Commentaires

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

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