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Market Update Tsys trading weaker, near recent lows, yields 3-4bps higher, 10Y 2.85% (+2.5bps), small bounce after weaker core March Retail Sales/Empire Man. after limited reaction to US airstrikes in Syria. Core Euro bonds also lower, gilt/bund ylds 2-4bps higher – 10Y gilt testing support approaching 1.50% . GOCs weaker, undperforming tsys in the backup, 10Y 2.278% (+4.2bps). Data calendar is relatively thin until Friday’s CPI/Retail Sales, with the BOC decision on Wed – BOC not expected to hike rates until later this year according to OIS mkts, a full rate hike not priced in until Sep.  Provis closed Friday tighter again, Ont 27s  @64 have retraced 50bps of the Feb-March widening. 

News headlines

Trump Says ‘Mission Accomplished’ With Syria Strike Unanswered (Bloomberg) The Pentagon said missile strikes on Syria have hampered Bashar al-Assad’s ability to use chemical weapons again, without encountering serious resistance from the Syrian military or its Russian allies. President Donald Trump summed up that achievement in two words: “Mission accomplished.”

Comey Says Trump Is ‘Morally Unfit’ to Be President (Bloomberg) Donald Trump is “morally unfit” to be president, former FBI Director James Comey said in a highly anticipated prime-time interview Sunday, adding that he couldn’t rule out the possibility that the Russian government has incriminating information about the president. “I think it’s possible. I don’t know,” Comey said in an interview with ABC News’ Chief Anchor George Stephanopoulos, when asked whether Trump has been “compromised” by the Russians. “These are more words I never thought I’d utter about a president of the United States, but it’s possible.”

U.S. Stock Futures Rally, Bonds Fall After Syria: Markets Wrap (Bloomberg) U.S. stock futures rallied and bonds fell with oil as traders speculated there would be limited repercussions from the weekend’s missile strikes in Syria. Haven assets including Treasuries and gold dropped with European debt, while the Stocks Europe 600 Index slipped as traders assessed the military action’s aftermath. The dollar weakened after futures data showed hedge funds are the most bearish on the currency in five years. WTI oil futures fell below $67 a barrel amid concern that shale production will rise further, and after there was no immediate reprisal to the missile attack. The ruble reversed earlier losses.

Oil Investors Rally Behind the Rally With Record Bets on Rise (Bloomberg) Hedge funds have never been so invested in the global oil rebound. Their bets that Brent crude futures will climb reached a new high as growing tensions across the Middle East are putting almost half of the world’s supply at risk. The escalation of strife in the region sent the key crude benchmark to its highest in more than three years, while volatility surged. “Clearly, emotionally, people view markets as tighter because they are actually reacting so strongly to these tensions,” said Ashley Petersen, lead oil analyst at Stratas Advisors in New York. “There is money to be made here again” amid heightened volatility, she said.

What to Expect From Retail Sales After the Trump Tax Cuts (Bloomberg) Tax cuts have given a boost to Americans’ take-home pay this year. The question hanging over the U.S. economy is whether they are putting the extra cash toward savings and debt, or using it to go shopping. Retail-sales data due Monday from the Commerce Department will help provide an answer, and economists are betting that consumers finally opened up their wallets a little wider, thanks in part to the boost in paychecks as well as 2017 tax refunds from Uncle Sam. Sales probably rose 0.4 percent in March from the prior month, based on the median estimate of analysts.

Canada’s Trudeau ready to offer aid to ensure pipeline is built (Reuters) Canadian Prime Minister Justin Trudeau on Sunday moved to end an escalating crisis over a Kinder Morgan Canada Ltd (KML.TO) oil pipeline, saying Ottawa was prepared to offer financial aid to ensure the project went ahead. Trudeau cited investor confidence as one reason to help Kinder Morgan Canada, part of Kinder Morgan Inc (KMI.N), which plans to almost triple the capacity of its Trans Mountain line from Alberta to the Pacific province of British Columbia.

TSX futures higher as concerns about Syria strikes fade (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Monday as investors expected that the weekend’s missile attacks on Syria would not escalate into a wider conflict. The U.S., France and Britain launched 105 missiles on Saturday, targeting what they said were three chemical weapons facilities in Syria in retaliation for a suspected poison gas attack on April 7.

Rising inflation poses biggest test of Poloz’s cautious stance (BNN) Bank of Canada Governor Stephen Poloz’s cautious approach to interest rates is about to be challenged. While the central banker is expected to hold off from raising borrowing costs for a second straight policy decision on Wednesday, and retain a degree of prudence in his rhetoric, Poloz will probably face mounting pressure to return to the rate hike path soon, with inflation and growth beginning to pick up. 

