Commentaires

Market Update Tsys higher, US 10Y back below 3.0% (2.994 -3.4bps), along with core Euro bonds after ECB/ Swedish Riksbank. Equity futures higher after positive earnings from FB, Qualcomm, and crude is higher for a 2nd day (68.89 +1.0%) after Macron said the US is likely to withdraw from the Iran nuclear deal and before EIA Nat. gas storage data later this morning. ECB left rates unch as expected, attention turns to Draghi press conf – any hints the ECB is closer to pulling back on stimulus. GOCs  higher, slightly wider vs tsys, June 2028 now benchmark 10Y, 10Y roll 0.1bp wider @ 1.6/1.5. 

News headlines

Macron Says He Thinks Trump Will Pull Out of Iran Nuclear Deal (Bloomberg) French President Emmanuel Macron said he thinks U.S. President Donald Trump will withdraw from the Iran nuclear accord, dealing a blow to the six-nation agreement reached in 2015 and endorsed by world powers. “My view — I don’t know what your president will decide — is that he will get rid of this deal on his own for domestic reasons,” Macron told journalists Wednesday in Washington, adding that he encouraged the American president to stay in the accord during his three-day visit to the U.S. capital.

Investors Want to Know Whether Draghi Is Worried About Economic Momentum (Bloomberg) Mario Draghi’s press conference on Thursday may well feature repeated versions of the same question: how worried is he? From sagging business confidence to falling industrial output, the region seems to be losing economic momentum after the best performance in a decade last year. Yet the European Central Bank president and his colleagues say the expansion in the 19-nation bloc is stabilizing rather than slowing down.

Deutsche Bank Cuts Wall Street Ambition to Focus on Europe (Bloomberg) Deutsche Bank AG is abandoning its ambitions to be a top global securities firm as it embarks on possibly the most sweeping overhaul yet of its struggling investment bank. Germany’s largest lender will scale back U.S. rates sales and trading, reduce the corporate finance business in the U.S. and Asia, and review its global equities business with a view toward cutting it back, the bank said in a statement Thursday. The measures will lead to a “significant reduction” in the roughly 97,100-person workforce this year, it said.

Stocks Advance as Results Roll In; Treasuries Jump: Markets Wrap (Bloomberg) U.S. equity futures pointed to a higher open with strong earnings lifting Facebook Inc. and Qualcomm Corp., though gains were muted as investors remained cautious about the prospects for future growth. The euro stayed higher as the ECB kept interest rates unchanged. With the common currency holding gains ahead of a press conference from ECB President Mario Draghi, the dollar pulled back from a three-month high. The pound gained alongside the yen. European bonds tracked a jump in Treasuries, with the yield on 10-year U.S. notes falling below 3 percent.

Facebook Sales Top Estimates, Fueled by Ads; Shares Jump (Bloomberg) Facebook Inc. has been embroiled in one controversy after another. But ad sales are near records and users keep flocking to the social network. First-quarter revenue rose 49 percent to $11.97 billion, beating the $11.4 billion average analyst projection, according to data compiled by Bloomberg. In a statement Wednesday, Facebook said it now has 1.45 billion daily users, matching estimates on this key measure of engagement. Shares surged more than 5 percent in extended trading.

TSX futures higher as oil prices rise (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday as oil prices gained on concerns over renewed U.S. sanctions on Iran and falling Venezuelan output. June futures on the S&P TSX index SXFc1 were up 0.11 percent at 7:15 a.m. ET. Canada’s main stock index rose on Wednesday as higher oil prices boosted energy shares, offsetting investor worries about higher bond yields. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.15 percent at 7:15 a.m. ET, while S&P 500 e-mini futures Esc1 rose 0.22 percent and Nasdaq 100 e-mini futures NQc1 were 0.62 percent higher. [.N]

Freeland slams U.S. on sunset clause, steel as NAFTA talks heat up (BNN) Canada and the U.S. have had a testy exchange over the idea of including a termination clause in NAFTA, with this idea of a so-called sunset clause emerging as a late-stage sticking point in the negotiations. The U.S. has revived the sunset proposal. In the late stages of bargaining, with hopes of a deal within days, sources say the United States has made clear it wants some sort of additional mechanism allowing the easy termination of NAFTA after several years.

Canada’s economy is ‘finally positive’: Poloz (BNN) Bank of Canada Governor Stephen Poloz said on Wednesday the economy was « finally positive » after a long adjustment to a sharp fall in oil prices, but he added there was still softness in several areas of the country. Poloz also told the Senate’s banking committee that while interest rates would go up from their current low levels, moving too quickly could create a financial stability risk. The central bank has hiked three times since last July as the economy improves and the unemployment rate hovers around 40-year lows. It held rates steady last week at 1.25 per cent. 

Overnight markets

Overview: US 10yr note futures are up 0.197% at 119-10, S&P 500 futures are up 0.31% at 2652.75, Crude oil futures are up 0.88% at $68.65, Gold futures are up 0.17% at $1325.1, DXY is up 0.07% at 91.233, CAD/USD is down -0.12% at 0.7793.

