Commentaires
11/05/2018
Market Update US tsys slightly higher on avg volume (295k TY fut), 10Y 2.96 (-0.5bps), tsy curve unch after yesterday saw 2s/10s flatten to 40bps the narrowest since 2007. Relatively quiet day data wise with import prices & U. Michigan Sent, Fed Bullard speaks on economy this morn. Equities higher, S&P fut +5, crude unch 71.37. Core EGBs giving up early gains, 10Y gilt slightly lower, 1.435% (+0.5bps), bund curve 1bp flatter. GOCs slightly lower before April Employment data – 20k increase exp after 32.3k in March, Can/US spreads wider going into the data 3-6 bps wk/wk, notably flattening in 10s30s ~5bps over the week, 10s 5bps cheaper on the 2s30s butterfly, the equivalent tsy butt unchanged on the week. In corps 3 deals yest including a Morguard 3Y @200 (4x oversubscribed) which broke 10bps tighter and BP Capital 7Y maple @113. Consider the Morguard credit curve still fairly steep after the repricing yest, the 18s ~90bps, so 30bps/yr. Ontario & BC 2028 deals yesterday both trading 0.5bps inside of issue , Ont 28s 64.5/64.
News headlines
U.S. Congress Needs Notice of Nafta Deal by Next Week, Ryan Says (Bloomberg) Paul Ryan says he needs notice of a Nafta deal by May 17 if the current Congress is going to be able to vote on it, suggesting talks are pushing up against the constraints of American trade law. The House Speaker, in remarks delivered Wednesday in Washington, said U.S. Trade Promotion Authority regulations mean next week is a deadline for the Trump administration if it wants to pass a new North American Free Trade Agreement before a new Congress is sworn in.
Trump Heads Into Kim Summit Adept at Breaking Not Making Deals (Bloomberg) Donald Trump has spent his presidency breaking deals he inherited, confident he could do better. So far, it hasn’t worked. Now, as he games out a historic summit with North Korea’s Kim Jong Un in Singapore next month, Trump is gambling he can do just the opposite: construct a complicated pact to dismantle Pyongyang’s nuclear program.
Italy Finally Falls to the Forces of Populism (Bloomberg) First came Brexit, then Donald Trump, and now the rebellion by angry voters has landed its biggest blow on continental Europe. Italy, the most indebted member of the euro region to avoid a bailout during the European debt crisis, has succumbed to the forces of nationalism and protectionism that emerged over the past two years as the biggest threat to the political order.
Global Stocks Mixed as Rates in Focus; Oil Steady: Markets Wrap (Bloomberg) European stocks struggled for traction even as U.S. equity futures rose and Asian peers jumped after easing inflation in the world’s biggest economy removed some pressure from the Fed to step up the pace of monetary tightening. The dollar slipped after dropping the most since March on Thursday. The Stoxx Europe 600 Index fluctuated, but still headed for its seventh week of increases, the longest streak in more than three years. Declines in the healthcare sector — weighed on by a string of negative drug-trial results and some stocks trading ex-dividend — offset gains for real estate and basic resources. U.S. 10-year Treasury yields held below 3 percent. Oil was steady around a three-year high, heading for a second week of gains after the U.S. pulled out of the Iran nuclear deal.
Canada new home prices unchanged in March; Toronto slips (Reuters) Canadian new home prices were unchanged in March, as expected, as higher prices in Ottawa were offset by a weaker Toronto market, data from Statistics Canada showed on Thursday. Prices in Toronto fell 0.3 percent, the third monthly decrease in a row, after provincial government measures taken last year to rein in the city’s hot market. Tighter mortgage rules that came into effect at the start of 2018 and three interest rate increases from the Bank of Canada have also helped cool the country’s housing market. Markets expect the central bank to hike rates again this summer, which could put additional pressure on highly indebted consumers.
