Commentaires

Market Update Tsys trading lower, yields 0.5-2bps higher with the US 10Y 2.91%(+0.7bps), equities higher (S&P fut +9.5), EU peripheral yields rallying, Italy 2Y -36bps @0.59% from 2.64% last Tuesday.   German bund yields higher, thou well of early European highs, 10Y bund 0.38% after reaching 0.42% as Italy bond rally has faded somewhat. AUD up sharply (+1.2% highest since Apr 23rd) on stronger Aus retail sales data, with RBA meeting tomorrow. GOCs lower, outperforming tsys in the short end, curve unch , 10Y 2.244%. Friday late afternoon saw profit taking/outright selling in GOCs, mostly longs, in what appeared to be flattener unwinds with 10s30s widening 2bps after 3:00pm and the long end ~$1.00 lower.  Poloz over the weekend said the BOC is ‘data dependent’ at the G7 fin min meeting in Whistler, but also pointed to strengthening capex. Provis another 0.5bps tighter after closing 2bps narrower Friday, bouyed by index buying, risk on and a marked slowing in corp issuance due to hightened volatility. 

News headlines

Trump and Allies Set for Showdown Over Trade (Bloomberg) President Donald Trump is headed for a showdown with America’s allies at a Group of Seven summit this week in Quebec, with the European Union and Canada threatening retaliatory measures unless he reverses course on new steel and aluminum levies. China, while open to talks to resolve the dispute, is warning it will withdraw commitments it made on trade if the president carries out a separate threat to impose tariffs on the Asian country. While China doesn’t want an escalation in trade tensions, it will defend its core interests, according to a commentary published Monday by the state-run Economic Daily.

Turkey Inflation Accelerates in May on Weak Currency (Bloomberg) Turkey’s consumer inflation accelerated to the highest level in six months ahead of a landmark presidential election, fueled by a slump in the lira that triggered an emergency hike in interest rates. The annual inflation rate rose to 12.2 percent in May from 10.9 percent the previous month, matching the median estimate in a Bloomberg survey. Turkey’s state statistics office said monthly inflation was 1.6 percent, in line with the median estimate in a separate survey. The lira gained.

Stocks Extend Gain on Growth Outlook; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures and European stocks advanced on Monday, tracking peers in Asia as optimism over the world’s largest economy helped investors put protectionist fears to one side. Treasuries edged lower, the dollar fell, and the pound and euro rose. The Stoxx Europe 600 Index climbed as almost every industry group traded in the green, with utility companies leading the way. S&P 500 contracts pointed to the U.S. benchmark extending Friday’s advance, while the MSCI Asia Pacific Index surged even as China warned it will withdraw from commitments it made on trade if President Donald Trump carries out a separate threat to impose tariffs on the Asian country. The dollar pulled back after completing a seventh week of gains. The 10-year Treasury yields traded above 2.90 percent.

Ontario premier concedes defeat ahead of next week’s polls (Reuters) The premier of Canada’s most populous province, Ontario, conceded defeat on Saturday ahead of next week’s election, but called on voters to vote for her party anyway to keep the next government in check. Kathleen Wynne, who has been premier since 2013 and whose Liberal Party has governed for 15 years, told reporters she will not be premier after the June 7 election. “This is a hard thing to do,” 64-year-old Wynne told reporters tearfully, while urging party followers to vote for as many Liberals as possible to prevent the other two parties from forming a majority government.

Global shares shrug off trade tensions as U.S. data reassures (Reuters) The MSCI world equity index, which tracks shares in 47 countries, rose 0.4 percent, while European stocks enjoyed a positive start to the day’s trading as tensions calmed in Italy and Spain. “The mood is mainly positive due to better U.S. job creation seen in (Friday’s) NFP data, which has carried stocks higher despite headwinds such as escalating trade disputes,” analysts at FX Pro Insights said. “The risk is that sentiment shifts and catches traders off balance as volatility increases.”

