of a trade war and housing downturn.

U.S. oil premium rises on shortage as OPEC uncertainty persists (BNN) U.S. oil for near-term delivery rose to the highest level since 2014 versus cargoes for later on speculation that America faces a supply crunch while uncertainty lingered over OPEC’s planned output boost. August futures in New York were over a US$1 higher than the September contract, in a market structure known as backwardation that signals a shortage. Inventories at the key U.S. storage hub in Cushing, Oklahoma, are seen sliding for a sixth week and the nationwide hoard is forecast to have fallen for a third week. A Canadian oil-sands outage could lead to a North American crunch for all of July and drain stockpiles, according to Goldman Sachs Group Inc. 

Overnight markets

Overview: US 10yr note futures are up 0.026% at 120-02, S&P 500 futures are down -0.09% at 2719.75, Crude oil futures are up 0.26% at $68.26, Gold futures are down -0.92% at $1257.2, DXY is up 0.21% at 94.484, CAD/USD is up 0.23% at 0.7504.

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 US tsys weaker, 10Y 2.91 (+1.5bps), light volume in TY futures (240k) risk-on with S&P futures +15, crude higher after OPEC deal to increase supply.  EGBs lower after EU Services PMI came in stronger than exp, also strong French & German PMIs. In Canada, GOCs lower in line with tsys, curve 0.5bps flatter with longs outperforming before Retail Sales/CPI at 8:30.  Can/US spreads little changed yest in the rally which saw 10s move below 2.12% and despite $3.55bln in corp supply – 3 tranche Hydro one, 5Y LB deposit note @ 145, TD 5Y covered & 5Y covered FRN @ 31. The latter looked the most interesting on a RV basis, considering the reopned 1.68/21 trade 17 on ASW, the new 5Y @ 31 seem like a decent pickup on AAA credit curve. 

News headlines

Euro-Area Economy Sees Silver Lining as Growth Momentum Picks Up (Bloomberg) The much awaited rebound in euro-area growth momentum may have finally begun. A gauge measuring private-sector activity unexpectedly increased in June, suggesting the economy is gathering pace after a slow start to the year. With output strengthening in the bloc’s two largest economies, Germany and France, the numbers underpin the European Central Bank’s prediction that a rebound is on the cards, even if it arrives later than expected.

Europe’s Retaliation Takes U.S. Trade Tensions to the Next Level (Bloomberg) The European Union’s retaliatory tariffs on U.S. products came into force on Friday, the latest shots fired in what increasingly looks like a global trade war. The EU, the world’s largest trading bloc, imposed levies on 2.8 billion euros ($3.3 billion) of American products in response to U.S. duties on its steel and aluminum exports that were justified on national security grounds.

Stocks Jump on Data; Oil Gains as OPEC Nears Deal: Markets Wrap (Bloomberg) European stocks rose along with U.S. futures as manufacturing and services data from the euro zone’s largest economies beat analysts’ expectations, also lifting the region’s common currency. Oil jumped as OPEC inched closer to an agreement on output. Risk sentiment also benefited from reports that some U.S. officials were trying to restart trade talks with China before President Trump’s tariffs come into effect next month. Declines in Japanese and Hong Kong equities were offset by advances in their Chinese and Korean counterparts as investors awaited developments. U.S. Treasuries fell and the dollar edged lower.

BlackBerry posts quarterly loss (Reuters) BlackBerry Ltd (BB.TO) reported a quarterly loss on Friday, compared with a year-ago profit when the Canadian software maker received a one-time arbitration payment of $940 million from chipmaker Qualcomm Inc (QCOM.O). The company’s net loss was $60 million, or 11 cents per share, for the first quarter ended May 31, compared with a profit of $671 million, or $1.23 per share, a year earlier. Total revenue fell to $213 million from $235 million.

Stocks set for worst week in three months on trade war worries (Reuters) World shares rose on Friday but were set to end a second week lower amid intensifying worries over the fallout of a trade dispute resulting from U.S. tariffs, while oil prices were higher ahead of an OPEC meeting later in the day. The MSCI All-Country World index .MIWD00000PUS, which tracks stocks in 47 countries, was up 0.2 percent in the European morning but down 1.3 percent on the week, its worst weekly showing since mid-March.

U.S. banks clear Fed’s stress test hurdle (BNN) Big banks cleared the first hurdle of this year’s U.S. stress tests as the Federal Reserve found all 35 lenders examined could withstand a severe economic downturn, though Goldman Sachs Group Inc. () trailed the rest of Wall Street in a key measure of leverage. The results announced Thursday mark the third straight year every bank exceeded the Fed’s minimum capital demands, indicating the industry’s increased comfort with reviews that once triggered headaches. The exams assess how much capital lenders would have left after enduring financial shocks. This year, Goldman Sachs and Morgan Stanley () came closest to the edge among Wall Street behemoths.

Overnight markets

Overview: US 10yr note futures are down -0.117% at 119-23, S&P 500 futures are up 0.49% at 2766, Crude oil futures are up 1.45% at $66.49, Gold futures are up 0.09% at $1271.7, DXY is down -0.27% at 94.605, CAD/USD is down -0.29% at 0.7532.

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