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Market Update Tsys slightly higher across the curve on very light volume (130k TY fut), 10Y 2.945% (-05bps). Crude above $70 for the first time since Nov 2014 on rising tensions in the middle east, USD index highest since Dec, US equity futures higher (S&P +6.75, Nasdaq +32). Several Fed speakers on tap this week, data focus on April CPI Thurs  (0.3% exp). GOCs higher in line with tsys, provis unch after closing Friday 0.5bps tighter. 

News headlines

A Nafta Deal in May? Negotiators Will Try, But It Won’t Be Easy (Bloomberg) Cabinet-level negotiators from the three Nafta nations meet again in Washington this week to attempt a breakthrough on the trade deal in May. It won’t be easy. Several contentious issues remain unresolved after more than eight months of talks between the U.S., Mexico and Canada to renegotiate the North American Free Trade Agreement. Discussions last took place in late April and will resume Monday, with U.S. Trade Representative Robert Lighthizer expected to host Mexico’s Economy Minister Ildefonso Guajardo and Canadian Foreign Affairs Minister Chrystia Freeland.

Dollar Advances With Stocks; Oil Extends Gain: Markets Wrap (Bloomberg) The dollar resumed its winning ways after a shaky start on Monday, reversing early losses to strengthen. U.S. equity futures and European stocks also climbed following a muted Asian session, and oil extended recent gains to hit another milestone. The Stoxx Europe 600 Index extended Friday’s increase as most national gauges in the region advanced, though trading volumes were lighter than usual thanks to a holiday in the U.K. Contracts for the S&P 500 pointed to the index building on a jump at the end of last week. In Asia, shares climbed in Australia and rallied in Shanghai. The yen fell as Japanese traders returned from holidays, while the euro also weakened. West Texas crude pushed above $70 a barrel for the first time since November 2014 as investors braced for the re-imposition of some U.S. sanctions on Iran. The 10-year Treasury yield ticked higher.

China Softens Tone on Trade After U.S. Leaves Empty Handed (Bloomberg) China tried to strike a positive tone after Donald Trump’s trade negotiators left Beijing Friday with no public sign of an agreement, reiterating that the U.S. shouldn’t make unreasonable demands. State media over the weekend offered a somewhat positive assessment of the U.S. trade talks, urging more negotiations while saying the Americans should be “rational and pragmatic.” And in a move that would meet some U.S. demands, the Commerce Ministry is studying measures to further lower import tariffs on some food, pharmaceuticals and medical instruments, Economic Information Daily reported Monday, citing unidentified people.

Putin Starts New Term as Tensions With West Cloud Economic Hopes (Bloomberg) Vladimir Putin was sworn in for the fourth time as president, promising Russians an “economic and technological breakthrough” in his new six-year term amid the deepest standoff with the West in decades. He’s expected to reappoint his longtime ally Dmitry Medvedev as prime minister as early as Monday in what would be a strong signal of continuity despite a disappointing economic performance.

TSX futures rise on higher crude prices (Reuters) Canada’s main stock index futures rose on Monday, helped by oil prices that touched their highest levels since late-2014 on the back of Venezuela’s deepening economic crisis. June futures on the S&P TSX index SXFc1 were up 0.06 percent at 7:15 a.m. ET. No major economic indicators are scheduled for release. The Toronto Stock Exchange’s S&P/TSX .GSPTSE rose 107.93 points, or 0.69 percent, to 15729.4 on Friday. [nL8N1SB6WL] Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.36 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were up 0.41 percent and Nasdaq 100 e-mini futures NQc1 were up 0.65 percent.

Morneau fires back on Canadian competitiveness warnings (BNN) Federal Finance Minister Bill Morneau is firing back amid a growing chorus of warnings that Canada’s level of competitiveness is eroding. “I will constantly go back to business people and listen to them and say, you need to help me to understand what exactly are the prescriptions to ensure we remain competitive,” Morneau said in an interview with BNN Bloomberg’s Amanda Lang on Friday. “But what I won’t do is accept the frame that we’re not competitive.”

U.S. adds 164,000 positions in April; jobless rate hits 3.9% (BNN) U.S. hiring rebounded in April and the unemployment rate dropped below 4 per cent for the first time since 2000, while wage gains unexpectedly cooled, suggesting the labour market still has slack to absorb. Payrolls rose 164,000 after an upwardly revised 135,000 advance, Labor Department figures showed Friday. The jobless rate fell to 3.9 per cent, the lowest since December 2000, after six months at 4.1 per cent. Average hourly earnings increased 0.1 per cent from the prior month and 2.6 per cent from a year earlier, both less than projected. 