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 lower on heavy volume in TY futures (>500k) , 10Y above 3.0% @ 3.026% (+2.6bps), yield curve slightly steeper. USD index at high since Jan 12th  (DXY + 0.46%), above key 91 resist, equities adding to yesterday’s selloff, S&P futures -8.0. Core Euro bonds weaker, bund/gilt yields 1-3bps higher, bund curve 2bps steeper, 10Y bund 0.64%.  The bund/tsy spd broke to new wides @ 238bps as bunds continue to lag the decline in tsys.  With USD hedging  costs significantly higher than the last time the US 10Y was at 3.0% in Jan2014,( both in terms of the libor-euribor spd and the cross-currnecy basis), US tsys offer very little pickup for european as well as Japanese buyers. And there is more supply to deal with as  the US auctions $17bln in 2Y FRNS & $35bln in 5Y notes this aft . In Canada, GOCs are lower , outperforming tsys out the curve, the 10Y GOC/tsy spd at one month narrows. Provis closed 1-2 bps wider yest on weaker stocks, Ont 27s 65.5, Ont 38 78.5.  The BOC auctions $2.3bln in June 2028s at noon, with the 28/27 roll 1.7/1.4 vs ~3.0bps when the June 28s were last auctioned on Feb 21st , thou this time amount being auctioned is $700mln less. The 10Y yield @ 2.35% should offer some support as it is close to 2.38% high reached in Feb, and 27bps higher since the end of March. 

News headlines

Macron’s Pitch to Trump on a ‘New’ Iran Deal Surprises EU Allies (Bloomberg) French President Emmanuel Macron is pushing the limits of international diplomacy, as his last-ditch appeal to salvage the Iran nuclear deal wrong-footed European allies and was met with intransigence by U.S. President Donald Trump. Macron, who has sought to cultivate a personal bond with Trump, made his Iran pitch the centerpiece of his visit to the White House. If the U.S. preserved the existing nuclear accord, that could serve as the cornerstone of a new, expanded deal that would address the Islamic Republic’s ballistic missile program and destabilizing behavior across the Middle East.

Google’s Results Spark an $85 Billion Rout for FANG Stocks (Bloomberg) A bad earnings season for the tech industry just got worse with Google’s parent joining the ranks of stocks tumbling after results. Shares of Alphabet Inc. slumped almost 5 percent as of 1:10 p.m. in New York after first-quarter results sparked concern that the internet company is embarking on a new spending binge to keep up with its biggest rivals. Other tech giants fell in tandem, with the FANG complex that also includes Facebook, Amazon and Netflix seeing almost $85 billion in market value wiped out.

Dollar Gains as Treasury Yield Hits 3%; Stocks Dip: Markets Wrap (Bloomberg) The dollar resumed its rally on Wednesday, climbing to the highest in three months as the yield on benchmark U.S. Treasuries extended an advance to pierce 3 percent a second day. Pressure grew on stocks as investors digested a slew of earnings. The greenback strengthened against almost every major peer, with the euro among the losers a day before the European Central Bank’s next rate decision. The region’s currency weakness was no tonic for equities, and the Stoxx Europe 600 Index fell along with U.S. futures and the MSCI Asia Pacific Index after less-than-optimistic earnings forecasts Tuesday from bellwethers including Caterpillar Inc.

Takeda Closes in on $64 Billion Shire Deal to Join Pharma Elite (Bloomberg) Takeda Pharmaceutical Co. reached a preliminary agreement to buy Shire Plc with a sweetened takeover offer of about 46 billion pounds ($64 billion), closing in on a bold transaction to gain a foothold in one of the pharma industry’s most coveted niches. The U.K.-listed company’s board said it was willing to recommend the latest offer to shareholders on Wednesday, capping a month-long tug of war in which its Japanese suitor made five successively higher proposals, two of them in the last few days.

Futures lower on rising U.S. yields, cost worries (Reuters)  Canada’s main stock index was set to open lower on Wednesday, tracking losses in global shares, due to rising U.S. bond yields and warnings from top global companies about increasing costs. June futures on the S&P TSX index SXFc1 were down 0.11 percent at 7:15 a.m. ET. Canada’s main stock index fell on Tuesday as lower oil prices weighed on energy shares, while investors worried about the prospect of higher global borrowing costs after the benchmark U.S. 10-year Treasury note US10YT=RR yield hit 3 percent for the first time in four years.

China’s Dagong downgrades Canada’s sovereign credit outlook to negative (BNN) China’s Dagong Global Credit Rating Co, one of the country’s major ratings firms, on Wednesday cut the credit outlook of Canada to negative, citing a slowdown in the Canadian economy and relatively high risks in its real estate market. A persistently high fiscal deficit was also one of the reasons for the downgrade, Dagong said in a statement. The agency kept its ratings for Canada’s local and foreign currency ratings at AA+.

Trump says NAFTA talks going ‘nicely,’ Canada sees progress on auto rules (BNN) U.S. President Donald Trump said on Tuesday a new North American Free Trade Agreement could be agreed on quickly, as Canada hailed progress on forging new rules for the auto industry, the pivotal issue in talks to revamp the 24-year-old accord. Ministers from the United States, Canada and Mexico responsible for NAFTA met in Washington to try to narrow differences on regional content rules for autos in the hope of tying up a deal in the coming days. 

Overnight markets

Overview: US 10yr note futures are down -0.236% at 119-02, S&P 500 futures are down -0.28% at 2628, Crude oil futures are down -0.07% at $67.65, Gold futures are down -0.9% at $1321, DXY is up 0.42% at 91.151, CAD/USD is up 0.45% at 0.7757.

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 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