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Market Update Tsys trading lower in recent trade, 10Y 2.99% (+1bp) after rangebound o/n session.  Equity futures higher (S&P +14.75), earnings from Caterpillar, Verizon & UTX beat exp – Cat  +6% higher pre-mkt. Crude follow thru after yesterday’s rebound, now 68.85 (+0.20) before API inventories this aft (-2.25m bbl exp) . Core EGBs mixed, gilts higher, having given up early gains after the UK DMO raised its estimate for planned gilt issuance by GBP3.1bln for 2018-19. Same story for bunds, 10Y unch, weighed by supply from Germany, Italy and Finland, despite weaker German April IFO sentiment. GOCs lower, lagging the decline in tsys, provi spds opening 0.5bps wider this morn, Ont 27 63.5/63. CWB reopened the 2.788% 2021 @99, a 3bp concession from second lvls.  

News headlines

After Weeks of Chaos, U.S. Throws Aluminum Industry Lifeline (Bloomberg) After two weeks of convulsions caused by U.S. sanctions against United Co. Rusal, the metals market was braced for more mayhem: many traders were betting the Russian aluminum giant was just days away from having to shut plants from Sweden to Jamaica.

How 3% Yields Could Reshape the Investing Landscape (Bloomberg) Ten-year Treasury yields sit closer to 3 percent than at any time in the past four years, prompting investors to dust off their playbooks for how to trade in an era of relatively higher rates. Rising rates isn’t exactly a new problem for markets — the 10-year yield jumped 30 basis points in January alone — but this time the spike’s driven by surging commodity prices, not heady economic gains. And that’s thrown a wrinkle into the discussion, particularly when it comes to equities.

Deutsche Bank Is Weighing Massive Cuts in Its U.S. Cash Equities Unit (Bloomberg) Barely two weeks into the job, Deutsche Bank AG’s Chief Executive Officer Christian Sewing is considering a retreat that could mark the end of the bank’s two-decade quest to compete with Wall Street. Sewing is weighing extensive cuts to the lender’s cash equities business in the U.S. and may announce details as part of a wider restructuring of its investment bank when he reports earnings on Thursday, people familiar with the matter told Bloomberg. They asked not to be identified because the details are confidential.

Bonds Steady as Dollar Rally Cools; Stocks Mixed: Markets Wrap (Bloomberg) The rise in U.S. Treasury yields appeared to stall on Tuesday, with the benchmark rate trading sideways after a selloff this week took it to within a whisker of 3 percent. Stocks in Europe struggled for traction following gains for most Asian markets as the earnings season gathered pace.

Xi Ready to Respond as China Rattled by Trade, Debt Risks (Bloomberg) China’s leaders are giving their strongest signal since 2015 that growth in the world’s second-largest economy could slow — and that they’re prepared to tweak policy if trade or financial risks threaten a sharp deceleration.

At least 10 dead, multiple people injured in ‘horrific’ Toronto van attack (BNN) The death toll rose to at least 10 late Monday following a “horrific attack” in which a young man drove a van into a crowd of pedestrians along a stretch of one of Toronto’s busiest streets, authorities said. The federal public safety minister said the incident, which also left 15 people injured, did not appear to be connected in any way to national security. However, the city’s police Chief Mark Sanders said investigators would be exploring all avenues and asked for any witnesses to contact the force with information.

Bank of Canada sees economy improving, plays down inflation risk (Reuters) Bank of Canada Governor Stephen Poloz on Monday gave an upbeat assessment of the economy’s prospects after a sluggish first quarter and said that while inflation this year would rise above the central bank’s target, it would be temporary.

TSX futures higher as oil prices rise (Reuters) Canada’s main stock index looked set to open higher on Tuesday as oil prices rose above $75 per barrel to their highest since November 2014. June futures on the S&P TSX index SXFc1 were up 0.34 percent at 7:15 a.m. ET. Canada’s benchmark stock index ended higher on Monday, with gains in the price of U.S. crude oil driving up shares of companies in the energy sector. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.57 percent at 7:15 a.m. ET, while S&P 500 e-mini futures Esc1 were 0.53 percent higher and Nasdaq 100 e-mini futures NQc1 rose 0.54 percent. [.N].

