Commentaires

Market Update Tsys rallying sharply on heavy volume (625k TY fut), 10Y 2.91 (-2.7bps), buffeted by news of US tariffs on $50bln in Chinese goods, and the concomitant announcement of Chinese retaliatory measures. Core EGBs also higher, outperforming tsys as Germany’s CSU party has threatened to quit Merkel’s coalition govt. Euro equities slightly lower,  S&P futures -10, crude unch, USD index slightly lower. GOCs higher, in line with tsys. Yesterday saw GOCs fully recoup Wednesday’s underperformance vs tsys led by strong buying of CGBs, 10s 7bps richer on the curve over the week. Provis trading down 0.5bps on risk off tone, Ont 28s 65/64. 

News headlines

Wage Anxiety Casts a Shadow Over Canada’s Booming Job Market (Bloomberg) A key indicator of Canada’s labor-market health remains depressed, even with the economy producing some of the biggest pay increases in years and the unemployment rate sitting at a four-decade low. Workers are doubtful switching jobs would leave them better off financially, according to a Nanos Research Group poll conducted for Bloomberg News. Only one in 10 respondents said their wages would increase if they lost their jobs or chose to find a new one, while about seven in 10 said they’d probably be paid the same or less.

Trump’s Tariff Threats Are Paralyzing American Business (Bloomberg) President Donald Trump wants to level the playing field for American companies in the global economy, but his combative stance has unsettled business plans from the Atlantic to the Pacific. From Washington cherry farms to Midwestern chemical plants to New England lobster-trap makers, the risk of global trade war is creating anxiety among executives whose firms rely on foreign markets for revenue or to keep costs down with imported products.

Trump Approves Tariffs on $50 Billion of Chinese Goods (Bloomberg) President Donald Trump has approved tariffs on Chinese goods worth about $50 billion, said a person familiar with the decision, ratcheting up a confrontation on trade with Beijing and triggering losses in the domestic stock market. The Trump administration is preparing to release a refined list of the first batch of Chinese products to be hit with tariffs on Friday that hones in on technologies where China wants to establish itself as a leader, according to people familiar with the matter. In April, the U.S. revealed an initial list targeting about 1,300 products worth $50 billion in Chinese imports.

Stocks Fall as Trade Tensions Boil; Bonds Advance: Markets Wrap (Bloomberg) Stocks fell and bonds gained as trade tensions between the U.S. and China escalated, while investors weighed diverging monetary policies from the Federal Reserve and European Central Bank. Futures on the S&P 500 dropped and the Stoxx Europe 600 Index headed lower, erasing an earlier advance, after a mixed session in Asia. Treasury yields dipped and Italian debt led a rally in European bonds triggered by the ECB ruling out a rise in interest rates until the second half of 2019, a day after the Federal Reserve said American policy makers will continue with gradual hikes. The euro gained and the dollar was steady.

Canada debt-to-income ratio hits two-year low as rates set to rise (Reuters) Canadian household debt as a share of income slipped in the first quarter to a two-year low, a development sure to please policymakers worried about the pain that rising interest rates will cause. The ratio of debt to disposable income – which hit a record 170.0 percent last year – fell to 168.0 percent from 169.7 percent in the fourth quarter, Statistics Canada said on Thursday. This was its lowest since the 165.4 percent recorded in the first quarter of 2016.

Futures drop as oil prices slip (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Friday as oil prices fell after Saudi Arabia and Russia hinted that two of the world’s biggest producers would increase output. Ahead of an OPEC meeting in Vienna on June 22-23, Russian Energy Minister Alexander Novak said on Thursday after talks with Saudi Energy Minister Khalid al-Falih in Moscow that both nations “in principle” supported a gradual increase in production after restricting output for 18 months.

Rogers Media cuts 75 jobs amid industry ‘headwinds’ (BNN) Rogers Media laid off approximately 75 full-time employees Thursday, citing ongoing industry challenges such as print revenue pressure.  “We have reorganized our digital content and publishing structure to reflect the headwinds the industry is facing and make the business sustainable,” a company spokesperson said in a statement.

Overnight markets

Overview: US 10yr note futures are up 0.249% at 119-24, S&P 500 futures are down -0.51% at 2774.25, Crude oil futures are down -0.31% at $66.68, Gold futures are down -0.91% at $1296.4, DXY is down -0.1% at 94.783, CAD/USD is up 0.43% at 0.7597.

