Commentaires

Market Update

US tsys/ EGBs trading higher on ‘risk off’ after China announced retaliatory tariffs on $50bln US goods including aircraft & soybeans , US 10Y 2.75%(-3bps), heavy volume in TY futures (550k). The 10Y bund -1bp @ 0.49% low since Jan 9^th. S&P futures  -35 pts (1.4%), Nasdaq -107 (1.6%). Little reaction to stronger than expected March ADP 241k vs 210k exp. GOCs higher, in line with tsys, 10Y 2.11% (-3bps) approaching last week’s low 2.10%. Provi spreads gapping ~2bps wider, Ont 27s 70.5/70 (68), Ont 48s 83.5/82.5 (81.5).  BOC auctions $3bln in 5Y bonds at noon – new Sep 23s with the WI roll 3.3/3.0, 0.3bps flatter from yest. Coupon should be 2.0% based on current 5Y (1.985%). 

News headlines

China’s Counterpunch to Trump’s Tariffs Sparks Global Selloff (Bloomberg) Tit-for-tat tariff threats from the U.S. and China ignited fears that a trade war was beginning between the world’s two largest economies, sending U.S. stock futures tumbling and sinking European and Asian equities. President Donald Trump pushed back against an escalation with the Asian superpower, saying on Twitter that “we are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.”

Specter of Full Trade War Returns to Batter Stocks: Markets Wrap (Bloomberg) Fears of a trade war between the world’s two largest economies returned to haunt markets on Wednesday, sending U.S. stock futures tumbling and sinking European and Asian equities. Treasuries climbed while the dollar was steady, and gold jumped. Hopes that Tuesday’s gains in U.S. equity markets would lead to a more lasting rebound foundered as contracts for the S&P 500, Nasdaq 100 and Dow all slumped alongside both the Stoxx Europe 600 Index and the MSCI Asia Pacific Index. China said it would levy 25 percent tariffs on imports of 106 U.S. products including soybeans, automobiles, chemicals and aircraft, in response to proposed American duties on its high-tech goods. Safe-haven assets including bullion and the Japanese yen rallied, while European bonds tracked the jump in Treasuries.

Euro-Area Inflation Ticks Up to 1.4% (Bloomberg) Euro-area inflation accelerated last month, buttressing the arguments of policy makers keen to phase out unprecedented stimulus. The inflation rate rose to 1.4 percent in March, the highest level since the end of last year. The reading is in line with the median estimate in a Bloomberg survey and up from 1.1 percent in February. The core rate remained unchanged.

OPEC Output Falls to Lowest in a Year Amid Venezuela Woes (Bloomberg) OPEC crude production dropped to the lowest in a year amid the woes in Venezuela’s oil industry. Output from the 14 members of Organization of Petroleum Exporting Countries fell by 170,000 barrels to 32.04 million barrels a day in March, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. That’s the lowest since last April’s 31.9 million barrels a day. Back then, Equatorial Guinea — which pumped 130,000 barrels a day last month — wasn’t part of OPEC.

Toronto homes sales, prices slump in March (Bloomberg) Toronto homes sales sagged in March, tumbling 39.5 percent from the previous year, as tighter mortgage rules and higher borrowing costs dampened demand, data showed on Wednesday. Sales of detached homes plunged 46.3 percent and condo sales dropped 32.7 percent, as many would-be buyers put their plans on hold, the Toronto Real Estate Board (TREB) said. The average selling price in the Toronto area was C$784,558 ($613,799), down 14.3 percent from C$915,126 in March 2017, though up 2.1 percent from February 2018. The average selling price for a detached home, the most expensive segment of the market, plunged 17.1 percent, while the average condo price rose 6.1 percent.

TD Bank CEO Masrani fears trade tensions could bring on recession (BNN) As the possibility of a full-blown trade war between the U.S. and China looms, Toronto-Dominion Bank’s chief executive says he’s concerned that global trade tensions could boil over and even lead some nations into recession. In an exclusive interview, Bharat Masrani told BNN’s Amanda Lang that anything that disturbs global trade is worrisome. “Trade skirmishes have been there since freer trade started. Hopefully this is something in that realm, and not something substantial that results in protectionism and a trade war that could trigger a slowdown and perhaps even recessions in certain countries,” Masrani said.

