Commentaires

Market Update Tsys trading higher, 10Y 2.95% (-2.5bps), FTQ bid for a third day, yields at a two-week low as equities futures slide, widening in EU peripheral spreads (Ita/Ger 10Y +15 @ 202, Spain/Germ +13). Core Euro bonds  USD index rising since early NA trade close to Wednesday’s high 94.18.  WTI crude sharply lower, (WTI -1.60 @ 69.12) on OPEC news they are looking to boost supply by ending excessive cuts. GOCs opening higher, in line with tsys, the CAD at a two week low following the decline in crude. 

News headlines

Failed Trump-Kim Summit Is a Bitter Lesson for the White House (Bloomberg) A historic summit between Donald Trump and Kim Jong Un — abruptly agreed to with little plan for how events would unfold — collapsed as the leaders talked past each other on their goals, phone calls weren’t returned and rhetoric turned from hopeful to sour.U.S. officials insist they’re optimistic the meeting will happen, eventually. And North Korea’s Vice Foreign Minister Kim Kye Gwan said Friday that his country remains willing to meet the U.S. any time.

Trump Levies Would Hit Other Asia Economies Harder Than China’s (Bloomberg) Other Asian economies would suffer more than China’s if Donald Trump does deliver on his threats to slap $150 billion of tariffs on shipments from the world’s biggest trading nation. That’s according to Bloomberg economists Fielding Chen and Tom Orlik, who estimate that for every 10 percent drop in China’s exports, the gross domestic product growth rate of Asian economies would fall 1.1 percentage points on average. China’s would decrease by just 0.3 percentage point.

Iran Wants Oil and Bank Pledges by June After U.S. Deal Exit (Bloomberg) Europe needs to come up with a package of economic guarantees by June to prevent the crisis triggered by Donald Trump’s nuclear deal withdrawal from escalating further, according to a top Iranian official. Iran expects oil exports to remain at current levels, continued access to international finance and the completion of contracts signed with European companies, according to the person, who asked not to be named in line with diplomatic protocol. The official spoke Friday in Vienna ahead of talks with Chinese, French, German, Russian and U.K. diplomats about the fate of the Joint Comprehensive Plan of Action, as the 2015 accord is formally known.

Stocks Steady as Korea Concerns Cool; Oil Falls: Markets Wrap (Bloomberg) Stocks steadied after North Korea offered a measured response to President Donald Trump’s decision to cancel a summit with that country’s leader, though politics in Europe damped the appetite for risk. The dollar edged higher with U.S. Treasuries, while crude oil extended a decline. The Stoxx Europe 600 Index pared gains, with Spain’s benchmark gauge tumbling as the prospect of a snap election increased. S&P equity-index futures fluctuated between gains and losses after Thursday’s decline in U.S. benchmarks. Core European bonds advanced, while Italy led peripheral debt lower as worries mounted over the leadership there and in Spain. WTI crude dropped below $70 a barrel after a Saudi minister said supply would likely be boosted in the second half.

Two men set off bomb in restaurant in Canada; 15 wounded (Reuters) Two unidentified men walked into a restaurant on Thursday in the Canadian city of Mississauga and set off a bomb, wounding more than a dozen people, local police said. The blast went off in the Bombay Bhel restaurant at about 10:30 p.m local time. Fifteen people were taken to hospital, three of them with critical injuries, the Peel Regional Paramedic Service said in a Tweet. The two male suspects fled after detonating their improvised explosive device, Peel Regional Police said in a Tweet. No one has claimed responsibility, and the motive for the attack was not known.

Canada PM raps possible U.S. auto tariffs, says linked to NAFTA (Reuters) A move by the United States to explore tariffs on auto imports is based on flimsy logic and is part of the pressure from Washington to renegotiate the NAFTA trade pact, Canadian Prime Minister Justin Trudeau said on Wednesday. In an interview with Reuters, Trudeau said that while U.S. President Donald Trump had raised the idea of punitive measures, there was no guarantee they will happen. Trudeau also predicted talk of tariffs would likely disappear if slow-moving negotiations to update the North American Free Trade Agreement – currently stuck on autos issues – are successful.

IMF’s Lagarde tells Turkey to ensure central bank independence (BNN) International Monetary Fund Managing Director Christine Lagarde urged the Turkish government to preserve the independence of its central bank after confusion sent the lira sliding. Mixed signals about whether the central bank is free of political interference created a sense of uncertainty among investors, putting the currency under pressure, Lagarde said in an interview with Bloomberg Television in St. Petersburg.

Royal Bank: Canadian businesses borrowing to grow as commercial loan growth tops double digits (BNN) Rod Bolger, chief financial officer at RBC, tells BNN Bloomberg that commercial loan growth was up by double digits as business continue to invest in Canada and that the bank is seeing a strong consumer and healthy real estate market.

Overnight markets

Overview: US 10yr note futures are up 0.157% at 119-22, S&P 500 futures are down -0.23% at 2721.25, Crude oil futures are down -2.26% at $69.11, Gold futures are down -0.05% at $1309.2, DXY is up 0.38% at 94.133, CAD/USD is up 0.57% at 0.7719. 

