Commentaires

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

Market Update Quiet start to what promises to be a busy week data wise in the US, with tsys slightly weaker, 10Y 2.96% (+0.5bps) on low volume in TY futures (~210k), equity futures higher, reflecting a string of better than expected earnings as well as the Sprint/T-Mobile, Sainsbury/Asda deals. McDonald’s Q1 eps beat highest estimates: $1.79 vs $1.67, comp sales +2.9% vs 2.7% exp. Core EGBs mixed, bunds weaker , curve 1.5bps steeper despite softer regional German CPI.  Gilts are higher, with yield curve bull steepening and as a May BOE looks less likely after last week’s poor GDP figure. In Canada, GOCs are slightly lower, in line with tsys before monthly IPPI/Raw Materials data, while provis have traded down so far this morning, Ont 48s @ 78.0, Ont 27s @ 65 on expectations of more supply. 

News headlines

Ross Says U.S. to Extend Duty Relief to Some Allies, Not All (Bloomberg) The Trump administration plans to extend relief from steel and aluminum tariffs to some countries, but not all, when their temporary exemptions expire on Tuesday, said Commerce Secretary Wilbur Ross. Ross, in an interview in Washington with Bloomberg late Saturday, declined to identify which nations would be spared from the tariffs. He said the announcement will be made right before the May 1 deadline for the duties to kick in. The secretary indicated on Friday that nations have been asked to accept import quotas in return for tariff-free access of the metals into the U.S.

Oil Pares Monthly Gain as U.S. Rigs Counter Iran-Deal Risk (Bloomberg) Oil fell as the U.S. oil rig count rose for a fourth week, but was still poised for a second monthly advance. Futures in New York are up 3.7 percent this month, even after a 1 percent drop on Monday, following data that showed an increase in U.S. drilling activity. A potential withdrawal in May by U.S. President Donald Trump from a 2015 nuclear deal between world powers and Iran would reimpose sanctions on the Middle Eastern producer and curb its exports. Meanwhile, OPEC is trimming output even after concluding it has cleared 97 percent of the surplus that has weighed on prices.

Stocks Advance as Deals Greet Week; Dollar Climbs: Markets Wrap (Bloomberg) Stocks in Europe drifted higher, U.S. futures advanced, and equities across Asia gained as dealmaking activity brought some excitement to the start of a busy week. The dollar climbed while the pound faced pressure as Prime Minister Theresa May lost a key ally. Media and real estate companies led advances in Europe as most national gauges rose, while raw material providers were among the biggest losers as commodities fell. Shares in the FTSE 100 Index climbed to the highest in almost three months, with retailer J Sainsbury Plc jumping the most on record as it plans to buy Walmart Inc.’s U.K. arm, Asda. The pound dropped after Amber Rudd quit as U.K. home secretary, and Housing Secretary Sajid Javid was named her replacement.

Fed Far From Ready to Declare Mission Accomplished on Inflation (Bloomberg) The Federal Reserve is closing in on its elusive 2 percent inflation target but that doesn’t mean policy makers are ready to pronounce mission accomplished. The central bank’s preferred measure of inflation probably clocked in at that level last month after spending much of the past six years below target, government data due out on Monday are expected to show.

Canada stock market shutdown pushes investors to explore options (Reuters) A rare outage at Canada’s major stock exchanges could dent the credibility of operator TMX Group Ltd (X.TO) and encourage investors to explore alternative trading channels, fund managers and traders told Reuters. Canada’s stock market suffered a partial shutdown on Friday, forcing TMX to halt trading more than an hour early. TMX has since said the exchanges will resume trading on Monday after “internal technical issues” were resolved.

TSX set to open higher after Friday’s rare shutdown (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday after the world’s sixth largest exchange was forced to halt trading on Friday due to an outage. June futures on the S&P TSX index were up 0.27 percent at 7:15 a.m. ET. The operator of Canada’s stock exchange said over the weekend that it had fixed the error that halted the market for several hours on Friday afternoon.

U.S. economic growth slowed to 2.3% pace in Q1 (BNN) The U.S. economy slowed to a moderate 2.3 per cent annual growth rate in the first quarter as consumer spending turned in the weakest performance in nearly five years. Still, the January-March increase came in better than expected and was enough to propel growth over the past year to come close to the 3 per cent goal set by the Trump administration.

NAFTA ministers head home, plan to reconvene talks in a week’s time (BNN) The politicians leading the NAFTA negotiations left Washington without a deal on Friday, under a cloud of question marks about the continental trading relationship. Canada’s Chrystia Freeland and Mexico’s Ildefonso Guajardo returned home after a week-long round with plans to reconvene around May 7 in hopes of obtaining an agreement this spring. 

Overnight markets

Overview: US 10yr note futures are down -0.039% at 119-15, S&P 500 futures are up 0.29% at 2679.25, Crude oil futures are down -1.01% at $67.41, Gold futures are down -0.74% at $1313.6, DXY is up 0.36% at 91.871, CAD/USD is up 0.3% at 0.7772.