Overnight markets

Overview: US 10yr note futures are up 0.181% at 121-02, S&P 500 futures are down -1.44% at 2575.5, Crude oil futures are down -1.4% at $62.62, Gold futures are up 0.9% at $1349.4, DXY is down -0.12% at 90.091, CAD/USD is up 0.21% at 0.7793.

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 UpdateUS tsys trading lower, US 10Y 2.757 (+2.7bps), reversing most of yest rally which saw the 10Y move below 2.72% as US equities rebound, S&P futures +18, Nasdaq + 60.  European equities also reversing losses after reopening from the long weekend, Euro stoxx -0.50%. Quiet day on the data front with only Vehicle sales, Redbook and ISM NY, Fed Kashkari speaks at 9:30.  The CAD continuing to rise on yest Nafta news, up 0.75% 1.2838.  GOCs lower, outperforming tsys by 1-2bps. Tomorrow the BOC will auction $3bln of new Sep 2023s with the WI/5Y roll 3.6/3.4. Provi spds steady after widening another ~0.5bps yest, Ontario 27s 10bps wider over the past two weeks.

News headlines

Stocks’ Second-Quarter Start Is the Worst Since the Great Depression (Bloomberg) If you feel like the second quarter began badly, you’d be right. U.S. stocks had their worst April start since 1929, according to data compiled by Bloomberg. The S&P 500 index slumped 2.2 percent, a rout exceeded only by its 2.5 percent decline 89 years ago, a prelude to the devastating crash later that year that brought on the Great Depression. (Back then, the index only comprised 90 stocks.)

Trump Pushing for Preliminary Nafta Deal by Mid-April, Sources Say (Bloomberg) The Trump administration is pushing for a preliminary Nafta deal to announce at a summit in Peru next week, and will host cabinet ministers in Washington to try to achieve a breakthrough, according to three people familiar with the talks. The White House wants leaders from Canada and Mexico to join in unveiling the broad outlines of an updated pact at the Summit of the Americas that begins April 13, while technical talks to hammer out the finer details and legal text could continue, according to the people. They asked not to be identified because the talks are private.

America’s Libor Replacement Is Ready for Its Debut (Bloomberg) Regulators around the globe began work on replacements for Libor, the London interbank offered rate, well before the U.K.’s Financial Conduct Authority set to put the beleaguered interest-rate benchmark out of its misery. In the U.S., enter the Secured Overnight Financing Rate, or SOFR, a new reference rate being introduced next week by the Federal Reserve Bank of New York in cooperation with the U.S. Treasury Department’s Office of Financial Research. The debut of SOFR is a critical step in a quest to wean more than $350 trillion of securities off Libor.

Euro-Area Manufacturers Rein in Output Amid Capacity Constraints (Bloomberg) Euro-area manufacturing expanded at the weakest pace in eight months in March as factories delayed production due to increasing capacity constraints. A Purchasing Managers’ Index dropped to 56.6 from 58.6 — in line with a previous flash estimate — IHS Markit said on Tuesday. Activity slowed across countries and industries in the region but remained indicative of solid growth nonetheless, it said.

Provincial stimulus can kick Canada into a higher gear: economists (Reuters) Fiscal stimulus from major provinces is set to give Canada’s economy a shot in the arm, which could boost the case for further Bank of Canada interest rate hikes over the coming months despite slow growth at the start of the year, economists said on Monday.

Disappointing Canada growth data for January heralds under par Q1 (Reuters) The Canadian economy unexpectedly shrank by 0.1 percent in January, Statistics Canada data indicated on Thursday, in a clear sign that first-quarter growth is likely to be weaker than the Bank of Canada had predicted. Analysts in a Reuters poll had expected gross domestic product to increase by 0.1 percent after a revised 0.2 percent gain in December. January’s drop was the first since a 0.1 percent decline in August 2017.

RBC chief McKay warns investment capital fleeing Canada in ‘real time’ (BNN) The head of one of Canada’s largest banks is urging the federal government to stem the flow of investment capital from this country to the United States — because, he warns, it’s already leaving in « real time. » RBC president and CEO Dave McKay discussed some of his biggest concerns about Canadian competitiveness, particularly those related to recent U.S. tax reforms, during a recent interview. Ottawa has come under pressure from corporate Canada to respond to a U.S. tax overhaul that’s expected to lure business investments south of the border.