TSX futures rise on strong commodity prices (Reuters) Canada’s main stock index futures edged higher on Friday, helped by strong commodity prices on the back of a weaker U.S. dollar. June futures on the S&P TSX index SXFc1 were up 0.19 percent at 7:45 a.m. ET. Employment change data for April is due at 8:30 a.m. ET The Toronto Stock Exchange’s S&P/TSX .GSPTSE rose 48.69 points, or 0.31 percent, to 15,959.50.
Air Canada pounces on WestJet ‘uncertainty’ amid strike threat (BNN) Air Canada is aiming to cash in as its main rival braces for the possibility of a walkout by its pilots. « Travellers who may be concerned about the uncertainty resulting from WestJet’s strike vote mandate can book Air Canada with confidence, » Air Canada said in a release Thursday afternoon, less than a half hour after the Air Line Pilots Association said in a tweet 91 per cent of its WestJet members voted to authorize a strike.
Feds, Quebec team up with Apple, Alcoa, Rio Tinto on carbon-free aluminum smelting (BNN) Aluminum giants Alcoa Inc. (AA.N) and Rio Tinto Group (RIO.N) are teaming up with Apple Inc. () and the federal and Quebec governments to commercialize the world’s first carbon-free aluminum smelting process. Described by the companies as the most significant innovation in the aluminum industry in 100 years, the new process eliminates greenhouse gas emissions from traditional smelting by instead producing oxygen.
Overnight markets
Overview: US 10yr note futures are up 0.039% at 119-14, S&P 500 futures are up 0.15% at 2722.75, Crude oil futures are down -0.01% at $71.35, Gold futures are up 0.21% at $1325.1, DXY is down -0.15% at 92.512, CAD/USD is down -0.27% at 0.7854.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.984% | 2 Year | 2.533% |
| 5 Year | 2.238% | 5 Year | 2.831% |
| 10 Year | 2.408% | 10 Year | 2.962% |
| 30 Year | 2.437% | 30 Year | 3.107% |
US Economic Data
| 8:30 AM | Import Price Index MoM, Apr est 0.5% (0.0% prior) |
| Import Price Index ex Petroleum MoM, Apr 0.2% (0.1% prior) | |
| Import Price Index YoY, Apr est 3.9% (3.6% prior) | |
| Export Price Index MoM, Apr est 0.4% (0.3% prior) | |
| Export Price Index YoY, Apr (3.4% prior) | |
| 10:00 AM | U. of Mich. Sentiment, May est 98.3 (98.8% prior) |
| U. of Mich. Current Conditions, May (114.9 prior) | |
| U. of Mich. Expectations, May (88.4 prior) | |
| U. of Mich. 1 Yr Inflation, May (2.7% prior) | |
| U. of Mich. 5-10 Yr Inflation, May (2.5% prior) |
Canadian Economic Data
| 8:30 AM | Net Change in Employment, Apr est 20.0k (32.3k prior) |
| Unemployment Rate, Apr est 5.8% (5.8% prior) | |
| Hourly Earnings Permanent Empl YoY, Apr est 3.2% (3.1% prior) | |
| Full Time Employment Change, Apr est 16.8 (68.3 prior) | |
| Part Time Employment Change, Apr est 12.0 (-35.9 prior) | |
| Participation Rate, Apr est 65.5 (65.5 prior) |
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
10/05/2018
Market Update Tsys trading higher before CPI & 30Y auction, 10Y 2.98 (-1bp). S&P futures slightly higher (+4), crude higher extending gains above $71 on Middle East tensions, BOE left rates steady as exp in 7-2 vote, Carney leaving in doubt the pace of future hikes after recent slowing in inflation & growth, year end hike odds fell to 85%. US CPI expected to have risen 0.3% last month after falling 0.1% in March, the spike in energy expected to contribute to the rebound, thou yesterday’s tame PPI reading adds to some downside risk. In Canada, GOCs underperforming, slightly weaker with the 10Y approaching 2.40% resist. Provis continuing to tighten as GOC yields rise, the Ontario 48/27 credit curve narrowing 0.5bps yest to 14.3. Ontario & Sask rumoured for today.
