Commentaires

Market Update Tsys trading slightly higher, 10Y 3.06%, narrow overnight range on heavy volume in TY futures (510k). The USD index up for a third day, DXY 93.50 the highest since Dec, crude lower (WTI -0.35 @ 70.96), equity futures slightly lower.  Tsys rebounded late yest afternoon from steep losses (worst two days since Dec) on Korea summit uncertainty and TIC data showing China’s holdings of tsys actually grew in March to $1.188 trln the highest since last October. In Canada, GOCs are higher in line with tsys, 10Y 2.475 after reaching above 2.505 for the first time since April 2014, while 5s @ 2.30% have eclipsed the highs of 2013, now the most since 2011. Provis steady , all in yields supporting spreads despite heavy supply (~12bln in provi cpn & maturity flow in June). After alberta 48s @ 78.5 yest, rumour of long mani 48 (now 11/10.5 vs Ont). CMB 10Y pricing today ~9:30 in the area of 37bps. 

News headlines

Pimco Sees U.S. 10-Year Treasury Yields Topping Out at 3.5% (Bloomberg) U.S. 10-year Treasury yields will move in a 3 percent to 3.5 percent range for the rest of the year as the Federal Reserve continues raising interest rates, said Robert Mead, co-head of Asia-Pacific at Pacific Investment Management Co. “We do think this hiking cycle is quite well advanced,” Sydney-based Mead said at the Bloomberg Invest summit in Sydney. “We also know that the backdrop of the U.S. economy has been pretty strong and going for a long time. At some point we will find these high yields will become an impediment for growth.”

North Korea Threatens to Scrap Trump Meeting on Nuclear Demands (Bloomberg) North Korea threatened to walk away from its meeting with President Donald Trump next month if the U.S. made a “one-sided demand” for the regime to surrender its nuclear weapons. Kim Kye Gwan, a vice foreign minister and a top North Korea disarmament negotiator, said the regime was disappointed by recent comments from the U.S. on their goals for the summit, according to a statement published Wednesday by the state-run Korean Central News Agency. Kim said North Korea felt “repugnance” toward National Security Adviser John Bolton and rejected a “Libya model” in which the regime quickly gives away its nuclear weapons.

Trump to Use Mueller One-Year Mark to Blast Probe, Giuliani Says (Bloomberg) President Donald Trump and his legal team are planning to use the one-year anniversary this week of Robert Mueller’s appointment to ratchet up pressure on the special counsel to close his investigation. Trump and his lawyers are trying to set up the milestone on Thursday as a turning point in their campaign to end Mueller’s probe into Russian election meddling and obstruction of justice, Rudy Giuliani, Trump’s personal lawyer, said Tuesday in an interview. While he isn’t threatening specific actions, Giuliani said they haven’t ruled out additional steps if Mueller doesn’t heed their calls.

Stocks Steady With Treasuries as Dollar Edges Up: Markets Wrap (Bloomberg) U.S. equity futures edged higher and European stocks rose as global markets regained some composure following a risk-off Tuesday session. The dollar extended gains as the euro came under pressure, and Treasury yields stabilized after their spike a day earlier. Contracts for the S&P 500, Nasdaq and Dow Jones fluctuated before moving slightly higher alongside the Stoxx Europe 600 Index. Earlier in Asia, equities nudged downward, with shares in Japan and Hong Kong declining while Australia’s main gauge eked out a gain and Korean stocks were little changed.

Canada home resales fall in April, lowest in over five years: CREA (Reuters) Resales of Canadian homes fell 2.9 percent in April from March to the lowest level in more than five years, the Canadian Real Estate Association said on Tuesday. The industry group said actual sales, not seasonally adjusted, fell 13.9 percent, while the group’s Home Price Index was up 1.5 percent from April 2017. Canada’s once-hot housing market has cooled in recent months in response to rising interest rates and tighter mortgage rules – dubbed a stress-test – since January. While most economists expect a soft landing, some say there is a risk of a U.S.-style crash.

Futures slightly higher ahead of March manufacturing data (Reuters) Canada’s main stock index futures were slightly higher on Wednesday ahead of manufacturing sales data for the month of March. June futures on the S&P TSX index were up 0.1 percent at 7:15 a.m. ET. Canada’s manufacturing sales numbers, which is likely to show a 1.2 percent increase in March, is due to be released at 8:30 a.m. ET. The Toronto Stock Exchange’s S&P/TSX rose 12.20 points, or 0.08 percent, to 16,097.81 on Tuesday. Dow Jones Industrial Average e-mini futures were up 0.05 percent at 7:15 a.m. ET, while S&P 500 e-mini futures rose 0.07 percent and Nasdaq 100 e-mini futures were 0.13 percent higher.

Morneau to provide update today on Trans Mountain expansion talks (BNN) Finance Minister Bill Morneau will update the nation on his effort to save the controversial Trans Mountain expansion project Wednesday morning. A media advisory was sent late Tuesday, stating Morneau will « update Canadians on the ongoing discussions » regarding Kinder Morgan Canada’s controversial $7.4-billion pipeline proposal at 9 a.m. ET in Ottawa.