TSX futures up as global trade war concerns ease (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday, tracking gains in Asian and European markets, after last week’s strong U.S. jobs report helped ease investor jitters over a potential global trade. June futures on the S&P/TSX index SXFc1 were up 0.19 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE fell 17.96 points, or 0.11 percent, to 16,043.54.

Trudeau: U.S. metals tariffs in the name of national security ‘insulting’ (BNN) Prime Minister Justin Trudeau says it is « insulting » that President Donald Trump says Canada’s steel industry poses a national security risk to the United States. Speaking on NBC’s Sunday morning news show Meet the Press, Trudeau said he wants to make sure Americans, and more specifically Trump supporters, hear the message that they are going to feel financial strain and pain from the steel tariffs Trump imposed on Canada last week. « The fact that the president has moved forward with these tariffs is not just going to hurt Canadian jobs, it’s going to hurt U.S. jobs as well and neither of those things is something Canada wants to see, » Trudeau said.

Toronto home prices climb for fifth straight month in May (BNN) There was further sign of stabilization in Canada’s largest housing market in May, with the average selling price rising for a fifth consecutive month as the region’s real estate board warned competition is intensifying among buyers. Selling activity plunged 22.2 per cent year-over-year across the Greater Toronto Area in May as 7,834 properties traded hands. However, that was a slight uptick from the previous month when 7,792 sales were recorded in the GTA.

Overnight markets

Overview: US 10yr note futures are down -0.117% at 119-23, S&P 500 futures are up 0.34% at 2743, Crude oil futures are down -0.52% at $65.47, Gold futures are up 0.11% at $1300.7, DXY is down -0.5% at 93.684, CAD/USD is down -0.37% at 0.7749.

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 lower before May payrolls, US 10Y 2.90% (+4bps), curve 1bp steeper 2s10s.  Trump tweeted “looking forward to the employment numbers” (195k headline exp, 3.9% unemp rate, 2.6% AHE), which led to additional selling in rates, along with sharply lower gilts/bunds, rally in Italian bonds. BOJ surprise cut in bond purchases weakened the belly of the JGB curve, yields ~1bps higher. S&P futures +13.75, crude lower for a second day, USD index rebounding from losses after Trump’s tweet.  GOCs lower, 1bp narrower vs tsys, 10Y 2.27% vs 2.19% post Italy crisis low from Tuesday, still 25bps off the four year highs above 2.50%  two weeks ago. Month end flows supportive for the long end of the GOC curve, 10s30s narrowing 1bp to 1.4bps before some selling of longs in the aft pushed it back out to 2bps. Provincials trading up to start the morning, Ont 48s, 49s lifted on screen at 78,78.5. Ont 28s @69< ont 48/28 9.4/9.2.

 News headlines

Trump Appeasement Fails, So Trudeau Takes the Gloves Off (Bloomberg) After more than a year of trying to make nice, Justin Trudeau finally looks fed up with Donald Trump. Canada had pushed for an exemption from Trump’s tariffs — thinking, now naively, there’d be a perk to being a neighbor, ally and largest buyer of U.S. goods. Trudeau had bitten his tongue through skirmishes over airplanes, lumber and North American Free Trade Agreement talks.

Outrage Over U.S. Steel Tariffs Set to Spill Over Into G7 Meeting (Bloomberg) Treasury Secretary Steven Mnuchin received an earful from global finance chiefs Thursday after the Trump administration imposed steel and aluminum duties that sparked swift trade responses. Canadian Finance Minister Bill Morneau acknowledged that trade has taken center stage at a meeting of finance ministers and central bankers from the G-7 nations in a Canadian ski resort near Vancouver. On his arrival, German Finance Minister Olaf Scholz said the U.S. levies on imported metals from the European Union, Mexico and Canada are probably illegal.

Draghi’s Understudy Starts Work as ECB Navigates Italian Turmoil (Bloomberg) The new man who would step into Mario Draghi’s shoes in an emergency has just taken office. Former Spanish Finance Minister Luis de Guindos starts his job as European Central Bank vice president on Friday. He replaces Vitor Constancio on the same day that the Frankfurt-based institution celebrates its 20th anniversary, in troubled times.

