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Market Update Treasury futures trading mostly weaker, following Bunds/Gilts lead to near late overnight lows, Tsy curves bouncing off 10+ year lows; 10YY tapped 2.895%, near Feb 21 4+ year high of 2.950%. US$ index mildly higher after some decent chop overnight (DXY +.025, 89.648; US$/YEN>107.42); equities seeing mild selling (emini -3.75, 2706.0); gold near steady (XAU +0.30, 1349.73); West Texas crude making new 3+ year highs (WTI +.99, 69.46).  Asia, Tsys opened steady to NY closes, held narrow range/drifted higher into London crossover on modest 2-way flow. 

News headlines

Commodities Rally as Metals Surge; Bonds Slide: Markets Wrap (Bloomberg) Metals extended their stellar gains on Thursday, driving another rally in Bloomberg’s commodity index as investors continue to fret about how Russian sanctions will impact the market. Government bonds retreated amid an upbeat global growth outlook. Aluminum and nickel led the advance as the BCOM Index flirted with the highest level since 2015. U.S. 10-year Treasury yields climbed to 2.89 percent after leaping on Wednesday in the wake of the Federal Reserve’s Beige Book report, which showed a solid outlook for the economy despite trade concerns. European bonds played catch up, and yields in the region jumped.

Oil Extends Rally Before OPEC Meeting After U.S. Stockpiles Fall (Bloomberg) Oil rallied above $69 a barrel after a surprise drop in U.S. inventories added to signs the market is in balance before a key OPEC meeting. Futures in New York rose as much as 1.2 percent after gaining 2.9 percent in the previous session. Focus is now shifting to whether OPEC and its allies will signal an extension of supply cuts at their meeting on Friday in Saudi Arabia. Total U.S. inventories of crude and fuel dropped below their five-year average for the first time since 2014, government data showed Wednesday.

VIX Jumped in Flat Market After Futures Settled Way Above Range (Bloomberg) The Cboe Volatility Index, a barometer for investor anxiety, jumped Wednesday amid a tranquil stock market, reprising a pattern of jerky moves on days when futures on the gauge are settled in monthly auctions. The VIX was heading for its longest streak of daily losses in almost a year in early New York trading, before it reversed direction and rose as much as 11 percent. The gain occurred around the time of the settlement, which happened 13 percent above the VIX close on Tuesday and outside of today’s range.

Malaysia Stocks Hit Record as Foreigners Buy Ahead of Elections (Bloomberg) Stock market volatility, global trade tensions, geopolitical risks aren’t ending the fervor for the second hottest stock market in Southeast Asia. A rally in consumer stocks this year and over $753.2 million in foreign inflows boosted Malaysia’s benchmark stock index to close at an all-time high Thursday, ahead of the nation’s 14th general election on May 9.

Bank of Canada says more rate hikes coming, but holds for now (Reuters) The Bank of Canada flagged more interest rate hikes would be coming after it held its benchmark rates steady on Wednesday, but said it did not know when or how aggressive it would need to be to keep inflation in check. Pointing to a pickup in wage growth and inflation, two issues that had concerned the central bank, Governor Stephen Poloz said policymakers believe the need for monetary stimulus continues to diminish steadily, albeit gradually.

TSX futures point to higher open on commodities rally (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday, tracking a fierce rally in commodities and resource stocks following talk that Saudi Arabia has its sights on $80-$100 a barrel oil again. June futures on the S&P TSX index were up 0.21 percent at 7:15 a.m. ET. Oil prices rose to their highest since late 2014 as U.S. crude inventories declined, moving closer to five-year averages. [O/R] Canada’s main stock index rose for the fifth straight day on Wednesday to reach a four-week high, as energy and metal mining companies led broad-based gains, boosted by higher commodity prices.

