Commentaires

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

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