Stocks Jump as Politics Ease; Treasuries Decline: Markets Wrap (Bloomberg) Stocks headed for a positive end to a tumultuous week in which political developments in Europe and escalating trade tensions roiled markets. Treasuries and the dollar edged lower as the focus shifted to U.S. jobs data due Friday. The Stoxx Europe 600 gauge headed for the biggest gain in a month, led by banks and basic-resources stocks, while S&P equity-index futures pointed to a higher U.S. open. Italy’s benchmark index rallied the most since early February as populist parties surged to power, bringing to an end a three-month political deadlock though opening the way to a period of friction with Europe.

TSX futures trade higher on global cues (Reuters) Stock futures pointed to a higher open for Canada’s main stock index on Friday, tracking gains in world stocks as political uncertainties in Italy and Spain ended. In Italy, anti-establishment parties revived coalition plans on Thursday, while in Spain Socialist Pedro Sanchez took over as prime minister on Friday, after outgoing leader Mariano Rajoy lost a confidence vote. However, the prospects of a full-blown trade war with the United States continues to loom over the markets.

Scotiabank buys MD Financial for $2.5B (BNN) The Bank of Nova Scotia () made a big play to expand its customer base on Thursday with a deal to acquire financial adviser MD Financial Management for $2.5 billion. The company provides financial planning, insurance, banking, investment and estate and trust services to 45,000 Canadian doctors and 65,000 of their family members with more than $49 billion in assets under management and administration.

Canada’s economic growth slowed in Q1 amid housing chill (BNN) The pace of economic growth in Canada slowed in the first quarter of this year to its lowest rate in nearly two years as housing investment pulled back amid new mortgage stress test rules and a cooling housing market. Statistics Canada said Thursday the economy grew at an annualized pace of 1.3 per cent for the first three months of the year. That compared with an annual pace of 1.7 per cent in the final three months of 2017.

Overnight markets

Overview: US 10yr note futures are down -0.506% at 119-27, S&P 500 futures are up 0.49% at 2718.75, Crude oil futures are down -0.85% at $66.47, Gold futures are down -0.45% at $1298.8, DXY is up 0.18% at 94.144, CAD/USD is up 0.14% at 0.7706.

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 weaker, curve flatter, US 10Y 2.87% (+1.5bps) amid continued relief rally in Italian bonds, Italy 2Y ~50bps lower @ 1.0% from 2.64% on Tuesday. Bunds lower, slightly outperforming tsys despite better than expected Eurozone CPI (1.9% vs 1.6%) after strong regional German CPI data released yesterday. News that Trump may impose tariffs on Canadian steel and aluminum today, no real impact on CAD, thou GOCs 0.5bps wider vs tsys, 10Y 2.274%. March GDP expected to have risen 0.2% vs 0.4% in Feb, Q1 forecast at 1.8% vs 1.7%. Yesterday the BOC left rates unch yet raised the odds of a July hike with the removal of the ‘cautious’ language in favor of ‘gradual approach’, adding that incoming data suggests Q1 growth is stronger than expected while inflation is running higher than the Bank forecast in April. Provincial spreads improving since yest, Quebec reopened Dec 48s @ 75.5 , now 74.5/74, Qc/ont 48 -4.6/-5.2 from -4.5 at issue yest. 

News headlines

Bank of Canada Lays Ground for More Rate Hikes (Bloomberg) Canada’s central bank is paving the way for a new round of rate increases in the second half of the year as the nation’s economy runs up against capacity constraints and inflation hovers at the highest in seven years. Bank of Canada Governor Stephen Poloz left rates on hold for a third straight decision Wednesday, but gave an upbeat assessment of the economy and removed some cautious language. The currency and bond yields popped higher after the statement from Ottawa.