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

Market Update Tsys trading higher, rising after ECB decision to end QE in Dec yet leave rates unch until summer 2019, US 10Y 2.937% (-3.1bps). Bunds reversed earlier losses, the Sep bund spiking to intra-day high 160.32, thou the contract has since backed off. EUR/USD initially rallied on the ECB taper (15bln from Sep-Dec from 30bln) but reversed sharply lower on dovish pledge to hold rates unch. Bund yields 3-4bps lower, 10Y 0.45% at a one week low.  ECB press conference at 8:30 along with US Retail Sales and Import Prices. Stocks higher, S&P futures +6.5, crude higher (66.88 +0.24). GOCs higher, in line with tsys after ECB, Can/US 2Y which rallied 3bps post FOMC back to only marginally tighter , -62.5bp, indicating Can outperformance may be stretched at this point. Provis closed yest 0.5bps tighter on no supply, City of Montreal 10Y @ 85 (QCs +25) well received. 

News headlines

Powell Solves Some Fed Policy Mysteries, Plot Thickens on Others (Bloomberg) Jerome Powell gave Federal Reserve-watchers some meaningful answers on Wednesday. He also left them scratching their heads over ever-bigger questions. Federal Reserve Chairman Jerome Powell signaled growing optimism on the U.S. economy while trying to reassure investors that the central bank would not derail the country’s second-longest expansion by aggressively tightening monetary policy. Fed officials on Wednesday raised interest rates by a quarter point for the second time this year and upgraded their median forecast to four total increases in 2018, as unemployment falls and inflation overshoots their 2 percent target earlier than previously projected 

ECB says its massive bond-buying program will likely end in December (CNBC) The bank said Thursday that if incoming data followed its forecasts, then its monthly bond purchase program would be extended through to the final quarter of the year.Until now, this quantitative easing (QE) program was scheduled to last until September, carrying monthly purchases of 30 billion euros ($35 billion) of government and private debt.This will now be reduced to 15 billion euros during the last three months of 2018. 

China urges U.S. to make ‘wise choice’ ahead of tariffs decision (Reuters) China urged the United States on Thursday to make a “wise decision” on trade, saying it was ready to respond in case Washington chose confrontation, as U.S. President Donald prepares to decide whether to activate tariffs on Chinese goods. Trump is due to unveil revisions to his initial tariff list targeting $50 billion of Chinese goods on Friday. People familiar with the revisions said the list would be slightly smaller than the original, with some goods deleted and others added, particularly in the technology sector.

China’s Economy Is Slowing Just as Trump Readies a Trade Beating (BLoomberg) China’s economy fell short of expectations and its central bank chose not to follow the Federal Reserve in raising borrowing costs, adding fresh caution on the outlook for global growth as trade tensions with the U.S. escalate. etail sales grew by 8.5% year-over-year in April, making for the weakest reading since June 2003, according to National Bureau of Statistics data released Thursday. Fixed asset investment, industrial output, and mining output also fell short of expectations.

U.S. energy firms chasing oil price rally stumble on old baggage (Reuters) With oil price recovery taking hold, several U.S. oil and gas companies entered 2018 with a compelling plan – sell undeveloped or less essential fields and invest the money to boost returns from their sweetest, most productive spots.

Euro goes up as ECB prepares to wind down (Reuters) The euro rose to its highest in a month but world stocks wilted on Thursday, as the European Central Bank prepared to pull the plug on its 2.55 trillion-euro, three-year stimulus program.

Overnight markets

Overview: US 10yr note futures are up 0.197% at 119-14, S&P 500 futures are up 0.35% at 2788.75, Crude oil futures are up 0.68% at $67.09, Gold futures are up 0.78% at $1311.4, DXY is up 0.33% at 93.856, CAD/USD is up 0.04% at 0.7699.

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

Market Update

Tsys are trading slightly higher out the curve unch in the short end, 10Y 2.96%, ,little reaction to stronger May PPI (0.5% vs 0.3%, ex food & energy 2.4% vs 2.3%).  Equity mkts higher, S&P futures +3, crude under slight pressure, below $66 after Trump’s latest tweet on OPEC. FOMC this afternoon – futures mkts pricing in 85% odds of a 25bp hike., dot plots and press conference will be paid particular attention. Core Euro bonds outperforming tsys ,  UK gilts higher after May inflation came in as exp. German bunds lagging the rally in gilts after a technically uncovered 10Y bund auction. More event risk tomorrow with ECB decision where Draghi may announce the end to QE.  GOCs maintaining outperformance vs tsys across the curve, 2s setting new tights yest as it becomes increasingly more apparent the BOC will lag the Fed in tightening despite last month’s strong rise hourly wages,  reduction in excess capacity.