Canada-Britain trade deal could come quickly after Brexit: May’s office (BNN) Canada and Britain will be able to quickly pursue a new trade deal after Brexit, Canadian PM Justin Trudeau told British counterpart Theresa May at a bilateral meeting on Wednesday, according to May’s office. “Prime Minister Trudeau said he believed that, post-Brexit, the UK and Canada governments would be able to move in rapid fashion towards a new trade deal that will be particularly beneficial to both countries,” a Downing Street spokeswoman said in a statement.

Overnight markets

Overview: US 10yr note futures are down -0.13% at 119-32, S&P 500 futures are down -0.18% at 2705, Crude oil futures are up 1.37% at $69.41, Gold futures are down -0.08% at $1352.4, DXY is down -0.07% at 89.564, CAD/USD is down -0.21% at 0.7936.

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 lower, yields 0.5-1bp higher with longs outperforming, avg volume in TY futures (30k), 10Y  2.835 (+0.7bps). Equities firmer (S&P fut +11) – Morgan Stanley +2.0% pre-mkt after Q1 eps beat est ($1.45 vs $1.25), gold higher, crude 1.4% higher @ 67.47 close to the highs of last week after API showed surprise drop in US inventories.  Core EGBs mixed – gilts higher , steeper on drop in UK Mar CPI. GOCs lower in line with tsys – BOC not expected to raise rates today, yet  updated forecasts for growth & inflation expected to inject a level of hawkishness into the mix, with Poloz likely to signal at least a couple more hikes in are in the cards for this year, particularly as the trade picture seems to be improving. Provis reacting as expected to positive tone in risk mkts – another 0.5bps tighter yest, opening 0.5bps tighter this morn. Ontario spds narrower despite Moody’s downgrade yest which was expected. In corps – BAC priced 2 tranche maple yest – $500mln 4Y FRN @ CDOR+52 & $1bln 6Y fixed-floater @ 118.6. Both tracnhes looked cheap, 3-4bp concesssion on the fixed, and we would highlight the relative cheapness of the existing May 22 sub FRNs @ ~90.  Kruger Products (BBL) priced $125mln 6% 7NC3 @ 379 which broke $1.00 higher on the break.

News headlines

Trump Confirms CIA Chief Pompeo Met North Korea’s Kim Last Week (Bloomberg) CIA Director Mike Pompeo traveled to North Korea last week to meet with Kim Jong Un in advance of a possible summit on denuclearization, President Donald Trump said. “Meeting went very smoothly and a good relationship was formed,” Trump said in a Twitter posting Wednesday morning. “Details of Summit are being worked out now. Denuclearization will be a great thing for World, but also for North Korea!”

U.K. Inflation Drops More Than Expected to Slowest in a Year (Bloomberg) U.K. inflation slowed to the weakest in a year in March, raising questions about how quickly the Bank of England will increase interest rates. Consumer prices rose 2.5 percent from a year earlier, down from 2.7 percent in February, the Office for National Statistics said on Wednesday. That’s less than economists estimated and below the BOE’s most recent forecast of 2.8 percent for the same period. Core inflation cooled to 2.3 percent, also the lowest rate in a year.

Oil Rallies as Drop in U.S. Inventories Adds to Political Risks (Bloomberg) Crude rose as the drop in U.S. inventories reported by an industry group helped to sustain a rally spurred by geopolitical risks. Futures in New York rose as much as 1 percent while Brent gained to within a dollar of last week’s three-year high. U.S. crude and gasoline inventories fell last week, the American Petroleum Institute was said to report on Tuesday, in contrast to forecasts for a build in U.S. government data later. OPEC and Russia will probably look at ways to prolong their cooperation on cuts when they meet in Saudi Arabia this week.