News headlines
BOE Keeps Interest Rate on Hold as Inflation Seen Cooling Faster (Bloomberg) The Bank of England kept interest rates on hold after a first-quarter economic slump and said inflation will slow faster than previously anticipated. The Monetary Policy Committee voted 7-2 to hold at 0.5 percent, as predicted by all but three of 54 economists in a Bloomberg survey. While Ian McCafferty and Michael Saunders reiterated their support for an immediate increase, investors pared their bets on a rate hike this year. The pound fell.
Iran’s Door to the West Is Slamming Shut, and That Leaves China (Bloomberg) Tehran traffic is gridlocked half the time, and the city spends most of the year engulfed in smog, so it’s not surprising that locals travel underground when they can — on a metro system that sometimes carries 2 million people a day. During the sanctions decade, when Iran was largely frozen out of global commerce, the capital’s authorities managed to steadily expand the network — roughly doubling its size. It wasn’t easy. Often, “the parts we needed, we had to build ourselves,’’ said Ali Abdollahpour, deputy managing director of Tehran Urban and Suburban Railway Operating Company.
China Tariff Retaliation Threatens Key States in Trump Country (Bloomberg) Retaliatory tariffs China is threatening against U.S. exports would hit hardest in states that helped propel Donald Trump to the presidency, bringing home the risks of a trade war ahead of midterm elections. Of the 10 states that face potential Chinese tariffs on more than $1 billion of their exports, seven backed Trump in 2016, according to a report by the American Action Forum, a Washington-based group that opposes protectionist trade policies.
Dollar Drops as Treasuries Rise; Pound Hit by BOE: Markets Wrap (Bloomberg) The dollar gave up some of its recent gains on Thursday, declining before inflation data as traders confronted a range of catalysts from political risks to missiles in the Middle East. European stocks slipped, U.S. equity futures rose, and the pound reversed an advance after the Bank of England held interest rates. Ten-year Treasury yields, which have been driving up the greenback and exacting pain on emerging markets, dipped back below 3 percent to push the dollar toward its first drop in five days. The pound weakened as policymakers at the central bank voted 7-2 to keep rates unchanged in what was interpreted as a dovish hold. It then pared the decline as Governor Mark Carney struck a more hawkish tone in a press conference after the decision.
TSX futures dip on political uncertainty (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Thursday amid political uncertainty after Israel said it attacked nearly all of Iran’s military infrastructure in Syria after Iranian forces fired rockets at Israeli-held territory for the first time. It was the heaviest Israeli barrage in Syria since the start in 2011 of its civil war, in which Iranians, allied Shi’ite militias and Russian soldiers have deployed in support of President Bashar al-Assad.
Canadian Tire to buy sportswear brand Helly Hansen in C$985 mln deal (Reuters) Retailer Canadian Tire Corp (CTCa.TO) said on Thursday it would buy Norway-based sportswear and work-wear brand Helly Hansen for C$985 million, including debt. Canadian Tire said the deal, which will close in the third quarter, will add to earnings immediately. Oslo-based Helly Hansen sells apparel used in outdoor activities such as sailing, skiing, mountaineering and hiking.
Bank of Canada raises conventional 5-year mortgage rate (BNN)The bar is now higher for homebuyers to qualify for mortgages in Canada after the central bank raised a key metric used in stress tests that determine borrowers’ eligibility. The Bank of Canada raised the conventional five-year mortgage rate from 5.14 per cent to 5.34 per cent after all Big Six banks raised their posted five-year fixed mortgage rates in recent weeks.
Canada worried auto production could get tied up in NAFTA’s red tape (BNN) Canada is voicing concerns heard from car companies that some of the rules being considered during the NAFTA negotiations could prove damaging to one of this continent’s biggest industries. Foreign Affairs Minister Chrystia Freeland says she raised some of those worries Wednesday during a meeting with her U.S. counterpart, as countries make what could be a last stab at a deal in 2018.
