Commentaires

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

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