Overnight markets

Overview: US 10yr note futures are down -0.091% at 119-19, S&P 500 futures are up 0.32% at 2671.5, Crude oil futures are up 1.13% at $70.51, Gold futures are down -0.3% at $1310.7, DXY is up 0.41% at 92.944, CAD/USD is up 0.32% at 0.776.

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 higher on light volume (206k TY fut), 10Y 2.93 (-1.7bps), tsy curve 1bp flatter. April non farm payrolls due at 8:30 – 185k increase exp rebounding from March’s weak 103k, with the unem rate forecast to decline 0.1% to 4.0% with AHE steady at 2.7%.  EGBs mixed ahead of the US data, 10Y bund lower in rangebound trade despite more weak Eurozone data (PMI, retail sales), 10Y yield 0.532% (+0.4bps). GOCs higher in line with tsys, curve unch , 2s30s 2.5bps flatter wk/wk. New 10Y roll (28/27) 0.5bps flatter (1/0.9) since 10Y auction last week (1.5), while the old 10Y roll (27/26) 0.4bps cheaper so 27s starting to look cheap, June 26s anchored by CTD status. 

News headlines

U.S.-China Trade Talks End With Key Differences Still Unresolved (Bloomberg) Two days of U.S.-China trade discussions ended in Beijing with an agreement to keep on talking, and little else. China’s official Xinhua News Agency reported Friday afternoon that both sides reached a consensus on some trade issues while acknowledging major disagreements on some matters. It said they would continue discussions, without providing specifics for when they would start again. Neither side briefed the media, and the U.S. delegation led by Treasury Secretary Steven Mnuchin departed Beijing in the evening.

Buffett’s Berkshire Braces for ‘Wild’ Swings From New Accounting (Bloomberg)  Warren Buffett’s company is scheduled to report earnings Saturday morning before its annual meeting, and a new accounting rule could sink results. Berkshire is now required to report unrealized gains and losses from equity investments in net income. Buffett has warned that the change could be significant because Berkshire’s more than $170 billion stock portfolio can easily fluctuate by $10 billion or more in a quarter.

Stocks Mixed Amid China Talks; Payrolls in Focus: Markets Wrap (Bloomberg) Stocks in Europe edged higher despite a decline in Asia as investors assessed trade talks between the U.S. and China. U.S. equity-index futures declined while the dollar advanced ahead of the monthly U.S. jobs report. Basic materials and technology companies led gains in the Stoxx Europe 600 index as the euro slipped amid mounting concern about the region’s economic outlook. Financials fell after disappointing earnings reports from BNP Paribas SA, Societe Generale SA and HSBC Holdings Plc. Stocks from Sydney to Hong Kong retreated earlier. U.S. Treasury yields were steady along with core European bonds.

U.S. Looks Beyond Iran Nuclear Deal Deadline to What Comes Next (Bloomberg)  Donald Trump seems set on pulling out of the Iran nuclear deal next week, with U.S. officials suggesting that any initial diplomatic turbulence will be followed by negotiations for a new accord. There’s one big hang-up: Iran is ruling out new talks, calling the current agreement “non-negotiable.” And America’s European allies continue to back it, saying the deal has been essential to reining in Iran’s nuclear program.

TSX futures slightly lower ahead of U.S. jobs report (Reuters) Futures for Canada’s main stock index edged lower on Friday, tracking gold prices and ahead of the closely watched U.S. jobs data. U.S. job growth likely accelerated in April after a weather-related slowdown in the previous month, with the unemployment rate expected to drop to near a 17-1/2-year low of 4.0 percent. June futures on the S&P TSX index SXFc1 were down 0.05 percent at 7:15 a.m. ET.

Canada posts unexpected $4.1B trade deficit, its biggest ever (BNN) Canada’s trade deficit unexpectedly widened to a record in March as a surge in automobile imports outpaced a rebound for the nation’s exporters. The merchandise trade deficit widened to $4.14 billion from $2.93 billion a month earlier, Statistics Canada reported Thursday in Ottawa. Economists predicted the March figure would narrow to $2.25 billion.

Canada Post Group reports 2017 profit up as parcel business swells (Toronto Star) The Canada Post Group of Companies reported a profit of $144 million for 2017, up from $81 million in 2016, as its parcel business grew with the popularity of online shopping. The improved profit at the company which includes Canada Post, Purolator and SCI Group came as revenue from operations totalled nearly $8.23 billion in last year, up from $7.88 billion in 2016. Canada Post has seen its parcels business grow significantly as shoppers opt for online retailers, offsetting a decline in the company’s traditional transaction mail business.