Overnight markets

Overview: US 10yr note futures are down -0.18% at 121-02, S&P 500 futures are up 0.54% at 2589, Crude oil futures are up 0.24% at $63.16, Gold futures are down -0.34% at $1342.3, DXY is down -0.01% at 90.04, CAD/USD is down -0.33% at 0.777.

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 UpdateUS tsys higher, 10Y 2.765% (-1.5bps), curve flattening to new cycle lows before PCE data, 2s10s below 50bps narrowest since Nov 2007. US equity futures higher, the USD index slightly lower, crude little changed 64.27. Core EGBs showing little direction, 10Y gilt 1.362%. This afternoon will  likely see month end flow connected to extension in the Bloomberg-Barclays Sterling Agg 0.30Y. GOCs higher in line with tsys before Jan GDP, provi spreads unch after closing 1-1.5bps wider yest. The Broad TMX Universe sees small decline in duration today – 0.05 , with the provi index -0.08.

News headlines

Tech, Once Again, Weighs on Stocks as Dollar Jumps: Markets Wrap (Bloomberg) Megacap tech shares slumped again Wednesday as pessimism about the sector showed few signs of letting up. The dollar jumped while Treasury yields held below 2.8 percent as data showed American economic growth beat estimates. Volatility measures spiked as the Nasdaq 100 Index fell, with Netflix Inc. and Amazon.com Inc. among the biggest losers. The gauge is heading for its worst month in two years. The S&P 500 Index edged lower, hovering just above its average price for the past 200 days — a level that’s set a line in the sand in the selloffs last week and in early February.

Nissan, Renault in Talks to Merge, Create New Company (Bloomberg) Renault SA and Nissan Motor Co. are in talks to merge, seeking to solidify their two-decade-old alliance under a single stock as an unprecedented shift toward electric and shared cars transforms the industry, people with knowledge of the matter said. A deal would end the current alliance between the companies and marry them as one corporation, said the people, who asked not to be identified as the details aren’t public. Renault currently owns 43 percent of Nissan while the Japanese carmaker has a 15 percent stake in its French counterpart. Carlos Ghosn, the chairman of both companies, is driving the negotiations and would run the combined entity, the people.

Two Koreas Set April 27 for Kim Jong Un’s Historic Walk South (Bloomberg) Kim Jong Un could become the first North Korean leader in history to enter South Korea in just over four weeks, when he steps across the heavily fortified border for a summit with President Moon Jae-in. The April 27 meeting on the southern side of the demilitarized zone will be the first between leaders of the two nations in 11 years. Leaders of the two nations — which are still technically at war — have only met twice since the peninsula was divided in 1948.

How Theresa May Will Navigate the Perilous Road to Brexit (Bloomberg) Prime Minister Theresa May has nine months to define what Brexit will actually mean and she’ll have to do battle on three fronts to get there—in Brussels, in Parliament and with her own Conservative Party.

U.S. upbeat about fast NAFTA deal, Canada says much work is left (Reuters) U.S. Trade Representative Robert Lighthizer on Wednesday expressed optimism that talks to modify NAFTA could be wrapped up quickly, but a top Canadian official was more downbeat, saying much work remained.

TSX futures flat ahead of GDP data (Reuters) Canada’s main stock index futures were little changed on Thursday as investors awaited a report on gross domestic product for January to gauge the health of the economy. June futures on the S&P TSX index SXFc1 were down 0.04 percent at 7:15 a.m. ET. GDP data for January and producer prices data for February are due at 8:30 a.m. ET. The GDP data is expected to show a rise of 0.1 percent.

Ontario promises new spending, deficits as election looms (BNN) As it braces to fight for re-election this spring, Ontario’s Liberal government has rolled out a spending package that targets nearly every demographic while plunging the province back into deficit, with the books expected to stay in the red for six years. The 2018-2019 budget, tabled Wednesday by Finance Minister Charles Sousa, pumps billions into health care, child care, and support for seniors, though many of the spending promises had been announced by Premier Kathleen Wynne in recent days.

Overnight markets

Overview: US 10yr note futures are up 0.052% at 120-31, S&P 500 futures are up 0.31% at 2615.5, Crude oil futures are down -0.11% at $64.31, Gold futures are down -0.08% at $1328.9, DXY is down -0.1% at 89.97, CAD/USD is down -0.21% at 0.7754.

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