Overnight markets
Overview: US 10yr note futures are up 0.066% at 119-11, S&P 500 futures are up 0.13% at 2699.5, Crude oil futures are up 0.56% at $71.54, Gold futures are up 0.42% at $1318.5, DXY is down -0.15% at 92.905, CAD/USD is down -0.54% at 0.7822.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.958% | 2 Year | 2.522% |
| 5 Year | 2.205% | 5 Year | 2.828% |
| 10 Year | 2.389% | 10 Year | 2.979% |
| 30 Year | 2.444% | 30 Year | 3.148% |
US Economic Data
| 8:30 AM | Initial Jobless Claims, May 5th 211k est 219k (211k prior) |
| Continuing Claims, Apr 28th 1790k est 1800k (1756k prior) | |
| CPI MoM, Apr 0.2% est 0.3% (-0.1% prior) | |
| CPI Ex Food and Energy MoM, Apr 0.1% est 0.2% (0.2% prior) | |
| CPI YoY, Apr 2.5% est 2.5% (2.4% prior) | |
| CPI Ex Food and Energy YoY, Apr 2.1% est 2.2% (2.1% prior) | |
| CPI Index NSA, Apr 250 546 est 250.700 (249.554 prior) | |
| CPI Core Index SA, Apr 256 450 (256.200 prior) | |
| Real Avg Weekly Earnings YoY, Apr 0.4% (0.9% prior) | |
| Real Avg Hourly Earning YoY, Apr 0.2% (0.4% prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, May 6th (56.5 prior) |
| 14:00 PM | Monthly Budget Statement, Apr est 212.0b (-208.7b prior) |
Canadian Economic Data
| 8:30 AM | New Housing Price Index MoM, Mar est 0.0% (-0.2% prior) |
| New Housing Price Index YoY, Mar est 2.4% (2.6% prior) |
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
09/05/2018
Market Update Tsys trading lower, US 10Y back above 3.0% (3.01% high) , on heavy volume in TY futures (428k), crude up ~3.0% above 71 rebounding from yesterday’s post Iran announcement slump. Stocks higher (S&P fut +9.5). Core EGBs weaker, UK gilt yields 2-3bps higher weighed by UK/Euro bond supply including 10Y gilt auction, uncovered 30Y bund auction (b/c 0.71). Focus on April PPI – 0.2% vs 0.3% prev – headline PPI rose 3.0% y/y in March the highest since Nov while core prices rose at the fastest pace since Nov 2011. PPI is at risk of moving higher in the coming months from trade tariffs announced recently. The US auctions $25bln in 10Y notes at 1:00ET from $21bln in April, which saw the lowest indirect demand since Sept. GOCs weaker in line with tsys, 10Y approaching 2.40% high from Feb, long end well anchored on the curve 10s30s @ 6bps. BOC auctions $3bln in new August 2020 2Y bonds at noon with the WI roll (Aug/May) 3.9/3.6 , 2Y yields @ 1.95% same level as previous 2Y auction on April 19th. Provis well bid, Ont 28s&49s 0.5bps tighter, after closing tighter yest.
News headlines
Trump to Exit Iran Nuclear Deal and Reinstate U.S. Sanctions (Bloomberg) President Donald Trump said the U.S. will withdraw from the landmark 2015 accord to curb Iran’s nuclear program and reinstate financial sanctions on the Islamic Republic, opening an uncertain new chapter for the Middle East. His decision, widely anticipated by allies and analysts, was intended to force Iran to renegotiate an agreement the country’s leaders have said they will not revisit. Trump’s political opponents warned he could lead the U.S. into another Mideast war.
Europeans scramble to save Iran deal after Trump reneges (Reuters) Dismayed European allies sought to salvage the international nuclear pact with Iran on Wednesday after President Donald Trump pulled the United States out of the landmark accord, while Tehran poured scorn on the U.S. leader.
