Commentaires

Market Update Tsys trading higher, US 10Y 2.91 (-3.5bps), on heavy volume in TY futures (440k), following core EGBs higher on renewed weakness in Euro peripherals, Italy 2Y 22bps higher. Gilts trading mixed, curve flatter, UK service PMI surprising to the upside for May, 54 vs 53 exp. GOCs higher, slightly lagging the rally in tsys, , long end trading heavy so far.. 10s30s close to 5bps.  A new P3 issue just announced – Montreal Ring Road Project -$1.2bln in 4 tranches.

News headlines

Trump Said to Plan Meeting With GOP Concerned on China Stance (Bloomberg) President Donald Trump plans to meet Tuesday with Senate Republicans concerned about restrictions he’s weighing on Chinese investments in the U.S., two people familiar with the matter said. The meeting, called by the administration, includes Senate Majority Whip John Cornyn of Texas and Mike Crapo of Idaho, the chairman of the Banking, Housing and Urban Affairs Committee, according to the people. The lawmakers want to discuss Trump’s 301 investigation into Chinese violations of intellectual-property rights that has prompted U.S. threats of tariffs on imports of a range of products from the world’s second-largest economy, they said.

European Central Bank Boosts Purchases of German Bonds (Bloomberg) The European Central Bank’s buying of German bonds surged in May to a record relative to the so-called capital key, a guideline that dictates purchases corresponding to the size of a country’s economy. The share of Italian and French securities bought dropped below the capital key, but the shift in purchase patterns was due to technical factors rather than the recent sell-off in Italian debt, the ECB said.

BOE Gets Big Signal U.K. Economy Is Starting to Bounce Back (Bloomberg) The biggest part of the U.K. economy grew more than forecast in May, backing up the Bank of England’s view that a recent slump was temporary and keeping it on track for a rate hike in the summer. A measure of services jumped to a three-month high of 54 from 52.8, beating the reading of 53 predicted in a Bloomberg survey. Taken with manufacturing and construction, it suggests the economy is on course for growth of 0.3 to 0.4 percent this quarter, said IHS Markit, which publishes the indexes. Expansion slowed to just 0.1 percent in the first three months of the year.

Futures Point to Higher U.S. Open; Crude Declines: Markets Wrap (Bloomberg) U.S. futures pointed to a higher open on Tuesday, tracking gains in Europe as investors tried to keep the recent risk-on mood going. Amid trade headlines and political risks some caution was on show, however, and Treasuries rose while Italian bonds fell. Contracts for the S&P 500 signaled the underlying gauge will extend gains following its highest finish since mid-March, though momentum looks set to ease. After a shaky start the Stoxx Europe 600 Index advanced for a third day with technology companies and automakers leading the way. Italian bonds were poised for the first retreat since they blew up a week ago as Prime Minister Giuseppe Conte pledged in his maiden speech to pursue a program of fiscal expansion.

Canada vows to protect metals sector but resists call for quick action (Reuters) Canada’s government vowed on Monday to do all it could to protect its steel and aluminum sectors from U.S. tariffs but sidestepped an industry call to strike back quickly, saying it needed time to study the issue. President Donald Trump’s administration last week imposed U.S. tariffs of 25 percent on steel and 10 percent on aluminum from Canada – the No. 1 steel exporter to the United States – as well as on Mexico and the European Union.

Tech stocks on a tear as FAANGs and BATTS bite (Reuters) World tech stocks hit a record high on Tuesday, spurred on by a new all-time peak for Apple, a 17-year top for European tech firms and news that Twitter and Netflix were set to join Wall Street’s flagship S&P 500 index. MSCI’s global tech index .dMIWO0IT00PUS scored the milestone after the FAANGs — Facebook, Apple, Amazon, Netflix and Google — drove the technology-heavy Nasdaq to a new closing high in New York on Monday.

Canadian oil has record day after Enbridge scraps new rules (BNN) Canadian crude surged by the most ever after Enbridge Inc. said it won’t implement a new procedure to stop shippers from claiming more space than they can use on a key pipeline linking Alberta’s oil sands with U.S. refineries. Western Canadian Select jumped as much as US$12.20 a barrel to US$13.80 below the U.S. benchmark Monday, the narrowest spread since May 16. Canadian crudes have weakened to historically low levels in recent weeks as growing production overwhelms available pipeline capacity to transport Alberta’s supplies south of the border.

‘Mother Nature’ driving Vancouver, Toronto housing: Stephen Poloz (BNN)After years of hand-wringing over foreign investment in Canada’s most-scrutinized housing markets, Bank of Canada Governor Stephen Poloz argues fundamentals are at work as prices climb back in Vancouver and Toronto.“A year-and-a-half ago we had the changes in the Vancouver market and there was an initial effect and then a bounce back, and that just shows you that Mother Nature is still there – that the fundamentals for housing remain quite strong,” Poloz said in an interview with BNN Bloomberg late Friday in Whistler, B.C.

Overnight markets

Overview: US 10yr note futures are up 0.17% at 119-23, S&P 500 futures are up 0.11% at 2748.5, Crude oil futures are down -0.77% at $64.25, Gold futures are down -0.15% at $1295.3, DXY is up 0.08% at 94.111, CAD/USD is up 0.44% at 0.77.

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 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