Overnight markets

Overview: US 10yr note futures are down -0.013% at 119-10, S&P 500 futures are up 0.58% at 2686.75, Crude oil futures are up 0.32% at $68.86, Gold futures are up 0.28% at $1327.7, DXY is down -0.07% at 90.881, CAD/USD is down -0.15% at 0.7795.

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

Market Update Tsys trading weaker, 10Y close to 3.0% for the first time since Jan 2014, currently 2.975% vs 2.995% high, on heavy volume in TY futures (>500k,. ~2x avg daily vol), USD surging higher for a 5^th day, DXY highest since March 1^st. EGBs lower, weighed by better than exp Eurozone PMI  – German 10Y +3.7bp @ 0.623%, 10Y gilt +3.8bps . Ahead of ECB meeting Thursday, Euribor futures lower-  consensus is for no change in the ECB language just yet. GOCs lower, narrower vs tsys beyond 2yrs, 10Y 2.35% high since feb 21^st. BOC governor Poloz and deputy Wilkins are scheduled to discuss monetary policy before the House of Commons this afternoon. Over the weekend Poloz said he is wiling to be patient and overlook the rise in inflation above 2.0%, commenting that the BOC does not raise rates ‘mechanically’  when inflation rises above a certain target. Provis 2-3bps tighter last week despite heavy supply ($3.75bln) and a downgrade of Ontario by Moody’s. 

News headlines

U.S. Hints at China Truce as World Warns of Trade-War Threat (Bloomberg) U.S. Treasury Secretary Steven Mnuchin said he’s considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing. Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade.

Dollar Strengthens as U.S. Treasury Yields Near 3%: Markets Wrap (Bloomberg) The dollar rallied at the start of a week packed with catalysts, from economic data to new debt supply, as the yield on benchmark U.S. Treasuries climbed toward 3 percent. European stocks edged lower after equities across Asia retreated.

Euro-Area Economy Stays in Lower Gear as Order Growth Weakens (Bloomberg) Economic momentum in the euro area kept a steady pace in April after softening earlier in the year, in a sign that growth in the region is set to continue albeit at a slower pace. A composite Purchasing Managers’ Index remained unchanged at 55.2, IHS Markit said on Monday. Economists surveyed by Bloomberg predicted a decline to 54.8. While activity in services picked up, growth in manufacturing slowed to the weakest in more than a year.

Walmart Is Close to $12 Billion-Plus Deal for Flipkart (Bloomberg) Walmart Inc. is close to finalizing a deal to buy a majority stake in India’s leading e-commerce company for at least $12 billion and may complete the agreement in the next two weeks, according to people familiar with the matter. All the major investors in Flipkart Online Services Pvt are now on board with the Walmart purchase, after an earlier debate over an Amazon.com Inc. acquisition, said the people, asking not to be named because the matter is private. Tiger Global Management will sell nearly all its 20 percent stake in Flipkart, while SoftBank Group Corp. will offload a substantial part of its 20 percent-plus holding, the people said. Walmart will likely end up with 60 percent to 80 percent of Flipkart, valued at about $20 billion, they said.

TSX futures flat as U.S. yields hover near critical mark (Reuters) Futures for Canada’s main stock index were little changed on Monday as investors weighed U.S. bond yields approaching the critical 3 percent barrier. June futures on the S&P TSX index were up 0.08 percent at 7:15 a.m. ET. Canadian wholesale trade data for February is due at 8:30 a.m. ET and is expected to show a 0.5 percent rise. Canada’s main stock index rose on Friday as higher bond yields boosted financials, while shares of Rogers Communications jumped after the telecommunications company reported profits that beat estimates.

China opposes all forms of protectionism, commerce minister says (Reuters) China opposes all forms of protectionism and will firmly safeguard the world’s multilateral trading system, its commerce minister wrote on Monday in the ruling Communist Party’s official newspaper.

CP Rail strike postponed, while unions urge workers to reject offer (BNN) A rail strike has been temporarily averted after the federal labour minister ordered employees of Canadian Pacific Railway Ltd. to vote on the company’s final offers, just hours before they were set to walk off the job. Statements from both CP Rail and two unions representing workers say the minister’s order to administer a ratification vote on each of the two offers follows advice of federal mediators.

Overnight markets

Overview: US 10yr note futures are down -0.196% at 119-10, S&P 500 futures are up 0.19% at 2676.5, Crude oil futures are down -0.29% at $68.2, Gold futures are down -0.74% at $1328.4, DXY is up 0.39% at 90.669, CAD/USD is up 0.17% at 0.7821.