Overnight markets

Overview: US 10yr note futures are down -0.207% at 120-08, S&P 500 futures are up 0.55% at 2671.75, Crude oil futures are down -1.31% at $66.51, Gold futures are up 0.01% at $1348, DXY is down -0.29% at 89.542, CAD/USD is down -0.03% at 0.7933.

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 are little changed, 10Y  2.84%, avg volume in TY futures (300k).  Equity futures continuing to rise (S&P +9) after JPM reported strong Q1 rev & eps:  eps $2.37 vs $2.28 est, revenues rose to all time high $28.52bln vs $27.71bln est, higher ROE (19 vs 18), trading revenues rose 7% driven by equities – shares up 1.0% pre-mkt.   GOCs mixed, small narrower vs tsys out the curve, yesterday’s steep selloff cheapened Can-Us 2-3bps, 10Y rising to 2.28% highest since mid March while yields at the short end are the highest levels since 2011. The BOC will auction $3.0bln 2Y notes next Thurs, reopening the 1.75% May 2020 issue. Provis another 2bp tighter yesterday supported by selloff in GOCs and ‘risk on’ tone. Long Ontarios holding in well, Ont 48/27 curve @12.5 , unch on the week despite $1.8bln in long provi supply (Ont ,QC & BC). New BNS 5Y dep note yest – $2.25bln @ 85.2, now 82/81. 

News headlines

TPP Nations Welcome Trump’s Interest, Don’t Want Renegotiation (Bloomberg) Members of an 11-nation Asia-Pacific trade pact said Friday they opposed any renegotiation of the deal to accommodate the U.S. should it decide to rejoin at a later date. Ministers from Japan, Australia and Malaysia welcomed President Donald Trump directing officials to explore returning to the Trans-Pacific Partnership, a pact he withdrew from shortly after coming to office. But they also cautioned against making any significant changes.

Trump Orders Post Office Review After Attacks on Amazon (Bloomberg) President Donald Trump ordered the creation of a task force to review business practices at the United States Postal Service, a move that could affect one of the president’s favorite corporate targets: Amazon.com Inc. “The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout,” the president said in an order that was released Thursday night. The order calls for an examination of the Postal Service’s pricing, policies and workforce costs.

JPMorgan, Citi Results May Prove Whether Higher Rates Pay Off (Bloomberg) Bank investors will have their eyes trained on what the U.S. Federal Reserve’s recent interest rate increases, and a shifting yield curve, meant for first-quarter results. JPMorgan Chase & Co. kicks off earnings reports from big banks before the market opens Friday, along with Wells Fargo & Co. and Citigroup Inc. Next week, Bank of America Corp. arrives Monday, with Goldman Sachs Group Inc. Tuesday and Morgan Stanley Wednesday. The sector rose Thursday ahead of earnings, with the KBW Bank Index gaining as much as 2.8 percent intraday, helped by the prospect of looser regulation, higher 10-year Treasury yields, and easing geopolitical tensions.

Ruble Whipsawed on Trump Syria Threat, Mnuchin Sanction Remarks (Bloomberg) Russia’s ruble was whipsawed on Wednesday as Treasury Secretary Steven Mnuchin soothed traders by saying that his agency advised against Russian sovereign debt sanctions after President Donald Trump’s Syrian missile warning sent the currency tumbling earlier in the day. The pledged strikes over an alleged chemical attack in Syria and the latest round of U.S. sanctions rattled markets in Moscow, driving Russia’s currency to a 16-month low in morning hours. By afternoon, after Mnuchin reiterated his opposition to debt sanctions, it had rallied to its highest in nearly two weeks.

Canada job openings, vacancy rate climb in fourth quarter (Reuters) The number of job vacancies in Canada rose in the fourth quarter compared to a year ago, with increased openings led by the accommodation and food services, and manufacturing sectors, data from Statistics Canada showed on Thursday. There were 470,000 vacancies in the fourth quarter of 2017, up 23.2 percent from the fourth quarter of 2016. It was the largest annual increase since the series started in 2015. The vacancy rate, which measures the share of unfilled jobs out of those available, rose to 2.9 percent from 2.4 percent.

Canadian February small business lending edges up, but delinquencies rise (Reuters) Lending to small Canadian businesses edged up in February, but the number of delinquencies jumped, suggesting firms are unlikely to invest heavily in the near term, data showed on Friday. The PayNet Small Business Lending index rose to 112.0 from a downwardly revised 110.2 in January, while borrowing by medium-sized firms increased to 190.2 from 187.5. But compared to a year ago, small business lending was still down 5 percent and lending to medium firms slumped 18 percent, suggesting firms were pulling back after a strong 2017, said PayNet President Bill Phelan.

