Commentaires

Market Update

US tsys lower after Q4 GDP was revised higher -2.9% vs 2.5%, way off the o/n highs which saw the 10Y dip below 2.75% (low since Feb 6^th), now 2.78, tsys rising with gilts & bunds in European trade.  S&P futures +7.75, USD index unch, crude lower for a third day, 64.45 (-0.60%).  UK gilts sharply higher, yields 3-5bps lower, curve steeper – significant m/e extension and large cash flows in April with the BB Pan-Euro agg projected to rise 0.10 while the UK Sterling agg extension is 0.22 vs .08 last March. US month end tsy extension 0.06 vs 0.08 last March. The US Treasury auctions $29bln in 7Y notes and $15bln in 2Y FRNs this aft – 5Y auction yesterday well received with highest b/c (2.5) since Sep, indirect bidders 63.5 vs 58.5 Feb. GOCs unch, in line with tsys, 10Y 2.14% – lowest since Jan 8th after falling 9bps yest

News headlines

Tech Rout Punishes U.S. Stocks as Treasuries Surge: Markets Wrap (Bloomberg) A selloff in technology shares sent U.S. equity benchmarks lower, with losses accelerating late in the day. Bonds surged on demand for safe havens, pushing the yield on 10-year Treasuries below a key level. Trade angst weighed on leading tech companies with the Nasdaq 100 Index erasing most of Monday’s gain after a report the Trump administration is considering a crackdown on Chinese investments in technologies the U.S. considers sensitive. Facebook’s woes mounted and Nvidia Corp. spooked investors in chipmakers. The Chicago Board Options Exchange Volatility Index — Wall Street’s fear gauge — spiked.

Trump Urges Pressure Against North Korea After Kim’s China Trip (Bloomberg) U.S. President Donald Trump called for continued pressure against Kim Jong Un, after China said the North Korean leader expressed an openness to disarmament talks during a surprise visit to Beijing. Trump struck an optimistic tone after the unexpected summit with Chinese President Xi Jinping, saying in a pair of early morning tweets Wednesday that Kim might “do what is right for his people and for humanity” and give up his nuclear weapons. “In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost!” Trump said.

Shire Surges on News of Possible Takeda Bid (Bloomberg) Takeda Pharmaceutical Co. is considering its biggest takeover ever — a bid for Shire Plc that could approach $50 billion and propel the Japanese company into the ranks of the world’s top drugmakers. A combination would boost Takeda’s position in drugs for cancer, gastrointestinal diseases and nervous-system ailments, adding key treatments that are in the late stages of testing, according to a statement Wednesday. Shire, based in Lexington, Massachusetts, and listed in London, gained as much as 26 percent.

Brexit Bulletin: Divide and Wait (Bloomberg) The fishermen can’t wait, the public don’t want to wait, but Prime Minister Theresa May says she might need more time. Just like Brexit itself, the question of how long the U.K. should spend getting ready before finally leaving the European Union’s political and legal structures is dividing the country. First there was the argument about the transition period, which was agreed to last week. Brexit-backing fishermen aren’t happy that the U.K. won’t “take back control” of its waters – escaping the quotas of the Common Fisheries Policy – until Jan. 1, 2021. Yet it could have been worse for them, as May was exploring a longer transitional phase.

Oil Heads for Longest Slide in a Month as Fears of Glut Increase (Bloomberg) WTI falls 66 cents to $64.59 a barrel, sliding for a third day

Oil headed for its longest losing streak in almost a month on signs a global glut may persist. Futures in New York fell as much as 1.3 percent after dropping about 1 percent over the previous two sessions. An industry report was said to show a 5.32 million-barrel gain in U.S. crude inventories last week, far higher than the median estimate in a Bloomberg survey before government data later Wednesday. European stockpiles rose the most in five months last week.

Hudson’s Bay posts first profit in eight quarters but misses expectations (Reuters) Canadian department store Hudson’s Bay Co (HBC.TO) on Wednesday posted its first profit in eight quarters, but missed expectations as comparable sales and margins declined in some divisions. The owner of the Saks Fifth Avenue luxury retailer said it had net income of C$84 million ($65.23 million) in the fourth quarter, which ended Feb. 3, compared with a net loss of C$152 million a year earlier.

Quebec sets aside big money for health and debt repayment, taxes Netflix in 2018-19 budget (BNN) he final Quebec budget before the provincial election sets aside big money for health and education as well as more help for families — areas expected to become campaign battlegrounds in the lead-up to October’s vote. While annual spending growth has averaged 2.4 per cent since 2014-15, the 2018-19 budget increases it by 5.2 per cent and promises $16 billion in additional money over the next five years. Despite the substantial hike, Finance Minister Carlos Leitao maintains his budget is not political and that the Liberal government is not trying to buy votes.

Overnight markets

Overview: US 10yr note futures are up 0.09% at 121-01, S&P 500 futures are up 0.32% at 2624.25, Crude oil futures are down -0.69% at $64.8, Gold futures are down -0.59% at $1340, DXY is up 0.13% at 89.492, CAD/USD is down -0.04% at 0.7762.

