Commentaires

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

Market Update US tsys lower on above avg volume (335k TY), 10Y close to 3.0% (2.99% +2bps),little reaction to April ADP (204k vs 198k) – focus on FOMC meeting with the Fed widely expected to leave rates unch. US quarterly refunding announcement this morning –  the US Treasury expected to boost auction sizes across all maturities. Core Euro bonds lower, led by UK gilts , yields 4-6bps higher. Risk on tone  GOCs opening weaker, underperforming tsys by 1-1.5bps  – Poloz sounding a note of caution over raising rates in the face of the ‘sheer size’ of Canadas debt burden, while at the same time noting that the process of removing accommodation is made easier in a growing economy. 

News headlines

The Fed Has a Tricky Inflation Issue to Navigate (Bloomberg) Federal Reserve officials have a tricky problem to navigate at this week’s meeting: how to describe inflation that has just bounced back to their elusive 2 percent target. The policy-setting Federal Open Market Committee is expected to leave interest rates unchanged at its two-day meeting in Washington. How it opts to describe price pressures will shape expectations for the pace of future rate increases. A policy statement is scheduled for 2 p.m. on Wednesday.

Euro-Area Factories Fret About Euro as Economic Growth Cools (Bloomberg) Euro-area economic growth slowed in the first quarter, posing a challenge for the European Central Bank as it contemplates paring back monetary stimulus measures. The 0.4 percent expansion was the weakest in six quarters and followed a reading of 0.7 percent at the end of 2017. While temporary factors such as bad weather played a part, another report showed manufacturing continued to cool this quarter and some firms are concerned about the stronger euro.

Mueller to Cite Subpoena Power If Trump Won’t Do Interview (Bloomberg) Prosecutors working for Robert Mueller have made clear to Donald Trump’s legal team that the special counsel would consider a subpoena compelling the president to testify before a grand jury if he refuses to participate in a voluntary interview, according to two current U.S. officials.

Stocks Are Mixed, Treasuries Retreat Before Fed: Markets Wrap (Bloomberg) European stocks advanced and U.S. futures drifted as many investors returned from holidays to digest the latest earnings reports and shift their focus to the Federal Reserve’s imminent rate decision. The dollar nudged lower and Treasuries fell.

Canada economy grows 0.4 percent, first-quarter could be better than forecast (Reuters) The Canadian economy grew 0.4 percent in February, Statistics Canada said on Tuesday, a sign that first-quarter growth could outperform the Bank of Canada’s relatively weak expectations. Analysts in a Reuters poll had forecast February gross domestic product would increase by 0.3 percent after shrinking 0.1 percent in January. Even if March’s GDP figures are flat, Statistics Canada analysis shows that annualized first quarter growth would be 1.6 percent, greater than the 1.3 percent in the Bank of Canada’s latest forecast on April 18.

Asia sees signs of export weakness before key U.S.-China trade talks (Reuters) Manufacturing activity remained relatively solid in major Asian economies such as China and Japan in April, but exports showed signs of weakness across the region, a worrying development given heightened Sino-U.S. trade tensions. High-level U.S. and Chinese officials meet in China this week, with trade expected to be top of the agenda as both sides have threatened reciprocal tariffs on hundreds of billions of dollars worth of imports.

Stephen Poloz delivers wake-up call to most indebted Canadians (BNN) Bank of Canada Governor Stephen Poloz says the central bank is keeping a close eye on a small group of disproportionately indebted Canadians as it mulls the timing and impact of its next interest rate hike. In a speech in Yellowknife Tuesday, Poloz sounded the alarm, stating that about eight per cent of indebted households owe 350 per cent or more of their gross annual income, and that group is carrying about a fifth of total Canadian household debt.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 119-10, S&P 500 futures are up 0.06% at 2653.75, Crude oil futures are up 0.22% at $67.4, Gold futures are up 0.22% at $1309.7, DXY is down -0.06% at 92.398, CAD/USD is down -0.18% at 0.7796.