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 slightly higher, 10Y below 3.0% (2.992), prices rebounding as equity futures slide as ‘risk-on’ tone fades, heavy volume in TY1 on continued Jun/Sep roll.  USD index slightly lower, crude lower for a third day @ 70.93. Core EGBs higher, outperforming tsys, brief rally in Italian bonds after Italian govt formed, BTP/bund spd  @ 183.8 from earlier low 178.6 . GOCs lower, in line with tsys, rolls unch, 10s/30s narrowing after Dec 51 auction yest, 51/48 rl  -0.3/-0.4, post auction flows saw decent short cvoering of48s. Provincial spreads opening 0.5bps wider,  Ontario 48/27 curve  1bp flatter since end of April,  going into month end extension, all in yield pick up the narrowest it has ever been @ ~14.5bps. 

News headlines

Trump Threatens Allies With New Tariffs, Sowing Global Confusion (Bloomberg)  President Donald Trump’s push for tariffs on imported cars and trucks threatened a shake-up of the global auto industry while motivating nations including China and Germany to reiterate commitments of varying strength to free trade. The U.S. statement late Wednesday that it’s investigating auto imports on national security concerns drew pointed responses from Japan and South Korea — two nations that have been at pains to placate Trump — as well as Germany.

Carney And Dudley Urge Banks to Prepare for Move Away From Libor (Bloomberg)  Bank of England Governor Mark Carney and Bill Dudley, President of the Federal Reserve of New York, urged the finance industry to prepare for the transition to new benchmark rates from scandal-ridden Libor. “Libor’s potential cessation after 2021 poses a clear risk to financial stability, and prudent risk management means that all of us must prepare for a world without Libor,” Dudley said at a conference in London. “This is a monumental and complicated effort — one that the industry has never undertaken — and it will entail overcoming many obstacles.”

Trump Says He Won’t Sign ‘Dreamers’ Bill Without Money for Wall (Bloomberg) President Donald Trump said he won’t back any immigration bill out of Congress that doesn’t include both funding for a wall and increased border security, as some Republican lawmakers try to force a vote on a measure designed to shield young people from deportation. « Unless it includes a wall, and I mean a wall, a real wall, and unless it includes very strong border security, there’ll be no approvals from me, because I have to either approve it or not, » Trump said during an interview on the Fox News program “Fox & Friends.” « There is a mood right now to get better, stronger border security. »

Stocks Mixed as Trade Worries Linger; Euro Gains: Markets Wrap (Bloomberg) Concerns surrounding global trade hung over markets on Thursday, with U.S. equity futures following Asian shares lower even as European stocks edged up. The yield on 10-year Treasuries stabilized around 3 percent, while the euro and pound gained. The Stoxx Europe 600 Index managed to claw back a little ground following Wednesday’s selloff, even as carmakers took a hit after President Donald Trump ordered a probe into automobile imports to the world’s biggest economy. That news also dragged the MSCI Asia Pacific Index lower. Major American equity benchmarks were poised to slip at the open.

Canada blocks Chinese takeover of Aecon on security grounds (Reuters) Canada has blocked a proposed C$1.51 billion ($1.18 billion) takeover of construction company Aecon Group Inc (ARE.TO) by a unit of China Communications Construction Co Ltd (601800.SS) on national security grounds, the government said on Wednesday.

Unemployed Canadians’ struggle to find work getting worse: Survey (BNN) It’s becoming increasingly difficult for unemployed Canadians to find work. According to a survey by Express Employment Professionals, Canadians’ average duration of unemployment rose to 19 months – the highest level posted by the survey in five years. By comparison, in 2014 the average length of unemployment was 13 months.

Fed sees next hike soon, signals modest inflation overshoot OK (BNN) Federal Reserve officials said the economic outlook warranted another interest-rate hike “soon” and signaled they would welcome a modest overshoot of their 2 per cent inflation target, indicating they’re in no rush to tighten more aggressively. “Most participants judged that if incoming information broadly confirmed their current economic outlook, it would likely soon be appropriate for the committee to take another step in removing policy accommodation,” minutes released Wednesday of the Federal Open Market Committee’s May 1-2 meeting said.

Overnight markets 

Overview: US 10yr note futures are up 0.039% at 119-14, S&P 500 futures are down -0.1% at 2728, Crude oil futures are down -1.29% at $70.91, Gold futures are up 0.49% at $1301.2, DXY is down -0.21% at 93.808, CAD/USD is up 0.35% at 0.7763. 

