Commentaires

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

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.

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 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