Commentaires

Market Update Tsys trading lower, near bottom of overnight range on above avg volume (370k TY), 10Y 2.97% (+1.3bps) before May CPI (0.2%/2.8% exp). Equities unch, euro equities mixed, crude slightly lower, USD index unch.  News flow dominated by Trump/Kim meeting, which had little impact on mkts. Fed kicks of two-day meeting with a 25bp rate hike expected tomorrow. Particular attention will be played to the language in the statement and whether the Fed will hike rates 3 or 4 times this year.  GOCs slightly lower, in line with tsys, provis fairly steady along with rates over the past week. Busy session in primary corp issuance yesterday  with 2 deals: (i) 2 tranche $650mln Cdn Tire , 2Y @ 69, 5Y @ 99 – both inside of guidance with very small fills ,(ii) $200mln CWB reopening 2.751% 2020 @ 87.1.

News headlines 

Trump, Kim Sign Historic Pledge Toward Peace (Bloomberg) The U.S. and North Korea agreed to seek complete denuclearization of the Korean peninsula following a historic summit between President Donald Trump and Kim Jong Un, yet the accord set no deadline and left the path to disarmament undefined. Trump defended the two-page document he signed with Kim at the end of their meeting in Singapore earlier Tuesday, saying that he thinks his North Korean counterpart will live up to to it. “It’s very comprehensive,” the president said. “It’s going to happen.”

Trump Auto Tariffs Would Slam Canada as Trade Rhetoric Heats Up (Bloomberg) Donald Trump’s heightened attacks on Canadian Prime Minister Justin Trudeau are raising concerns that he might follow through on threats to impose auto tariffs, a move that would devastate the car industry in Canada and lead to higher U.S. prices. The Trump administration’s pledge to consider tariffs on all imported vehicles took on more urgency last weekend after Trump and his advisers accused Trudeau of “bad faith diplomacy” for his trade comments following a meeting of Group of Seven leaders in Quebec.

U.S. Small-Business Optimism Hits Second-Highest on Record (Bloomberg) A gauge of optimism among U.S. small-business owners rose to a 34-year high amid increasingly sunny expectations for sales and profits, a National Federation of Independent Business survey showed Tuesday. Small-business sentiment has remained elevated since Donald Trump was elected president in late 2016, with tax cuts, reduced regulations and solid economic growth supporting the optimistic outlook. At the same time, owners continued to cite difficulty finding workers with the necessary skills and qualifications and have raised compensation accordingly amid the lowest unemployment rate in 18 years. The report suggests that Trump administration tariffs, along with freight bottlenecks that have pushed up costs for some businesses, have had little effect so far on small-company sentiment.

Stocks Drift as Traders Look Beyond Korea Summit: Markets Wrap (Bloomberg) The meeting between President Donald Trump and Kim Jong Un was met with a collective shrug by global markets, which appear to be more fixated on a host of macro events and data due in a few days. Stocks were little changed, Treasuries edged down, and commodities mixed. The Stoxx Europe 600 Index opened higher, but pared its advance after modest gains for many Asian shares failed to ignite the MSCI Asia Pacific Index. S&P 500 futures fluctuated in a narrow range after the underlying gauge posted a small increase on Monday. Safe-haven assets including the yen and gold edged lower as Trump and Kim signed a document pledging to work toward peace on the Korean peninsula. The pound reversed a decline before Theresa May’s Brexit legislation goes to Parliament, as data showed a surprise moderation in the pace of U.K. wage growth.

Canadian dairy farmers cling to protections as Trump demands concessions (Reuters) Canadian dairy farmers want trade negotiators to keep their hands off the protected sector in increasingly contentious talks with the United States, however loudly U.S. President Donald Trump demands greater access, an executive with Canada’s biggest dairy lobby group said on Monday.

Quebec offers C$100 million in loans, guarantees to firms hit by U.S. metals tariffs (Reuters) The Canadian province of Quebec will offer C$100 million ($77.1 million) in loans and guarantees on loans to steel and aluminum companies hit by recent U.S. tariffs, the province’s economy minister said on Monday. Companies that transform the metals will benefit from the program after the United States recently slapped a 25 percent tariff on steel and a 10 percent tariff on aluminum imports.

