Commentaires

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

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