U.S. Stock Futures Climb on Earnings, Geopolitics: Markets Wrap (Bloomberg) U.S. stock futures rose, extending gains a third day as investors took heart from a solid start to the earnings season and signs of improving relations between America and North Korea. The pound slumped and euro briefly dropped on disappointing inflation data. The U.S. gains followed sweeping increases across Asian equities, though shares in Europe fluctuated in the wake of a jump on Tuesday. The dollar strengthened as many of its major peers had a bad day, with the Swiss franc deepening declines and Europe’s common currency wobbling after euro-area inflation data was revised downward. Sterling dropped as U.K. price growth slowed to the weakest level in a year. Treasuries edged lower and European bonds were mixed.

Teamsters Canada notifies Canadian Pacific of possible strike (Reuters) Teamsters Canada said early on Wednesday it has notified Canadian Pacific Railway that workers will go on strike starting April 21 following a stalemate in negotiations between the two parties. Teamsters Canada, which is affiliated to the International Brotherhood of Teamsters union, said it has issued railway operator Canadian Pacific with a formal 72 hours notice of intent to strike. Canadian Pacific was not immediately available for comment outside business hours.

Futures rise ahead of Bank of Canada’s rate decision (Reuters) The central bank is widely expected to hold the rate steady at 1.25 percent when it announces its decision at 10:00 a.m. ET. June futures on the S&P TSX index were up 0.38 percent at 7:15 a.m. ET. Canada’s main stock index rose to a 12-day high on Tuesday as technology and energy shares climbed and domestic data showed a stronger-than-expected gain for manufacturing sales. Dow Jones Industrial Average e-mini futures rose 0.35 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were up 0.39 percent and Nasdaq 100 e-mini futures were 0.37 percent higher.

Poloz to set tone for future rate increases (BNN) Almost nobody expects Bank of Canada Governor Stephen Poloz to increase interest rates at a policy decision Wednesday, but attention will turn to clues for the timing of the next hike as the central bank tries to steer an economy that’s beginning to run up against capacity. All but two of the 23 economists surveyed by Bloomberg, including those from the country’s largest banks, predict the benchmark interest rate will remain unchanged at 1.25 per cent. The central bank will also release new quarterly forecasts along with its decision at 10 a.m. in Ottawa, followed by an 11:15 a.m. press conference by Poloz and Senior Deputy Governor Carolyn Wilkins.

Overnight markets

Overview: US 10yr note futures are down -0.143% at 120-13, S&P 500 futures are up 0.43% at 2718.25, Crude oil futures are up 1.47% at $67.5, Gold futures are up 0.27% at $1353.2, DXY is up 0.03% at 89.54, CAD/USD is up 0.18% at 0.7953.

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 slightly weaker, yields 1bp higher out the curve, short end little changed, 10Y 2.84%, light volume in TY futures (209k). S&P futures +16, strong beat from GS in Q1 – eps $6.95 vs $5.56 est, revenues $10bln vs $8.75bln, 31% surge in trading rev, and the largest jump in FICC among banks reporting so far. Fed speakers today include Hacker, Evans & Quarles.  Core EGBS higher, UK gilt curve steeper after labor market data showed a less than exp rise in avg weekly earnings (2.8% vs 3.0%) despite a decline in the unemployment rate. Odds of a rate increase from the BOE at the May meeting fell to 84% from ~90%. GOCs higher, outperformer tsys by ~1bp in 10s, Feb Manuf Sales +1.9% vs 0.8% exp. Provis unch after closing tighter for a sixth straight day. Alberta 10Y 2027 reopening yest @ 67.5/ Onts +3 – 3/2.8 now. 

News headlines

China Hits $957 Million U.S. Sorghum Trade With Fresh Duty (Bloomberg) China will impose temporary anti-dumping deposits on U.S. sorghum imports from Wednesday, adding to trade tensions between the world’s biggest economies. Soybean meal futures climbed on concerns the oilseed could be targeted next. Imports will incur a 178.6 percent duty, China’s Ministry of Commerce said in a preliminary ruling on Tuesday. That’s in compliance with domestic law and World Trade Organization rules, Wang Hejun, chief of the trade remedy and investigation bureau at the ministry, said in a statement.