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 starting mostly unch on very light volume in TY futures (140k), 10Y 2.953%, much of Europe closed for May holiday, as well as Asia. Focus on  ISM Manufacturing & FOMC decision tomorrow aft.  Equities slightly lower (S&P fut -3.5), crude lower @ 67.88 (-0.70).  UK gilts higher, flatter following disappointing UK Manufacturing PMI.  GOCs slightly lower before Feb GDP (0.3% exp). BOC Poloz speaks on household debt this aft in the wake of TD’s decision to raise their 5Y mortgage rate by 45bps to 5.59%, the largest hike since 2010. CIBC is expected to announce a 15bp increase in its 5Y rate later today. 

News headlines

U.S. Extends Steel Tariffs Relief for EU and Other Allies (Bloomberg) President Donald Trump will delay imposing steel and aluminum tariffs on the European Union, Mexico and Canada until June 1 as he finalizes deals with them, the White House said in a statement. The administration has reached agreements-in-principle with Argentina, Australia and Brazil, according to the statement, which the White House released late Monday night. The details « will be finalized shortly, » the statement added. The U.S. will also extend exemptions for the EU, Canada and Mexico for 30 days to allow for further talks.

The U.S. Just Borrowed $488 Billion, a Record High for the First Quarter (Bloomberg) U.S. Treasury Secretary Steven Mnuchin said he’s unconcerned about the bond market’s ability to absorb rising government debt after his department said it borrowed a record amount for the first quarter. “It’s a very large, robust market — it’s the most liquid market in the world, and there is a lot of supply,” he said in a Bloomberg TV interview on Monday. “But I think the market can easily handle it.”

Netanyahu’s Iran Revelations Were Aimed at an Audience of One (Bloomberg) Israeli Prime Minister Benjamin Netanyahu took the stage in Tel Aviv on Monday to expose what he said was more than a decade of Iranian nuclear deception. Critics said he didn’t reveal anything new. That may never have been the point. From his decision to speak in English to the simplicity of the slides he unveiled — including one that just said “Iran Lied” — Netanyahu’s presentation appeared to be aimed at an audience of one: Donald Trump. And the U.S. president, who is days away from deciding whether to pull out of the Iran nuclear accord, was listening.

U.K. Data Cast Fresh Doubt Over Strength of British Economy (Bloomberg) U.K. manufacturing slowed more than predicted in April and consumers borrowed at the weakest pace in 5 1/2 years in March, adding to signs that the economy’s poor first-quarter performance could persist. IHS Markit said its monthly Purchasing Managers Index was at 53.9, from a downwardly revised 54.9 in March. A 17-month low, it was worse than economists had forecast and hardened expectations the Bank of England will refrain from raising borrowing costs on May 10. The pound fell as much as 0.7 percent.

TSX futures up after Trump extends tariff exemptions (Reuters) Canada’s main stock index was poised to open higher on Tuesday after U.S. President Donald Trump postponed the imposition of steel and aluminum tariffs on the country, the European Union and Mexico.

Canada repeats that U.S. steel tariffs would hurt American jobs (Reuters) Canada has repeated its position that imposing punitive measures would hurt jobs in both countries, in reaction to U.S. President Donald Trump’s decision to postpone the imposition of steel and aluminum tariffs. The Trump administration said on Monday that tariffs on steel and aluminum from Canada and Mexico would be suspended until June 1. Speaking a few hours before the announcement, Canadian Prime Minister Justin Trudeau said tariffs were a “very bad idea” guaranteed to disrupt trade between the two nations.

Amazon to create 3,000 jobs in Vancouver, expand tech hub (BNN) Amazon announced plans on Monday to expand its tech hub in Vancouver, B.C., in a move the company says will create 3,000 new jobs. « Vancouver is home to an incredibly talented and diverse workforce, and these thousands of new employees will invent on behalf of our customers worldwide,” said Alexandre Gagnon, VP of Amazon Canada and Mexico, in a release. 

Overnight markets

Overview: US 10yr note futures are down -0.104% at 119-16, S&P 500 futures are down -0.11% at 2644, Crude oil futures are down -1.14% at $67.79, Gold futures are down -0.86% at $1307.9, DXY is up 0.49% at 92.295, CAD/USD is up 0.23% at 0.7768.

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