Trudeau to Trump: NAFTA deal can be done right now, if you want it (BNN) Prime Minister Justin Trudeau has reportedly told President Donald Trump that a NAFTA agreement is imminently within reach as long as some controversial demands are set aside. That high-level conversation occurred in the midst of what many insiders view as a last-ditch push for a renegotiated agreement before impending political events pause the process until next year.

Overnight markets

Overview: US 10yr note futures are up 0.066% at 118-22, S&P 500 futures are down -0.06% at 2707.25, Crude oil futures are down -0.48% at $70.97, Gold futures are down -0.26% at $1287, DXY is up 0.32% at 93.513, CAD/USD is down -0.08% at 0.7772.

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 are lower, US 10Y above 3.0% , now 3.03% (+2.5bps), on strong volume in TY futures (>525k), risk off tone with US equity futures lower, Euro stoxx unch and the USD index higher, crude back to recent highs 71.75. Empire Man. & Apr Retail Sales at 8:30ET.  Core EGBs weaker, 10Y bund 0.63% new 3 week high, eurozone Q1 GDP +2.5% as exp, German ZEW 87.4 vs 85.5. Gilts outperforming bunds, despite better than exp employment data – solid demand for new ultra long 2071 gilt syndication, despite larger than expected size (Stg6bln vs 5bln). GOCs lower in line with tsys, provis unch. 

News headlines

U.S. Business Groups Bash Trump Tariffs as China Talks Intensify (Bloomberg)  U.S. companies and business groups are lining up to oppose the Trump administration’s plan to slap tariffs on Chinese imports, as the two nations step up efforts to resolve their trade dispute. About 120 firms and industry groups are scheduled to testify at a hearing beginning Tuesday on the administration’s plan to impose tariffs on $50 billion in Chinese goods. So many groups signed up that the U.S. Trade Representative’s Office extended the hearing by two days until Thursday. The USTR has received more than 2,700 comments.

Pennsylvania Voters May Hold Key to Democrats’ Hopes in November (Bloomberg)  If November delivers the wave election that Democrats hope will give them control of the U.S. House, it’s almost certain to wash through Pennsylvania. Results from Tuesday’s primary in the battleground state will offer fresh insight into whether Democrats can seize an opportunity — or miss a chance — to end one-party control of Washington under President Donald Trump.

German Economy Stumbles as Europe Suffers Setback in Growth (Bloomberg)  Economic growth slowed across Europe at the start of the year, with Germany seeing its pace of expansion cut in half amid weaker trade. The 0.3 percent increase in Europe’s largest economy was softer than forecast and the weakest in more than a year. Dutch and Portuguese growth also cooled more than expected in the first quarter, while a similar trend was seen across central and eastern Europe.

Stocks Struggle Amid Risk-Off Mood; Dollar Climbs: Markets Wrap (Bloomberg) There was a risk-off flavor to markets on Tuesday, with U.S. stock futures slipping, European equities struggling for traction and declines across Asia as investors grappled with worries around trade, growth and geopolitics. The dollar rallied, a bond sell-off deepened, and oil advanced. The Stoxx Europe 600 Index edged higher led by energy shares, gradually overcoming a plunge in telecom companies. Equity benchmarks fell in South Korea and Australia earlier, while they rose in Shanghai and dropped in Hong Kong after data showed China’s economic momentum holding up but investment slowing. Treasury yields once again climbed above 3 percent. The euro slid after German growth data disappointed.

Canada home prices rise in April: Teranet (Reuters) Canadian home prices rose slightly in April as Vancouver hit another record high, but the rate of appreciation continued to decelerate amid softening sales and higher interest rates, data showed on Monday. The Teranet-National Bank Composite House Price Index, which measures changes for repeat sales of single-family homes, showed prices increased 0.2 percent on a monthly basis after a flat month in March.

TSX futures higher as oil prices climb (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices hit a 3-1/2-year high, buoyed by tight supply and looming U.S. sanctions against Iran. June futures on the S&P TSX index SXFc1 were up 0.23 percent at 7:15 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE rose 102.29 points, or 0.64 percent, to 16,085.61.

Quebec premier agrees in principle with single tax return (BNN) Quebec is ready to collect provincial and federal taxes, which would permit citizens to file a single tax return instead of two, Premier Philippe Couillard said Monday. Couillard was responding to a resolution favourable to the change that was passed over the weekend at a Conservative party meeting in Quebec. « To simplify the lives of citizens, we would agree with that, » Couillard said. « There is no reason we wouldn’t be able to do it. »

NAFTA negotiators set to miss May 17 target without deal (BNN) NAFTA negotiators from the U.S., Canada and Mexico are poised to miss House Speaker Paul Ryan’s deadline this week, the latest blown marker for reworking the 24-year-old deal. U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Affairs Minister Chrystia Freeland aren’t scheduled to meet together in person this week, according to three government officials familiar with talks who spoke on condition of anonymity. The trio met at least bilaterally every day last week.