Overnight markets

Overview: US 10yr note futures are up 0.117% at 119-27, S&P 500 futures are down -0.3% at 2623.75, Crude oil futures are up 0.22% at $68.58, Gold futures are down -0.05% at $1312, DXY is up 0.09% at 92.496, CAD/USD is up 0.18% at 0.777.

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, yields 2-3bps lower on moderate volume in TY futures, the 10Y 2.93% (-3bps), USD index slightly higher, crude unch @ 67.90.  Data in the US includes ISM Non-Man & Factory Orders, yet mkt focus on April payrolls (185k est) tomorrow. Core EGBs higher, June bund future at a two-week high 159.03 (+0.44 ticks) – Eurozone core inflation fell to 0.7% in April from 1.0%, yet timing of the Easter holiday (prior to measurement period) likely responsible for some of the shortfall. GOCs higher in line with tsys, 10Y 2.336%. After closing 0.5bps wider yest, Ontarios are opening 0.5 bps wider in longs, (Ont 49s 79/78.5) with Ont 28s unch (69/68.5). 

News headlines

Ahead of Trade Talks, China Says It Won’t Submit to U.S. ‘Threats’ (Bloomberg) The Trump administration’s top economic officials arrived for trade talks in Beijing Thursday as China said it’s not willing to back down on key issues or submit to any U.S. threats. China’s government won’t accept any U.S. preconditions for negotiations such as abandoning its long-term advanced manufacturing ambitions or narrowing the trade gap by $100 billion, a senior government official, who asked not to be named, said late Wednesday.

Fed Calm Over 2% Inflation Underlines Gradual Rate-Hike Outlook (Bloomberg)  Federal Reserve officials made doubly sure to convey a relaxed attitude toward inflation rising above 2 percent, mentioning the “symmetric” nature of their target twice in a statement Wednesday that signaled no shift to a faster pace of monetary policy tightening.

Cabinet Brexiters Outgun May on Her Customs Plan (Bloomberg) Theresa May is facing a crisis after pro-Brexit ministers paired up with Conservative hardliners to demand a clean break from the European Union’s customs system, rejecting her plea for a compromise solution.

Dollar Drops as Focus Turns to Trade; Stocks Slip: Markets Wrap (Bloomberg) The dollar gave back some of its recent gains on Thursday as investors began to switch their attention away from the Federal Reserve and toward the outlook for global trade. U.S. equity futures pared an advance while stocks in Europe followed Asian peers lower.

North Korea’s Kim tells China he is committed to denuclearization (Reuters) North Korean leader Kim Jong Un told a visiting Chinese diplomat on Thursday that he is committed to denuclearization, China’s foreign ministry said, as diplomatic efforts to bring lasting peace to the Korean peninsula gather pace.

Bombardier sells Toronto assembly site in major makeover (Reuters) Canadian plane and train maker Bombardier Inc (BBDb.TO) has agreed to sell its Toronto aircraft assembly site to a pension fund as it strives to raise extra cash under a five-year recovery plan. The company, which reported a 16-percent rise in its favored measure of profit on Thursday but is only bouncing back after considering bankruptcy in 2015, will make $635 million gross from the sale to the Public Sector Pension Investment Board.

TSX futures up with earnings in focus (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday as gold prices rose, while investors focused on a host of earnings from companies including Bombardier. June futures on the S&P TSX index SXFc1 were up 0.15 percent at 7:15 a.m. ET. Trade data for March is due at 8:30 a.m. ET Canada’s main stock index edged higher on Wednesday, although paring some earlier gains, as resource shares climbed, while financials and Maple Leaf Foods Inc (MFI.TO) lost ground.

Canada loses NAFTA court challenge, reviving environmental concerns (BNN) The federal government has lost a court bid to overturn a NAFTA ruling involving a Nova Scotia quarry and marine terminal project, sparking renewed concerns about the trade deal’s effects on Canada’s environmental regime. The U.S. firm that backed the proposed project welcomed the Federal Court of Canada decision, while environmental groups said it highlights how the North American Free Trade Agreement hamstrings Canada’s ability to protect its ecology.

Overnight markets

Overview: US 10yr note futures are up 0.183% at 119-24, S&P 500 futures are down -0.35% at 2618.25, Crude oil futures are down -0.07% at $67.88, Gold futures are up 0.9% at $1317.3, DXY is down -0.03% at 92.485, CAD/USD is down -0.32% at 0.7787.

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