Trudeau to talk NAFTA with Mexican president and Pence in Peru (BNN) Prime Minister Justin Trudeau will aim to advance Canada’s position on the North American free trade talks when he meets with Mexican President Enrique Pena Nieto and U.S. Vice-President Mike Pence here over the next two days. There had been hopes leading up to Trudeau’s visit to Peru, where he and the others are attending the Summit of the Americas, that Canada, Mexico and the U.S. would emerge with some sort of North American free trade agreement. 

Overnight markets

Overview: US 10yr note futures are down 0% at 120-15, S&P 500 futures are up 0.31% at 2672.25, Crude oil futures are down -0.07% at $67.02, Gold futures are down -0.18% at $1339.5, DXY is up 0.07% at 89.815, CAD/USD is down -0.18% at 0.7958.

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 are trading lower, yields ~1bp higher across the curve on avg volume in TY futures (257k), risk-on tone as equities rise, Trump dialing back imminent threat of strike on Syria in latest tweet. Core EGBS mixed -German bonds lower into NY trading with tsys on risk-on – despite lower EU ind production data, as well as ECB minutes expressing concerns over trade disputes. GOCs lower , in line with tsys, provi spds continue to narrow as tone in equities improve.

News headlines

Trump Discussed Firing Rosenstein But Denies Bid to Oust Mueller (Bloomberg) Former strategist also advocates use of executive privilege President Donald Trump discussed firing Deputy Attorney General Rod Rosenstein with White House aides on Wednesday, a person familiar with the matter said, as a chorus of Trump’s advisers and allies urged him to thwart the investigation of Russian interference in the 2016 election.

Trump Meets Mattis as He Weighs Military Action in Syria (Bloomberg) President Donald Trump is still weighing options for U.S. military action against Syria and met with Defense Secretary Jim Mattis on Wednesday, after warning Russia on Twitter to expect a missile barrage. Trump has not yet settled on a plan to retaliate against Syrian President Bashar al-Assad for an alleged chemical weapons attack last weekend outside Damascus, and a U.S. strike isn’t expected Wednesday, two people familiar with the matter said.

Fed Sees GDP Hit From Trade War Outweighing Fleeting Inflation (Bloomberg) A trade war would leave the U.S. Federal Reserve having to decide between battling weaker economic growth or rising prices. Which one it focuses on already looks pretty clear. President Donald Trump’s administration has proposed tariffs on imported steel and aluminum, from which a number of U.S. allies would be exempt, and has threatened to slap additional measures on as much as $150 billion of Chinese goods. Higher and broader tariffs would raise the prices of those imports, potentially fanning U.S. inflation, while reducing economic activity by sapping confidence and tightening financial conditions.

China Says It Has a Detailed Plan to Hit Back at U.S. on Tariffs (Bloomberg) China will “unquestionably” retaliate if the U.S. further escalates trade tension, and authorities have prepared a detailed, comprehensive counter-punch plan, a senior trade official said. The government hasn’t conducted any negotiations at any level with American counterparts recently, Commerce Ministry Spokesman Gao Feng said Thursday at a press conference in Beijing. “We can’t talk under the unilateral threat from the U.S.,” he said.

Canada’s Trudeau to press British Columbia to accept pipeline (Reuters) Canadian Prime Minister Justin Trudeau is set to pile pressure on British Columbia’s provincial government to drop its resistance to a pipeline project, but will try to avoid tougher measures that might alienate voters who helped his Liberals win power, a source close to the matter said on Wednesday.

TSX futures rise as Syria tensions ease (Reuters) Futures for Canada’s main index were higher on Thursday as investor worries over a swift American military action in Syria eased following U.S. President Donald Trump’s latest comments. U.S. President Donald Trump amended on Thursday an earlier warning of a quick military strike against Syria in retaliation for a suspected chemical weapons attack on civilians, saying it “could be very soon or not so soon at all”.

NAFTA deal ‘not close at all’: Unifor’s Dias (BNN) Talk of an impending NAFTA deal is premature, Canadian union leader Jerry Dias said in Washington while officials were negotiating there Wednesday. The Unifor boss said he’s been in contact with the Canadian negotiating team and said speculation from some about an imminent agreement in principle is divorced from reality. The United States has been increasingly anxious to get something announced this month, before it becomes impossible for the rest of this year because of elections in Mexico and the U.S. Congress.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 120-27, S&P 500 futures are up 0.51% at 2654.5, Crude oil futures are down -0.61% at $66.41, Gold futures are down -0.78% at $1349.4, DXY is up 0.25% at 89.796, CAD/USD is up 0.11% at 0.7941.

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