Overnight markets

Overview: US 10yr note futures are down -0.236% at 118-31, S&P 500 futures are down -0.25% at 2724.25, Crude oil futures are up 0.73% at $71.48, Gold futures are down -0.89% at $1306.5, DXY is up 0.48% at 93.029, CAD/USD is up 0.18% at 0.7791.

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 slightly lower, curve steeper, 10Y 2.977%, on average volume in TY futures. USD index lower for a third day, equities higher (S&P fut +3), crude firmer.  Fed pres Mester had a positive outlook for the US economy, inflation likely to move higher, gradual rate hikes means 3 or 4 this year.  Stock futures giving up early gains from Trump’s announcement on possible deal with Chinese telecom firm ZTE. Core Euro bonds lower, 10Y bund yield at a three week high 0.59%, hawkish comments from ECB Villeroy saying end of QE approaching, timing of first rate hike nearer, inflation slowdown is temporary. GOCs are lower, slightly wider vs tsys, with the 10Y back @ 2.40% pre Cda employment level. Provis unch , spds narrowing 3-4bps last week on ‘risk on’ & higher GOC yields.  Notably the Ontario 48/27 curve narrowed 0.5bps last week despite significant flattening in the underlying 10s30s Cda curve, demand for long provis picking up going into month end extensions. This was a trade we highlighted in our provi comment sent last week. CMB 10Y deal this week as well as 5YR FRN. 

News headlines

Trump, Xi Ease Trade Tensions With ZTE, Qualcomm Reversals (Bloomberg)  The U.S. and China signaled a desire to avoid a costly trade war after President Donald Trump offered a lifeline to beleaguered telecom equipment maker ZTE Corp. and China’s Xi Jinping dispatched his top economic adviser to Washington. Vice Premier Liu He — who is Xi’s top aide for economic matters — will travel Tuesday to the U.S. for trade talks with Treasury Secretary Steven Mnuchin, the Chinese Ministry of Foreign Affairs said Monday in Beijing.

Pompeo Says U.S. Can Send ‘Capital’ to North Korea Once Nukes Go (Bloomberg)  The U.S. is ready to allow investments in North Korea once it has verifiable proof of the Asian nation’s denuclearization, two of President Donald Trump’s top national security officials said. “We’re prepared to open the trade and investment with North Korea as soon as we can,” National Security Adviser John Bolton said on ABC’s “This Week,” one of two appearances on Sunday political shows.

Here’s Why Trump Is Looking to Seal a New Nafta Deal Soon (Bloomberg) Trade negotiators meet their target dates about as often as meteorologists accurately predict the weather. But the Trump administration will soon bump against a deadline that will determine the fate of its Nafta plans. When he started negotiations on a new North American Free Trade Agreement last year, President Donald Trump invoked a legislative process called trade-promotion authority, a measure to ease the passage of trade deals by Congress. It allows him to seek a simple yes-or-no vote by lawmakers on an updated pact with Mexico and Canada. In exchange, the administration must clear a series of steps designed to build support among politicians.

Europe Stocks Retreat With Bonds; Futures Climb: Markets Wrap (Bloomberg) European stocks retreated with bonds, and the euro climbed toward its highest in two weeks. Futures pointed to an advance in U.S. equities as trade tensions between the world’s two biggest economies showed signs of abating. Banking and technology shares pulled the Stoxx Europe 600 Index lower as investors weighed ongoing Brexit turmoil and Italy’s struggles to form a government. Sovereign bonds on both sides of the Atlantic retreated with the dollar. The euro climbed after a senior European Central Bank official said the first rate hike could come quarters, not years after the end of asset purchases. Most Asian markets advanced and emerging-market stocks built on their first weekly advance in four weeks.

Canada’s Trudeau remains optimistic on trade deal with U.S. (Reuters) Canadian Prime Minister Justin Trudeau is optimistic that a new NAFTA trade deal with the United States can be reached and that a solution on U.S. tariffs for steel and aluminum imports can be found, he told German newspaper Handelsblatt. “We are working hard to reach an agreement on the NAFTA free-trade agreement and possibly also on the question of tariffs and quotas on aluminum and steel,” Trudeau said in a pre-release excerpt from an interview to be published by the German daily on Monday.

Trump outlines ‘sweeping’ drug price reduction plan (BNN) President Donald Trump’s plan to lower U.S. drug prices avoids some of the harshest steps that the pharmaceutical industry and the network of companies that distribute its products feared. Calling his proposal the most sweeping attempt in U.S. history to lower drug prices, Trump wants to increase competition for medicines, cut list prices and reduce patients’ out-of-pocket costs. Yet it also preserves –and in some cases expands — the role of the pharmacy middlemen the administration has blamed for many problems with drug costs.

Overnight markets

Overview: US 10yr note futures are down -0.079% at 119-10, S&P 500 futures are up 0.14% at 2733.25, Crude oil futures are up 0.17% at $70.82, Gold futures are down -0.11% at $1319.3, DXY is down -0.24% at 92.313, CAD/USD is down -0.29% at 0.7838.

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