Euro-Area Inflation Picks Up to Fastest in More Than a Year (Bloomberg) Euro-area inflation hit the fastest pace in more than year, some good news for European Central Bank officials debating the future policy path just as turmoil in Italy revives memories of the debt crisis. The 1.9 percent rate, effectively in line with the ECB’s goal, was up from just 1.2 percent in April and above the 1.6 percent reading forecast by economists. The core measure rose to 1.1 percent, also better than anticipated.

Imperial Professor Haskel Appointed to BOE Rates Committee (Bloomberg) Jonathan Haskel will join the Bank of England’s Monetary Policy Committee in September, giving it an expert in an issue that has vexed officials for years. The Imperial College Business School professor will replace Ian McCafferty, who is known for voting for tighter policy. He begins a three-year term on Sept. 1, according to the Treasury. Oxford Economics said he’s likely to be more dovish than his predecessor.

Stock Rebound Loses Steam on Italy, Trade Worries: Markets Wrap (Bloomberg) U.S. stock futures fluctuated and European equities struggled for traction as investors sought to rebuild their confidence amid a muddled political outlook in Southern Europe and uncertainty over global trade. The dollar fell while the euro climbed, and Italian bond yields declined. The Stoxx Europe 600 Index traded in the green but pared an earlier gain as Italy’s populists battled to revive plans for a coalition government, Spain’s prime minister teetered on the brink and the region braced for potential U.S. tariffs. The euro strengthened as inflation in the bloc hit the fastest pace in more than year. In Asia, Hong Kong and Chinese stocks outperformed after China’s official factory gauge underscored robust growth despite ongoing trade tensions. S&P 500 futures swung between gains and losses while the yield on 10-year Treasuries rose.

TSX futures flat ahead of first-quarter GDP data (Reuters) Canada’s main stock index futures was trading flat on Thursday, with investors awaiting the country’s gross domestic product data for the first quarter. June futures on the S&P TSX index were down 0.21 percent at 7:15 a.m. ET. The Canadian economy is expected to have grown at an annualized 1.8 percent pace in the first quarter, largely in line with the previous quarter as growth was likely restrained by weak exports and a slowdown in housing. The GDP data is scheduled to be released at 8:30 a.m. ET.

Rising oil prices bring hope to gloomy Canada sector (Reuters) Years of low oil prices and high costs spurred a stampede by multinational majors out of Canada’s oil sands last year, leaving the remaining crude producers struggling to weather painful drops in profit. Environmentalists derided the “tar sands” as too dirty for investment, and analysts said the region’s high production costs made little sense in a world of $50-a-barrel oil. But this month, global benchmark prices rebounded to $80 per barrel, cheering oil executives in the Canadian energy capital of Calgary, Alberta, who are shifting from survival mode to cautious expansion to capitalize on healthier cash flow expected this year.

‘Game-changer’: BMO data breach reportedly included SIN data (BNN) New details about the data breach at the Bank of Montreal have emerged. CTV News reported Wednesday it discovered an online document that included 100 BMO client names, along with crucial data including those customers’ social insurance numbers, dates of birth, and bank account information. Those details, according to CTV News, were included in a dataset posted to an online forum called Postbin on May 28, and was accessible for about five hours, between 2 p.m. and 7 p.m. ET before it was removed.

Soros view on global crisis is ‘ridiculous,’ Morgan Stanley CEO says (BNN) Morgan Stanley Chief Executive Officer James Gorman said that investor George Soros’s contention another major global crisis may be in store is unrealistic, and that the Federal Reserve will probably hike interest rates three more times in 2018 despite recent volatility. “Honestly I think that’s ridiculous,” Gorman said in an interview with Bloomberg Television in Beijing Thursday when asked about Soros’s comments this week, which included a warning that the European Union is at risk of breaking up amid Italy’s challenges. “I don’t think we’re facing an existential threat at all,” Gorman said of the EU.

Overnight markets

Overview: US 10yr note futures are down -0.156% at 120-04, S&P 500 futures are up 0.03% at 2725.25, Crude oil futures are down -0.88% at $67.61, Gold futures are up 0.13% at $1308.2, DXY is down -0.23% at 93.855, CAD/USD is down -0.14% at 0.7779.

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