DavidsTea losses more than triple in Q1 ahead of proxy battle (BNN)  Embattled beverage retailer DavidsTea says its net loss more than tripled on weaker sales in the first quarter of its fiscal year just days before a proxy battle comes to a head. The Montreal-based company lost $1.2 million for the period ended May 5, compared with a loss of $362,000 a year earlier. That translated into a loss of five cents per diluted share, versus a loss of one cent in the first quarter of 2017.

Province launches two reviews into BC Hydro over costs, future of energy sector (BNN) The British Columbia government has launched a two-phase review of BC Hydro in an effort to find cost savings and direction for the Crown utility. The first part of the review is expected to examine ways to save money within Hydro, create new revenue streams in an effort to keep rates low and give the corporation the resources it needs to provide electricity. An advisory group that includes staff from government ministries and BC Hydro will conduct the first review.

Overnight markets

Overview: US 10yr note futures are down -0.118% at 119-10, S&P 500 futures are down -0.02% at 2786.25, Crude oil futures are down -0.21% at $65.96, Gold futures are down -0.21% at $1300.5, DXY is down -0.01% at 93.594, CAD/USD is up 0.23% at 0.7686.

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 trading lower on avg volume (~290k TY1), 10Y 2.96% (+1.3bps), curve unch.  Slight risk off with S&P futures -2.75, USD index higher. No data today but busy week ahead in terms of event risk including CPI, FOMC/ECB and $68bln in 3,10 & 30Y tsy supply, $4bln more than in April.  Core EGBs lower, 10Y bund +3bps @ 0.48% on sharp rally in Italy BTPs after new Fin Min said there were no discussions to leave the euro. GOCs higher, outperforming tsys 1-2bps, notable move in the CAD above 1.30 after this weekend’s G7 and Trump’s spat with Trudeau and the potential impact of a trade war on Cda exports.    

News headlines

Trump Shocks Leaders With Trudeau Insult to Upend G-7 Summit (Bloomberg) President Donald Trump broadsided his allies and upended a Group of Seven meeting just as it wound up — disavowing a joint statement the U.S. had agreed to, lashing out at Canada’s Justin Trudeau and ratcheting up trade tensions. Trump fired off a pair of tweets several hours after leaving the summit in Canada to fly to Singapore for another on North Korea. Trudeau and other leaders had given closing press conferences and announced a U.S.-backed joint G-7 statement. Minutes after that statement was published online, Trump complained about comments made by Trudeau and revoked his support.

Canadian Dollar Hit Hardest as Trade Woes Resurface: Inside G-10 (Bloomberg) The Canadian dollar fell against all its major peers after U.S. President Donald Trump revoked his support for a joint Group-of-Seven statement and criticized his neighboring leader Justin Trudeau. The U.S. dollar was steady as investors awaited a series of major risk events this week, including a summit between Trump and North Korean leader Kim Jong Un in Singapore on Tuesday and meetings of the world’s three-biggest central banks on following days. The Japanese yen halted a two-day winning streak.

Fed to Stick With Gradual Hiking as Risks Balance Out: Survey (Bloomberg) The Federal Reserve won’t steepen the path of interest-rate increases this year in the face of accelerating U.S. growth, according to economists surveyed by Bloomberg. In a poll conducted June 5-7, the proportion of respondents who expect at least three additional rate hikes in 2018 dropped slightly, compared with the survey in March. The median estimate from economists now sees two more increases this year, which matches the Fed’s own projections back in March.

U.S. Stock Futures Steady in Busy Week; Pound Dips: Markets Wrap (Bloomberg) U.S. equity-index futures drifted while European stocks rose with most Asian shares as investors braced for one of the busiest weeks of the year, during which three major central banks set interest rates, President Donald Trump meets North Korea’s leader and Brexit returns to the fore. The mood was cautiously risk-on, with the Stoxx Europe 600 Index rising for the first time in five days as contracts for the S&P 500 traded little changed and Treasuries fell with core European bonds. Earlier in Asia, shares in Japan, Hong Kong and South Korea showed modest advances while Chinese stocks underperformed. Australian markets were shut for a holiday.