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 US Treasuries have rallied with higher during the European morning session, underpinned by risk-off sentiment on a combination of Italian political concerns, a renewal of US-China trade tensions, weak data, and emerging market assets under pressure. 10-yr Tsy yield is -5.1bp at 3.008%- The 5-yr and 7-yr part of the yield curve has led the rally, leading to 2s5s flattening by 3.5bps to 29.1bps, and 5s30s steepening by 1.5bps to 32.2bps. US Tsys edged higher in the main, as risk off trade dominated the Asia-Pacific session on US/China trade differences and that talk of US summit with North Korean leader Kim Jung-Un might be delayed. Data on tap includes home sales, $36B 5Y auction followed by May FOMC minutes at 1hpm.  Sentiment has deteriorated due to multiple factors, including the continuing saga over the appointment of a new Italian Prime Minister and potential eurosceptics in line for Finance; hawkish US President Trump comments Tuesday on China and North Korea; and emerging markets` continuing meltdown (esp Turkey).

News headlines

Stocks Fall, Bonds Gain as Risks Mount; Euro Drops: Markets Wrap (Bloomberg) Shares in Europe followed Asian counterparts lower as storm clouds gathered from Turkey to North Korea and data cast doubts on economic growth prospects for the euro area. Treasuries advanced with the dollar, while oil dropped with most commodities. The Stoxx Europe 600 Index sank by the most in two months alongside U.S. equity-index futures, as optimism over U.S.-China trade talks faded together with prospects for President Donald Trump’s summit with North Korea’s leader. Concerns over Turkey’s financial-market stability drove the lira to successive record lows and weighed on emerging-market assets. The yen and core European bonds gained and gold jumped as traders sought havens after equity benchmarks from Hong Kong to Sydney declined.

Fed Minutes to Detail Views on Inflation Overshoot, Yield Curve (Bloomberg) Divisions among Federal Reserve officials over the yield curve and inflation will be under scrutiny on Wednesday when the U.S. central bank releases minutes of its policy meeting at the start of the month. While the Federal Open Market Committee left interest rates unchanged at the May 1-2 session, new information on how officials discussed those topics could help analysts gauge how many additional hikes are likely this year. The Fed lifted its benchmark rate in March and another move is widely expected in June. Odds are currently about split between the probabilities for three and four increases over the year as a whole, according to pricing of federal funds futures contracts.

Euro-Area Economy Awaits Rebound Suppressed by Temporary Factors (Bloomberg) The euro-area economic rebound expected this quarter remains out of reach for now. After bad weather, strikes and a flu epidemic weighed on growth at the start of the year, manufacturing and services suffered another setback in May, when an unusual number of public holidays damped orders. In a sign that investors are getting impatient with the 19-nation economy, the single currency fell to the lowest level since November.

North Korea Gets Ready to Destroy Its Main Nuclear Test Site (Bloomberg) North Korea is preparing blow up its main nuclear-weapons test site in the next day or two, even as U.S. President Donald Trump raises new doubts about the prospects of a nuclear deal with Kim Jong Un. A selection of journalists representing Chinese, Russian, South Korean, U.K. and U.S. media organizations were traveling to the site in mountainous area of Punggye-ri to witness the event. North Korea said the detonations were intended to put out of use the tunnels used for all six of the isolated nation’s nuclear tests.

Canada says top NAFTA officials in constant contact on trade talks (Reuters) Top U.S., Canadian and Mexican officials are in constant contact about slow-moving talks to revitalize NAFTA and are ready to meet at any time to push the process forwards, Canada’s foreign minister said on Tuesday. Negotiations to update the North American Free Trade Agreement have stalled as Canada and Mexico try to digest U.S. demands for major changes.

TSX futures drop as oil prices slip (Reuters) Futures for Canada’s main stock index were lower on Wednesday as oil prices dropped on expectations that OPEC may increase crude output to cover any supply shortages from Venezuela and Iran. June futures on the S&P TSX index were down 0.44 percent at 7:15 a.m. ET. Canada’s main stock index edged lower on Tuesday, breaking its longest winning run in more than four years as shares of energy and materials companies lost ground.

CIBC blows past estimates as second-quarter profit surges 26% (BNN) Canadian Imperial Bank of Commerce kickstarted bank earnings season on Wednesday with a big profit beat powered by double-digit growth in its core Canadian banking division. CIBC earned $1.32 billion in its fiscal second quarter. On an adjusted basis, profit surged 26 per cent year-over-year to $1.35 billion.

Turkey heads toward a currency crisis as lira goes into freefall (BNN) Turkey is entering the grips of a full-blown currency crisis. The lira was already on course for its worst month since 2008 when it plunged to a new record Wednesday, a sign that the central bank’s apparent refusal to step in is giving traders free rein to bet against it. It sank as much as 5.2 per cent. Policy makers “must hike now,” said Cristian Maggio, the head of emerging-market strategy at TD Securities in London. “There’s no limit to how far this could go because this is becoming a currency crisis.” Eventually, Turks will start selling too, and then there will be “total loss of confidence,” he said.

Overnight markets

Overview: US 10yr note futures are up 0.368% at 119-10, S&P 500 futures are down -0.63% at 2708.75, Crude oil futures are down -0.64% at $71.74, Gold futures are up 0.17% at $1299.6, DXY is up 0.44% at 94.02, CAD/USD is up 0.74% at 0.7744.

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