News headlines

South Africa Retail Sales Rise at Slowest Since February 2017 (Bloomberg) Retail sales in South Africa, the continent’s most-industrialized economy, rose at the slowest pace in 15 months in April. Sales climbed 0.5 percent from a year earlier, Pretoria-based Statistics South Africa said in a statement on its website Wednesday. That’s less than the revised 4.6 percent expansion for March and compares with a median estimate of 4.4 percent in a Bloomberg survey.

Trump Says North Korea Poses No Nuclear Threat, Despite Weapons (Bloomberg) President Donald Trump declared that North Korea no longer posed a nuclear threat, even though Kim Jong Un hasn’t committed to a timetable for giving up his regime’s weapons. “Everybody can now feel much safer than the day I took office,” Trump said on Twitter Wednesday shortly after arriving back in Washington from his meetings in Singapore with Kim. “There is no longer a Nuclear Threat from North Korea.”

Turkey’s Election Is Too Close to Call, Bloomberg Poll Shows (Bloomberg) Turkey’s election this month could go down to the wire, with President Recep Tayyip Erdogan facing a tougher battle to cement power or even an upset, according to a poll commissioned by Bloomberg. Erdogan can win the presidential vote in the first round on June 24 with 50.8 percent support and get the backing of a majority in parliament, the survey by Foresight Danismanlik of 500 people on June 7-11 found. But a surprise victory for the opposition is also within the margin of error.

Anti-U.S. consumer boycott? Canadians may find it hard to pull off (Reuters) Canadians outraged by U.S. President Donald Trump’s attack on their prime minister have called for a consumer boycott targeting the United States, but indignation may be hard to sustain in a nation enamored by U.S. popular culture and larded with American goods. A push for some sort of reprisal in response to Trump’s personal attack on Justin Trudeau has gained force since Canada’s Parliament on Monday condemned weekend broadsides from its ally amid an escalating trade dispute.

AT&T slips after Time Warner buyout gets approval (Reuters) Shares of AT&T Inc fell 2 percent on Wednesday after a federal judge approved the telecom company’s $85 billion buyout of Time Warner Inc, clearing the path for more deals in a rapidly changing media industry. The news lifted shares of other telecom and media companies such as Sprint Corp, CBS Corp and Discovery Inc by around 4 percent in premarket trading. Time Warner was also up about 5 percent. “Once technically driven volatility wears off we expect the stock to move higher as closure will likely provide a new investor catalyst including $1.5 billion in anticipated cost synergies,” said Cowen & Co analyst Colby Synesael. However, at least one analyst raised concerns about the debt AT&T was taking on as part of the deal.

Trump aide Navarro apologizes for ‘inappropriate’ Trudeau comments (BNN) White House trade adviser Peter Navarro apologized for suggesting Canadian Prime Minister Justin Trudeau deserved a “special place in hell” for a perceived breach in protocol against U.S. President Donald Trump. “My job was to send a signal of strength,” he said at a Wall Street Journal CFO Network conference in Washington on Tuesday. “The problem was that in conveying that message I used language that was inappropriate.”

U.S. Fed dots in focus as market awaits interest rate hike (BNN) Federal Reserve Chairman Jerome Powell has repeatedly played down the central bank’s “dot plot” as a guide to future interest rates, but Wall Street just won’t take the hint. While the Federal Open Market Committee is almost certain to raise rates a quarter point at the close of a two-day meeting Wednesday, investors are focused on whether the panel will signal one or two additional 2018 hikes when it releases updated interest-rate forecasts with the policy decision at 2 p.m. Powell will begin his press conference 30 minutes later.

Overnight markets

Overview: US 10yr note futures are down 0% at 119-13, S&P 500 futures are up 0.17% at 2793, Crude oil futures are down -0.53% at $66.01, Gold futures are down -0.08% at $1298.4, DXY is up 0% at 93.822, CAD/USD is up 0.01% at 0.7682.

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