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 mixed, curve steeper, narrow range in TY futures , 10Y 2.92% (+1bp), close to one month high yield.  UK gilts rallying, yields 3-4 bps lower after BOE Gov Carney dovish comments suggesting rate hike may be put off for now due to recent weak economic data, probability of a May hike falling sharply to 50% from ~80% while the GBP fell to a two week low. GOCs lower, underperforming tsys by 1-2 bps after steep drop in crude ~7:00am  after Trump tweeted oil prices are artificially high.  March Retail Sales/CPI data on tap. 10Y GOC 2.35% highest since Feb 22nd, 2s10s  1.5bps steeper. Provis closed 1bp tighter yest, Ont 27s 61.5/60.5 (unch) 

News headlines

Commodities Shoulder the Blame for Hits to Treasuries and Stocks (Bloomberg) The recent weeks of sanctions, tariff dust-ups and tight oil supplies that jolted commodities prices higher have now got equities and Treasuries investors on the run, according to Weeden & Co. Unlike in February, when optimism over global growth sent Treasury yields higher, this time it’s the price pressure from rising metals, Weeden’s Michael Purves wrote in a note to investors Thursday.

OPEC, Russia Find Reasons to Keep Cutting After Hitting Goal (Bloomberg) The oil stockpile surplus that’s weighed on prices for three years is all but gone, but instead of celebrating victory some of the world’s largest producers are finding reasons to continue cutting output. OPEC and Russia’s historic agreement has achieved impressive results, wiping out 97 percent of the targeted inventory surplus. Still, the curbs should continue because another important goal — boosting investment in oil and gas production — remains far out of reach, said Saudi Energy Minister Khalid Al-Falih. There’s nothing to fear from prices rising even further from their current three-year high, he said.

Carney Hints That BOE Rate Hike Next Month Isn’t a Done Deal (Bloomberg) Bank of England Governor Mark Carney unexpectedly damped expectations for an interest-rate increase next month, a move that many investors had considered a sure thing. In a BBC interview that sent the pound lower, Carney said policy makers will make their decision “conscious that there are other meetings” at which they could act this year. That was enough to shake confidence in a move in May, with market pricing dropping to less than 50 percent from more than 80 percent earlier in the week.

Dollar Gains as Treasuries Steady; Stocks Struggle: Markets Wrap (Bloomberg) The recent weeks of sanctions, tariff dust-ups and tight oil supplies that jolted commodities prices higher have now got equities and Treasuries investors on the run, according to Weeden & Co. Unlike in February, when optimism over global growth sent Treasury yields higher, this time it’s the price pressure from rising metals, Weeden’s Michael Purves wrote in a note to investors Thursday.

Canada adds 42,800 jobs in March: ADP (Reuters) Canada added 42,800 jobs in March, led by hiring in the construction industry, according to a report from ADP released on Thursday. The new report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies.

TSX futures down ahead of inflation data, dip in oil prices (Reuters) Stock futures pointed to slightly lower opening for Canada’s main stock index on Friday as investors awaited inflation data and as criticism of rising prices by U.S. President Donald Trump weighed on oil. June futures on the S&P TSX index were down 0.1 percent at 7:15 a.m. ET. The annual inflation rate is expected show a 2.4 percent rise in March, from 2.2 percent in February. Annual inflation and retail sales data are both due at 8:30 a.m. ET. “Oil prices are artificially Very High! No good and will not be accepted!” Trump wrote in a post on Twitter.

Freeland says auto rules will be ‘core’ of new NAFTA deal (BNN) New automotive rules will be the centrepiece of a new NAFTA agreement, Foreign Affairs Minister Chrystia Freeland said Thursday during a round of negotiations she characterized as being focused on cars. In an exchange with reporters between sessions at the U.S. trade representative’s office across from the White House, Freeland said she and her peers are now down to the finest details on auto rules of origin.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 119-26, S&P 500 futures are down -0.04% at 2692, Crude oil futures are down -0.85% at $67.71, Gold futures are down -0.22% at $1345.8, DXY is up 0.2% at 90.117, CAD/USD is down -0.25% at 0.7912.

US Economic Data

There is no US economic data for today.

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