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 Update

Tsys trading higher, 10Y 2.835 (-1.8bps) curve slightly flatter, US equity futures pulling back from earlier highs, S&P futures +12.5, Euro Stoxx +1.4%. Short term rates continuing to move higher, US 3M libor 2.302% highest since 2008. The US sells $35bln in 5Y notes at 1:00PM.  Core EGBs lagging the move in tsys, bund yields slightly lower after the 10Y tsy/bund spread hit 233.5 – widest spd in over 30 yrs while  10Y bund contract rose to the highest since Jan. In Canada, GOCs well bid, outperforming tsys across the curve, the CAD slightly lower yet recovering on positive NAFTA comments from US trade rep Lightizer. The BOC auctions $3.0bln in 2Y notes at noon – reopening the 1.75% May 2020 issue with the May 20/2Y roll wider 5.2/5.1. This could be the last reopening  of the May issue as outstanding will reach $9.6bln.  The 2Y @ 1.86% is just off the last Friday’s post CPI highs – close to a six year high.  GTAA in the market with  $500mln June 2037 ! 103 +/-3 vs 37s.

News headlines

U.S. Pushes China on Cars and Finance in Tariff Talks (Bloomberg) The Trump administration is urging China to lower tariffs on cars and open its market to U.S. financial services as part of talks to resolve a rise in trade tensions that has shaken global markets, according to a person familiar with the matter. Treasury Secretary Steven Mnuchin called China’s Liu He to congratulate Liu on his appointment this month as vice premier in charge of economic policy, said the person, who spoke on condition of anonymity because the discussions aren’t public. The two discussed the trade deficit between the two countries and committed to finding a mutually agreeable way to reduce the gap, the person said, adding they have exchanged correspondence.

Stocks Jump in Best Day Since 2015 as Dollar Falls: Markets Wrap (Bloomberg) U.S. equities surged back from the biggest weekly rout in two years, with major benchmarks climbing more than 2.7 percent on signs that an escalation of trade tensions was beginning to ease. Chipmakers and banks led gains as the S&P 500 Index posted its biggest one-day jump since August 2015, while 20 stocks climbed for every one that fell. The advance erased Friday’s drop, though the gauge still had a ways to go to make up all of last week’s losses. Facebook Inc. was a noticeable underperformer, ending just slightly higher after the Federal Trade Commission said it has an open, non-public probe into the company’s privacy practices.

GSK Gets Full Control of Sensodyne Maker for $13 Billion (Bloomberg) The new bosses of two of Europe’s largest drugmakers are pivoting in different directions, with GlaxoSmithKline Plc doubling down on consumer health as Novartis AG focuses on finding new prescription medicines.

Trump’s Russian Expulsions Leave Moscow Stunned (Bloomberg) The U.S. president often accused of cozying up to the Kremlin suddenly looks closer than ever to the European allies he’s sometimes snubbed.

‘Vulnerable’ Stocks and Record U.S. Debt Sales Dominate the Week (Bloomberg)  A holiday-shortened trading week in the U.S. and much of Europe will see traders contend with more than just the end of the first-quarter.

TSX futures higher as trade war worries recede (Reuters) Canada’s main stock index on Tuesday looked set to extend its previous session’s gains as reports of talks to improve U.S. access to Chinese market eased trade war worries. June futures on the S&P TSX index SXFc1 were 0.35 percent higher at 7:15 a.m. ET. Canada’s main stock index rebounded on Monday from a five-week low, led by gains in consumer discretionary and energy shares. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.55 percent at 7:15 a.m. ET, while S&P 500 e-mini futures Esc1 rose 0.59 percent and Nasdaq 100 e-mini futures NQc1 were 0.96 percent higher.

Whistleblower says Canadian company worked on software to find Republican voters (Reuters) A Cambridge Analytica whistleblower said on Tuesday that Canadian company AggregateIQ worked on software called Ripon which was used to identify Republican voters ahead of the 2016 U.S. presidential election. AggregateIQ did not immediately respond to request for comment on the remarks by Christopher Wylie, a whistleblower formerly of British political consultancy Cambridge Analytica.

Quebec’s Leitao to table provincial budget today (BNN) Quebec Finance Minister Carlos Leitao is expected to table an election-themed budget today ahead of the fall provincewide vote. The government has said it intends to introduce measures to reduce the province’s debt by $10 billion over five years by dipping into a special fund that was created in 2006. The province believes it will save $1 billion in interest payments. Leitao says the budget will focus on the quality of life of Quebecers. The budget will be Leitao’s fifth budget and the final one before the provincial election on Oct. 1. The finance minister will table the document in the national assembly shortly after 4.

Overnight markets

Overview: US 10yr note futures are up 0.039% at 120-17, S&P 500 futures are up 0.48% at 2672.25, Crude oil futures are up 0.49% at $65.87, Gold futures are down -1.07% at $1346.3, DXY is up 0.56% at 89.526, CAD/USD is up 0.46% at 0.7751.