‘Fair trade, fool trade’, Trump’s tweets spew ire on NATO allies, Trudeau (Reuters) U.S. President Donald Trump fired off a volley of tweets on Monday venting anger on NATO allies, the European Union and Canadian Prime Minister Justin Trudeau in the wake of a divisive G7 meeting over the weekend. The escalating clash over trade between Washington and some of its closest global partners cast a cloud over Trump’s efforts to make history in nuclear talks in Singapore on Tuesday with Kim Jong Un of North Korea, one of America’s bitterest foes.

Bombardier JV wins $4.9 billion Los Angeles Airport contract (Reuters) Bombardier Inc (BBDb.TO) and its partners have been awarded a $4.9 billion contract to build and operate a passenger transit system at the Los Angeles International Airport, the company said on Monday. The Canadian plane and train maker has a 10 percent stake in the venture, which also includes Balfour Beatty, ACS Infrastructure and Fluor Enterprises. In the overall contract, Bombardier was awarded a $219 million order to design and build the system, including the supply of 44 of its INNOVIA automated vehicle systems, the company said here.

Reviving Energy East pipeline could hit Putin in Europe: MacKay (BNN) Of all the reasons raised in recent days in favour of resurrecting the Energy East pipeline, Peter MacKay believes a big one has been overlooked: curtailing Russian influence in Europe. “[Russian President] Vladimir Putin would hate having to compete with clean, ethical, Canadian oil and gas,” the former Foreign Affairs Minister told BNN Bloomberg, referring to TransCanada’s now-defunct $15.7-billion plan to ship over a million barrels per day from northern Alberta to Canada’s Atlantic coast.

Lacavera’s firm buys TD’s private credit card business for $250M (BNN) After shaking up the Canadian wireless industry a decade ago by launching Wind Mobile, entrepreneur Anthony Lacavera is taking another shot at disrupting the tech industry.  Financial technology company Flexiti Financial will announce Thursday it is acquiring Toronto-Dominion Bank’s () Canadian private label credit card portfolio for $250 million, Lacavera told BNN Bloomberg. Flexiti was founded in 2013 and is controlled by Globalive Capital Inc., the investment company founded and chaired by Lacavera. The fintech firm facilitates loans for retailers seeking to offer customers better financing terms on big-ticket items such as furniture or jewelry.

Overnight markets

Overview: US 10yr note futures are down -0.144% at 119-14, S&P 500 futures are down -0.09% at 2780, Crude oil futures are down -1.05% at $65.05, Gold futures are down -0.13% at $1301, DXY is up 0.13% at 93.653, CAD/USD is up 0.18% at 0.7677.

US Economic Data

There is no US economic data for today.

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 weaker, trailing the decline in European bonds, thou to a lesser extent, the US 10Y 2.985% (+1.3bps).  USD index weaker, EUR higher for a 4th day , stocks firmer (S&P fut +3), crude higher (65.32 +0.62). Core EGBs weaker,  German bund curve ~3bps steeper and the 10Y bund back to 0.50%, a two week high from 0.25% in the aftermath of the Italy crisis a week ago. Eurozone Q1 GDP came in at 0.4% as expected, the lowest since Q3 2016, from 0.7% in Q4. GOCs lower & steeper, 0.5bps wider vs tsys  – 10Y 2.325%  Provis well bid on ‘risk on’ tone, continued reinvestment flows from early June. Ontario election day – polls pointing to a conservative win, if not an outright majority. 

News headlines

It’s Trump Against the Developed World as G-7 Frays Over Tariffs (Bloomberg) President Donald Trump will cut a lonely figure at a meeting of the world’s club for wealthy nations this week. From steel tariffs to Iran sanctions and climate change, the president will find himself isolated from other Group of Seven leaders at the summit in Quebec. The meetings on Friday and Saturday will be the first opportunity for America’s closest allies to express their frustration in face-to-face meetings with Trump after he imposed steel and aluminum tariffs last week.