Oil soars above $71 and the dollar is on a tear after Trump dumps Iran deal (Reuters) Crude oil prices jumped back to 3-1/2-year highs on Wednesday after President Donald Trump pulled the United States out of an international nuclear deal with Iran, while the dollar continued its tireless ascent and world stocks held steady.
Argentina seeks IMF financial aid ‘to avoid crisis’ (BBC) Argentina is to start talks about a financing deal with the International Monetary Fund (IMF) on Wednesday amid reports it is seeking $30bn (£22bn). Finance minister Nicolas Dujovne is due to fly to the IMF’s Washington offices. After recent turmoil that saw interest rates hit 40%, President Mauricio Macri said IMF aid would « strengthen growth » and help avoid crises of the past. The talks come 17 years after Argentina defaulted on its debts and 12 years since it severed ties with IMF.
La Presse seeks not-for-profit structure, pending Quebec legislation changes (GlobalNews) Montreal-based La Presse news group plans to adopt a not-for-profit structure, if Quebec allows it to do so, the company announced Tuesday. The structural change requires the Quebec government to repeal a provision of a Private Act adopted in 1967, regarding La Presse’s ownership, the French-language publication said in a statement. Power Corporation of Canada, whose subsidiary Square Victoria Communications Group currently owns the 130-year-old publication, will grant $50 million to the venture.
Facebook shakes up its execs and adds new blockchain group (CNBC) Facebook will now operate under three divisions. The reorganization will reportedly include a new blockchain effort and aims to address privacy concerns.
Vodafone to pay $21.8 billion for Liberty assets to strengthen European presence (CNBC) The world’s second-largest mobile operator had held repeated talks with Liberty in recent years in a bid to broaden its offering and better compete in Europe. Vodafone will become Europe’s leading next generation network owner, serving the largest number of mobile customers and households across the EU, » Chief Executive Vittorio Colao said.
Crude soars, U.S. dollar dips as Trump dumps Iran nuclear deal (TheGlobeandMail) Crude oil prices hit 3-1/2-year highs on Wednesday after President Donald Trump pulled the United States out of an international nuclear deal with Iran, while the dollar touched a new high for the year and world stocks held steady. Trump’s move sparked fears of increased tension in the Middle East and uncertainty over global oil supplies.
Overnight markets
Overview: US 10yr note futures are down -0.222% at 119-08, S&P 500 futures are up 0.36% at 2679.75, Crude oil futures are up 2.43% at $70.74, Gold futures are down -0.06% at $1312.9, DXY is down -0.16% at 92.968, CAD/USD is down -0.52% at 0.7761.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.953% | 2 Year | 2.526% |
| 5 Year | 2.196% | 5 Year | 2.835% |
| 10 Year | 2.383% | 10 Year | 3.002% |
| 30 Year | 2.444% | 30 Year | 3.154% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, May 4th -0.4% (-2.5% prior) |
| 8:30 AM | PPI Final Demand MoM, Apr 0.1% est 0.2% (0.3% prior) |
| PPI Ex Food and Energy MoM, Apr 0.2% est 0.2% (0.3% prior) | |
| PPI Ex Food, Energy, Trade MoM, Apr 0.1% est 0.2% (0.4% prior) | |
| PPI Final Demand YoY, Apr 2.6% est 2.8% (3.0% prior) | |
| PPI Ex Food and Energy YoY, Apr 2.3% est 2.4% (2.7% prior) | |
| PPI Ex Food, Energy, Trade YoY, Apr 2.5% (2.9% prior) | |
| 10:00 AM | Wholesale Trade Sales MoM, Mar (1.0% prior) |
| Wholesale Inventories MoM, Mar F est 0.5% (0.5% prior) |
Canadian Economic Data
| 8:30 AM | Building Permits MoM, Mar 2.0% est 3.1% (-2.6% prior Revised -2.8%) |
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