U.K. Wages Rise Most Since 2015 as End to Squeeze Nears (Bloomberg) U.K. wages are rising at their fastest pace in almost three years, raising the prospect of an end to the squeeze on living standards. Annual pay growth excluding bonuses accelerated to 2.8 percent in the three months through February, the Office for National Statistics said Tuesday. Inflation averaged 2.9 percent in the same period and is forecast to fall toward 2 percent this year.

Trump Loses Initial Bid to Review Seized Records From Cohen (Bloomberg) President Donald Trump suffered a setback as a federal judge rejected his initial request to keep prosecutors from immediately reviewing evidence seized by the FBI last week from his longtime personal lawyer, Michael Cohen. U.S. District Judge Kimba Wood wrestled in court Monday with the correct way to determine whether materials seized from Cohen’s home, office and hotel room involved privileged communications between Cohen and his clients. Still, the judge ordered prosecutors to make available to Cohen’s attorneys all of the evidence seized. Prosecutors must put the material in digital form and can’t review it yet, the judge said.

U.S. Futures Advance as Focus Shifts to Earnings: Markets Wrap (Bloomberg) U.S. equity futures advanced alongside stocks in Europe as investors switched their focus to earnings season following the market turmoil of recent weeks. The euro and pound both erased gains on soft economic data. Contracts for the S&P 500, Nasdaq, and Dow all shrugged off weakness in Asia to point to a higher U.S. open as traders digested results from companies including Goldman Sachs Group Inc. The bank gave a boost to sentiment with solid numbers across the board, also saying it would boost its dividend. In Europe, the Stoxx 600 Index rebounded from Monday’s drop, with automakers leading the way after China said it will ease access to its market.

Bank of America’s Cost-Cutting Drive Pushes Profit to Record (Bloomberg) Bank of America Corp. hit a new milestone in its years-long effort to get costs under control. First-quarter expenses totaled about 60 percent of revenue, the best ratio in more than five years. That helped push profit above analysts’ estimates, and corporate tax cuts spurred earnings to a record. Net interest income got a bigger boost than expected from higher interest rates, but fixed-income trading disappointed. 

NAFTA meeting on tap; Mexico doesn’t want to be used to elude U.S. tariffs (Reuters) The ministers leading the renegotiation of the North American Free Trade Agreement (NAFTA) could meet again on Thursday in Washington as they push for quick progress, Mexican Economy Minister Ildefonso Guajardo said on Monday. Guajardo said he had spoken to Canadian Foreign Minister Chrystia Freeland on Monday and would talk to U.S. Trade Representative Robert Lighthizer on Tuesday to see about agreeing a trilateral meeting in Washington on Thursday.v Speaking after meeting with steel industry executives, Guajardo also said if that the United States imposed steel tariffs, Mexico might seek to mirror the move against some countries in order to prevent them from using Mexico to elude the duties.

TSX futures rise as risk appetite returns (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, suggesting a return of risk appetite on waning worries about more U.S. strikes in Syria. June futures on the S&P TSX index were up 0.08 percent at 7:15 a.m. ET. Data from Statistics Canada is expected to show a 1 percent rise in manufacturing sales in February after falling to its lowest in six months in January. Also expected is a report on foreign investment in Canadian securities for February.

China posts strong first-quarter growth, as GDP rises 6.8% (BNN) China’s economy grew at a slightly faster-than-expected pace of 6.8 per cent in the first quarter, buoyed by strong consumer demand, healthy exports and robust property investment. Resilience in the world’s second-largest economy will likely help keep a synchronized global recovery on track for a while longer, even as China faces rising trade tensions with the United States that could impact billions of dollars in business.

Overnight markets

Overview: US 10yr note futures are down -0.078% at 120-12, S&P 500 futures are up 0.56% at 2696.75, Crude oil futures are down 0% at $66.22, Gold futures are down -0.42% at $1345, DXY is down 0% at 89.421, CAD/USD is down -0.11% at 0.7968.

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