Fed on Track to Raise Rates Regardless of Emerging-Market Woes (Bloomberg) Emerging markets struggling with higher U.S. interest rates are likely to get little sympathy from the Federal Reserve. Currencies of such nations have been hammered in a spreading selloff amid worries that their economies won’t cope with higher U.S. borrowing costs. That’s prompted central bankers in India and Indonesia to raise interest rates and urge Fed caution, while officials in Brazil are bracing for challenging times too.

Brexit Showdown Pits U.K. Premier Against Her Top Ministers (Bloomberg) U.K. Prime Minister Theresa May is facing a major cabinet rebellion over Brexit, in a conflict that could destabilize the whole government, according to people familiar with the matter. Brexit Secretary David Davis is said to be furious over May’s plan to tie the U.K. into European Union customs rules for an open-ended period of time after the country leaves the bloc next March. She argues it’s a necessary step to break the deadlock in talks with the EU.

Stocks Edge Up as Momentum Eases; Treasuries Slip: Markets Wrap (Bloomberg) European stocks nudged higher alongside S&P 500 futures as equity markets fought to maintain the momentum from a record-breaking rally in tech shares. Treasuries added to recent losses, with 10-year yields crawling toward 3 percent. The Stoxx Europe 600 Index gave up much of its advance as the euro strengthened again and after disappointing data on euro-area exports and German factory orders. The common currency was up for a fourth straight day amid talk of an end to the European Central Bank’s quantitative easing program. Earlier, shares rose from Tokyo to Sydney in the wake of another record finish for the Nasdaq, but futures contracts for the gauge were little changed on Thursday. The dollar slipped, while the Turkish lira jumped after the central bank raised interest rates by more than expected.

Ontario goes to the polls, with populist Doug Ford in lead (Reuters) Canada’s most populous province votes on Thursday, with populist Doug Ford’s Progressive Conservative party leading in opinion polls, in an election likely to end 15 years of Liberal rule. The election in Ontario, Canada’s economic engine and home to Toronto, the country’s largest city, has been reduced to a fight between Ford and the left-learning New Democratic Party, after Liberal leader Kathleen Wynne, premier since 2013, conceded on Saturday she would not be re-elected.

CP Rail deal will give workers 9 percent raise over four years (Reuters) Canadian Pacific Railway Ltd conductors and locomotive engineers will get a 9 percent salary hike over four years as part of a tentative agreement reached last week with the Teamsters, spokesmen from both the union and CP said on Wednesday. The agreement, which must first be ratified by members to go into effect this year, would give the 3,000 workers an increase of 2 percent for the first three years and 3 percent during the last year, Teamsters Canada spokesman Chris Monette told Reuters by phone.

Canada’s Dollarama reports 7.3 percent rise in quarterly profit (Reuters) Canada’s dollar-store chain Dollarama Inc (DOL.TO) on Thursday reported a 7.3 percent rise in quarterly profit as customers spent more at its stores during the Easter holiday. Net income rose to C$101.6 million ($78.46 million), or $92 cents per share in the first quarter ended April 29, from C$94.7 million, or 82 cents per share, a year earlier. Total sales rose to C$756.1 million from C$704.9 million.

Scheer rejects one-on-one trade talks with U.S. as long as NAFTA can be saved (BNN) Conservatives say it might help Canada’s bargaining position on the North American Free Trade Agreement if the Liberal government were to agree to American demands that it join the U.S. continental missile defence system. However, leader Andrew Scheer said Wednesday he still thinks there is a chance to preserve NAFTA as a trilateral trade deal between Canada, the U.S. and Mexico, and that Canada shouldn’t give in to one-on-one trade talks with the U.S. yet.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 119-07, S&P 500 futures are up 0.08% at 2778.25, Crude oil futures are up 1.08% at $65.43, Gold futures are up 0.16% at $1303.5, DXY is down -0.29% at 93.341, CAD/USD is up 0.05% at 0.7722.

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