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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.

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, 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.

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, narrow range in TY futures overnite on avg volume (225k), market focus on Trump Iran announcement at 2:00ET. USD index setting new highs , DXY 93.08 (+0.36%), euro setting new lows, equities weaker (S&P fut -6.5), crude -1.0%. Core EGBs lower, German 10Y bund 1.5bps higher @ 0.54% after better than exp March Ind Prod. EU peripherals weaker led by Italy – 10Y BTP/bund +9bps @ 132 the widest since March 28th  , Italy looks to be heading into another election in July. GOCs slightly lower, in line with tsys, 10Y 2.33%,  April Housing Starts 214k vs 220k exp. Provis opening unch after closing 0.5bps tighter yest, Ontario  credit curve continuing to steepen , Ont48/27 14.7bps new wides +2bps since mid April, as underlying 10/30 GOC curve is ~9bps flatter over the period. 

News headlines 

Trump to Announce Iran Deal Decision on Tuesday (Bloomberg)  President Donald Trump will announce on Tuesday whether the U.S. will leave the 2015 Iran nuclear agreement, a signature achievement by his predecessor that he’s long derided as “the worst deal ever.” Foreign leaders and analysts say the president is likely to exit, casting the future of an accord widely seen as reining in Iran’s nuclear program into doubt. Trump has said the deal doesn’t do enough to address threats from the Islamic Republic’s ballistic missile program and the country’s involvement in regional conflicts.

U.S., China Set for Trade Brawl in Geneva (Bloomberg) The U.S. and China are set to clash in Geneva on Tuesday as envoys from the world’s two largest economies address the World Trade Organization amid threats of a trade war. Chinese Ambassador Zhang Xiangchen will criticize Washington’s proposed tariffs on $150 billion of Chinese goods as well as levies on steel and aluminum that went into effect in March, according to an agenda of the meeting. Zhang’s U.S. counterpart, Dennis Shea, is expected to defend the measures and find fault with Beijing’s retaliation.

Trump, Republicans Raise Alarms About West Virginia Primary Race (Bloomberg)  Republican officials were thrown into a panic on the cusp of Tuesday’s three crucial Senate primaries as they confronted a late surge by controversial and confrontational candidate Don Blankenship in West Virginia. There’s a high level of concern among party leaders that Blankenship, a former coal executive who served prison time and has launched racially tinged attacks on Senate Majority Leader Mitch McConnell’s wife, could win the three-way Republican primary, said one GOP strategist familiar with the race. That could damage Republican chances of ousting Democratic Senator Joe Manchin in November.

Dollar Advances, Oil Declines Before Iran Decision: Markets Wrap (Bloomberg) The dollar extended its winning streak while oil dropped as traders braced themselves for President Donald Trump’s decision on the Iran nuclear deal. Lingering uncertainty weighed on risk sentiment, and U.S. futures fell alongside European stocks. The greenback shook off a slow start to climb higher for a third consecutive session, given a boost as Fed Chairman Jerome Powell stuck with the central bank’s message of gradual tightening. U.S equity futures followed the Stoxx Europe 600 Index lower, with Italian stocks the worst performers in that region as the country looks set for fresh elections. Shares in Asia advanced. West Texas crude traded around $70 a barrel, paring a rally that had brought it to the highest since 2014. Treasuries were steady.

TSX futures little changed ahead of Trump’s Iran decision (Reuters) Futures for Canada’s main stock exchange were little changed on Tuesday, as investors awaited an announcement by U.S. President Donald Trump later in the day on whether the United States will reimpose sanctions on Iran. Trump will announce whether he will pull out of the Iran nuclear deal or stay in and work with European allies who have struggled to persuade him that it has successfully halted Iran’s nuclear ambitions.

Tech sector gains keep world shares near one-week high (Reuters) Oil prices eased on Tuesday from 3-1/2-year highs they hit on worries the United States may be set to pull out of a key nuclear accord with Iran, but robust tech sector gains in Asia helped support world stocks near one-week highs. U.S. President Donald Trump will announce at 1800 GMT whether Washington will withdraw from a deal that eased economic sanctions on Iran in exchange for Tehran limiting its nuclear program. A decision to leave the accord could give another boost to this year’s 13 percent oil rally, by constraining Iranian crude exports.

Canadian business confidence plunges to lowest since 2016 (BNN) Canadian business confidence has plunged to the lowest level in 18 months amid increasing concerns about the impact of U.S. tax cuts, a weak loonie and NAFTA uncertainty, according to a report released Monday by the Conference Board of Canada. The Conference Board’s Index of Business Confidence fell 6.9 points to 93.1 in the first quarter, with business leaders saying they do not expect last year’s sales momentum to continue in 2018, the report said

Overnight markets

Overview: US 10yr note futures are down -0.039% at 119-21, S&P 500 futures are down -0.3% at 2662, Crude oil futures are down -0.95% at $70.06, Gold futures are down -0.2% at $1311.5, DXY is up 0.36% at 93.083, CAD/USD is up 0.62% at 0.7715.

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