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 continuing higher , US 10Y 2.965 (-1.5.bps) , on above avg volume in TY futures, ahead of Q1 GDP (2.0% vs 2.9% Q4) and ECI.  USD index higher for a third day, the euro declining to the lowest since Jan 12th.  Core EGBs higher led by sharp rally in UK gilts in the wake of a much weaker than exp prelim Q1 GDP report – 0.1% the lowest q/q increase since 2012. Odds of  a May BOE hike collapsed to 20% from 56% yest and 100% last week.  Bunds higher, lagging the rally in gilts,  the 10Y bund erasing this week’s losses.  In Canada,  GOCs are higher, in line with tsys, new 10Y roll (28/27) 0.2 wider 1.7/1.5, 10s30s unch @ 9.5. 

News headlines

Kim Urges Frequent Talks After Declaring Korean ‘Era of Peace’ (Bloomberg) Kim Jong Un called for more meetings with his South Korean counterpart after becoming the first North Korean leader to cross the border to hold talks over his nuclear weapons program. Kim made the offer to South Korean President Moon Jae-in as the pair met Friday on their militarized boundary for the first summit between the rival governments in 11 years. Both men basked in symbolism of the moment. Kim declared “a new history” and an “era of peace,” while Moon said the “weight on our shoulders is heavy.”

European Economy Loses Thrust in Risk for Global Expansion (Bloomberg) Europe’s economy lost momentum in the first quarter as expansions slowed from France to the U.K., threatening to undermine the global growth the continent previously helped power. Figures from across the region pointed to a softer trend in the early part of the year, and U.S. first-quarter data due shortly is also set to show activity weakening. The world’s largest economy is forecast to have grown an annualized 2 percent, a step down from the pace seen through 2017.

Oil Steadies as Traders Weigh Impact of Korea Summit, Iran Deal (Bloomberg) Oil traded near $68 as investors weighed the impact of a potential U.S. pull-out from the Iran nuclear deal and the historic meeting between the leaders of North and South Korea. Futures in New York slipped 0.4 percent, on course for a 0.7 percent drop this week. French President Emmanuel Macron earlier this week predicted President Donald Trump will exit the Iran agreement, while U.S. Defense Secretary Jim Mattis said Thursday a decision on a withdrawal hasn’t been made. North Korean leader Kim Jong Un and South Korean President Moon Jae-in agreed to finally end seven decades of hostile relations this year.

BOJ’s Kuroda Starts New Term With Fresh Commitment to Easing (Bloomberg) Governor Haruhiko Kuroda began his new term at the Bank of Japan much as he did the first one — emphasizing his commitment to hitting 2 percent inflation. The BOJ left its policy settings intact, vowing to push ahead with stimulus even as other major central banks move further toward policy normalization, though at a moderating pace amid signs of slowing economic growth. Still there was a twist — not uncommon in Kuroda’s tenure — as the BOJ’s policy statement omitted mention of the projected time frame for hitting his longstanding 2 percent target.

Amazon Jumps After Posting First-Quarter Earnings Beat (Bloomberg) Shares of Amazon.com Inc. rose in extended trading after the company reported net sales in the first quarter that beat analyst estimates.

No risk of NAFTA termination despite Trump’s bravado: economists (Reuters) U.S. President Donald Trump’s threats to scrap the North American Free Trade Agreement (NAFTA) will soon be a distant memory, likely to be supplanted by only slight changes to the 24-year-old pact, a Reuters poll of economists suggested. None of the 80 forecasters – most based in Canada, the United States and Mexico – polled by Reuters April 16-24 expect NAFTA to be terminated. A large majority said the most likely outcome is a marginally different agreement, with only six expecting radical changes.

Airbus says aims to cut CSeries costs, sell ‘big volumes’ (Reuters) Airbus said on Friday it aims to reduce recurring costs of Bombardier’s CSeries so that it can sell the jetliner in “big volumes” as soon as a deal to buy the loss-making program from Canada’s Bombardier is completed. “We are ready to hit the market” using the global Airbus sales force as soon as the deal closes, Airbus executive Harald Wilhelm told analysts. People familiar with the matter told Reuters in Canada earlier this week that the deal is expected to clear the final regulatory hurdles by the end of May.

CETA’s extended drug patents could cost Ottawa $270M a year (BNN) An extension of drug patent protections in the Canada-EU free trade deal could end up costing Canadians an estimated $392 million a year, and federal coffers up to $270 million more annually, says a new report from the parliamentary budget officer. The report released Thursday sets out to put a price tag on a central — and controversial — element of the Comprehensive Economic and Trade Agreement, or CETA, that went into effect last September.

Overnight markets

Overview: US 10yr note futures are up 0.131% at 119-15, S&P 500 futures are down -0.13% at 2671, Crude oil futures are down -0.28% at $68, Gold futures are up 0.15% at $1319.9, DXY is up 0.37% at 91.904, CAD/USD is up 0.09% at 0.7761.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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