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 Update US tsys lower, yields ~3-4bps higher with the 10Y 2.85% on above avg volume in TY futures (365k) as S&P  futures are rebounding , up 37pts (1.4%) on news China will look to avert a trade war with the US, both countries have been negotiating to increase US access to Chinese markets according to the WSJ, also news that South Korea has struck a deal with the US on trade to avoid tariffs on steel. The US auctions $30bln in 2Y notes this aft – the largest 2Y supply since 2014, along with $35bln in 5Y notes tomorrow and $29bln in 7Y notes Wed. In Canada, GOCs opening weaker, outperforming tsys by 0.5-1bp out to 10s, wider in longs. Provis opening 0.5bps tighter, Ont 27s 61.5/60, QC/Ont 48 -3.5/-3.9 (unch).

News headlines

Mnuchin ‘Hopeful’ Truce Can Be Reached With China on Trade (Bloomberg) Treasury Secretary Steven Mnuchin said he’s optimistic the U.S. can reach an agreement with China that will avert the need for President Donald Trump to impose tariffs on at least $50 billion of goods from the country. “We’re having very productive conversations with them,” Mnuchin said on “Fox News Sunday,” when discussing talks with China. “I’m cautiously hopeful we reach an agreement.”

Global Trading Giants Dip Toes in China Oil Futures on Debut Day (Bloomberg) Two of the world’s biggest oil traders gave China’s crude futures contract a go on its long-anticipated trading debut. Commodity giants Glencore Plc and Trafigura Group were among foreign participants as the yuan-denominated futures started on the Shanghai International Energy Exchange Monday. After an initial surge in volume that outpaced overnight transactions in global benchmark Brent crude in London, trading tapered off toward the end of the session and the contract closed at 429.9 yuan a barrel ($68.22).

Facebook Hasn’t Been ‘Forthcoming,’ Warner Says, Floating New Rules (Bloomberg) Facebook Inc. hasn’t been “fully forthcoming” as Congress probed Russia’s attempted meddling in the 2016 presidential election, U.S. Senator Mark Warner of Virginia said Sunday as the social-media giant faced continued fallout from an ongoing data crisis. Warner, the top Democrat on the Senate Intelligence Committee, said on NBC’s “Meet the Press” that he questioned “the use of this really sketchy firm Cambridge Analytica,” but Facebook “blew that off” as they did other concerns over Russia’s actions.

Stocks Advance, Bonds Fall as Trade Fears Subside: Markets Wrap (Bloomberg) A rebound in U.S. equity futures Monday offered hope of stabilization after last week’s rout, with shares in Europe and Asia also rising as investor fears of an escalation of trade tensions began to ease. Carmakers and oil companies were among the top gainers in Europe as futures on the S&P 500 Index and the Nasdaq pointed to a higher open and Asian shares shook off earlier losses. Ten-year Treasury yields climbed three basis points ahead of major debt sales. The dollar dropped to the lowest in a month and the yen slipped back from the strongest in more than 16 months. Copper extended losses following the largest weekly decline for base metals since early February.

Bond Traders Face Gut-Check in Record $300 Billion U.S. Auctions (Bloomberg) Bond bulls who enjoyed a rare rally in short-term Treasuries last week might not want to get too comfortable: The world’s biggest debt market is about to be inundated with an unprecedented wave of issuance. The U.S. Treasury will probably auction about $294 billion of bills and notes this week, its largest slate of supply ever. The $30 billion two-year note sale is the biggest since 2014, and comes as the maturity posted just its fourth weekly gain in the last six months. The three- and six-month bill offerings remain at record sizes.

Canada inflation jumps to three-year high, retail sales disappoint (Reuters) Canada’s annual inflation rate in February jumped to a three-year high while January retail sales put in another disappointing performance, giving the Bank of Canada room to ponder when next to hike interest rates. The annual inflation rate rose to 2.2 percent from 1.7 percent in January, the highest since the 2.4 percent seen in October 2014, in part due to costlier gasoline, Statistics Canada said on Friday. The Bank of Canada, which has a 2.0 percent target for inflation, has raised interest rates three times since July 2017 amid a strengthening economy and near record low unemployment, and markets expect another hike by this July.

Trump signs US$1.3T budget deal after threatening veto (BNN) President Donald Trump said he has signed a spending bill funding the federal government for the next six months, reversing a veto threat he made earlier Friday that shocked Washington after his administration had previously said he would approve the legislation.Trump’s turnabout came after a meeting with Defense Secretary James Mattis, who advocated for the bill’s increases in defense spending and wanted the relative certainty of six months of assured funding.

Overnight markets

Overview: US 10yr note futures are down -0.13% at 120-15, S&P 500 futures are up 1.26% at 2630.5, Crude oil futures are down -0.05% at $65.85, Gold futures are down -0.05% at $1355, DXY is down -0.27% at 89.195, CAD/USD is down -0.05% at 0.7758. 

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