Commentaires

Market Update Tsys higher, yields 0.3-1.5bps lower led by the long end with the 10Y 2.93% , heavy volume in TY futures (465k), off the highs after BOE decision, spike in gilt yields. BOE left rates unchanged at 0.50% in a 6-3 vote as exp, yet decision seen as a ‘hawkish hold’ with BOE Haldane joining dissenters, and new guidance on QE aims to reduce bond holdings when the base rate reaches 1.5% vs 2.0% prev. Odds of an August hike jumped to 67% from 54% pre-meeting, gilt curve 2bps flatter.  Bunds higher, supported by risk -off tone with peripheral yields higher, 2Y Italy +24bps after two euroskeptics were appointed by new govt, CNBC survey found 76% of executives are concerned about Italy leaving the euro zone. GOCs higher, led by the 10Y (2.15, -2.7bps), longs lagging for a second day, 10s30s 6bps vs 4.5bps, 10Y roll unch @ 1.1 from yest 10Y reopening. 

News headlines

Legal Marijuana, Oil Send Canadian Stocks to Record High (Bloomberg) Canadian stocks surged to a record high on Wednesday, driven by soaring cannabis stocks and a rebound in the energy sector. The S&P/TSX Composite Index rose 0.7 percent to 16,424.82 at 10:09 a.m., above the intraday and closing high on Jan. 4. After a bout of volatility that sent global markets plunging in February, it took nearly six months for Canadian stocks to claw their way back to levels last seen at the beginning of the year. The S&P 500 Index is still trading about 3.6 percent below its Jan. 26 high.

U.S. Homes Prices Least Affordable in Almost a Decade (Bloomberg) The American dream continues to fade for many people. Housing affordability dropped this quarter to the lowest since late 2008, according to data released this month by the National Association of Realtors. In May, the median price of a previously owned homes rose to a record $264,800, NAR data show.

Trump’s Metal Tariffs Have Yielded More Than $775 Million So Far (Bloomberg) The Trump administration has collected more than $775 million so far from its metal import tariffs, as lawmakers from both parties blasted the duties and said the process for requests by companies for exclusions must improve. The tariffs President Donald Trump imposed in March have generated $582 million from steel imports and $195 million from aluminum as of last week, and the combined total is expected to top $1 billion within the next six weeks, according to the Commerce Department.

Dollar Gains, Stocks Slip as Italy Adds to Worries: Markets Wrap (Bloomberg) The dollar strengthened, Treasuries climbed and stocks slipped on Thursday as two prominent euroskeptics were handed key roles in the Italian parliament, adding to the worry list for investors already fretting over the outlook for global trade. Italian bonds and stocks slumped on the news before paring some of the drop, while the euro touched the weakest in 11 months. The main European equity gauge, already under pressure in the wake of Daimler AG’s cut to its profit outlook, headed lower and futures on the S&P followed suit. The greenback, which was strengthening after China reiterated threats to retaliate against proposed American tariffs, advanced against most major peers. The pound rose after the Bank of England held interest rates steady in a more hawkish-than-expected vote.

British Columbia cracks down on anonymous ownership amid housing crisis (Reuters) British Columbia said on Wednesday it is preparing legislation to crack down on “hidden ownership” in real estate and pledged Canada’s first public registry of property owners, amid concerns that offshore money and criminal investors are helping fuel a housing crisis in the Pacific Coast province. Real estate investors in British Columbia are able to buy housing using numbered companies, corporations and offshore and domestic trusts, which obscure true ownership and can be used to dodge taxes, the province’s Minister of Finance Carole James said in a statement.

Dollar scales 11-month peak, oil slides ahead of OPEC (Reuters) Simmering trade and political tensions and a pumped-up dollar weighed on world shares on Thursday, while oil prices were under pressure before an OPEC meeting expected to increase the world’s supply of crude. Europe’s main stock markets were back near two-month lows and Wall Street futures had also turned lower [.N], as the jitters that have dominated markets for months began to reassert themselves. [.EU] Europe’s car shares .SXAP fell to a nine-month lows after Mercedes-Benz maker Daimler (DAIGn.DE) warned the global trade tensions were slowing its sales. Italian stocks and bonds also tumbled on reports a eurosceptic had been given a key finance role [.EU][GVD/EUR].

Canadian steel not a national security threat on its own: U.S. commerce secretary (BNN) U.S. Commerce Secretary Wilbur Ross says Canada is not a national security threat to the United States and that a revitalized NAFTA could make the Trump administration’s tariffs on steel and aluminum go away. Ross also acknowledged Wednesday that the U.S. doesn’t have a trade deficit on steel with Canada. In fact, he said it has a surplus with its northern neighbour in terms of dollar value.

Overnight markets

Overview: US 10yr note futures are down -0.026% at 119-19, S&P 500 futures are down -0.05% at 2770.75, Crude oil futures are down -1.43% at $64.77, Gold futures are down -0.74% at $1265.1, DXY is up 0.15% at 95.269, CAD/USD is up 0.09% at 0.7506.

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 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