Commentaires

Market Update Tsys weaker, off the lows on moderate volume (380k TY futures), 10Y 2.815 (+1.1bps), long end underperforming. Risk on tone follow thru to yest rebound in US equities, S&P futures +11.25, Nasdaq +49.  News that the Trump admin is ready to negotiate with China over trade helping to support positive tone in stocks, Euro Stoxx +2% trading at two week high. Core EGBs lower, 10Y gilts +2.6bps @ 1.39%. GOCs lower in line with tsys, 10Y CAD 2.185%. Trade data in the US & Cda before key employment data tomorrow. Provis unch despite positive tone, after closing 1bp wider again yest. Supply from Alberta/MP rumoured, new Ontario 28 yest @ 73.5 well received, now 72.5. 

News headlines

Stocks Bounce Back From Trade Tremors, Bonds Fall: Markets Wrap (Bloomberg) U.S. equities stormed back from deep losses sparked by trade tensions as investors speculated the Trump administration won’t enact the most protectionist proposals and risk derailing economic growth. The S&P 500 Index saw the biggest two-day gain in five weeks as representatives from China and the Trump administration left the door open for a negotiated solution to avoid tariff proposals that wouldn’t take effect for months. Treasury yields turned higher to trade near 2.79 percent. The dollar fell as the Mexican peso strengthened after the U.S. president was said to have softened on his car-parts demand in North American Free Trade Agreement negotiations.

Republicans Warn Trump a Trade War Risks Party’s Chances in November (Bloomberg) Republicans are warning President Donald Trump that a trade war with China would deal an economic blow to politically important areas of the country that will cost the party in November’s congressional elections. The president’s proposed tariffs on a variety of imports are aimed at fulfilling a campaign promise to protect domestic industries slammed by globalization. But the impact of retaliation by China could drown out the GOP message that tax cuts are delivering prosperity, which the party is counting on to save their majorities in the House and Senate in what’s already a tough election year.

Facebook Says Data on Most of Its 2 Billion Users Is Vulnerable (Bloomberg) Facebook Inc. said data on most of its 2 billion users could have been accessed improperly, giving fresh evidence of the ways the social-media giant failed to protect people’s privacy while generating billions of dollars in revenue from the information. The company said it removed a feature that let users enter phone numbers or email addresses into Facebook’s search tool to find other people. That was being used by malicious actors to scrape public profile information, it said.

Euro-Area Economy Cools Further in Sign Peak Growth Has Passed (Bloomberg) Euro-area economic momentum slowed to the weakest level in more than a year, adding to warning signs that the region’s upswing has passed its peak. A composite Purchasing Managers’ Index dropped nearly two points in March, the most since 2012, when the 19-nation bloc was mired in recession. Growth in manufacturing cooled to an eight-month low last month, and sluggish orders in the region’s largest economy suggest there’s little additional strengthening in store.

TSX futures rise as trade war worries fade (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday, tracking gains in global equities as concerns over trade tensions between the U.S. and China receded. Canadian trade report for February is scheduled at 8:30 a.m. ET and is expected to show the trade deficit widened to C$2 billion from $1.91 billion the month before Canada’s main stock index pared earlier losses on Wednesday as investors grew less worried about trade tensions, but the TSX still posted its lowest close in nearly eight weeks as shares of financial and materials companies declined.

Canada reports progress on NAFTA, says ‘we’re not there yet’ (Reuters) Mexico, Canada and the United States have made good progress in their bid to modernize the NAFTA trade pact but still have work to do, Canadian Foreign Minister Chrystia Freeland said on Wednesday. Freeland also said she would be flying to Washington for a meeting on Thursday with U.S. Trade Representative Robert Lighthizer, who is pushing hard for a quick deal in principle to finish before a July 1 presidential election in Mexico.

China tariff plan seen a boon for Bombardier, others (BNN) China’s plan to slap tariffs on some U.S.-made planes will hit demand for Gulfstream and Boeing business jets but benefit Canada’s Bombardier () and other rivals seeking a larger share of Asia’s biggest market, jet brokers and analysts said. China’s Ministry of Commerce announced plans on Wednesday to place a 25 per cent tariff on U.S. aircraft with an « empty weight » of between 15,000 kilograms and 45,000 kilograms amid a trade spat between the nations. That category would include General Dynamics Corp’s () popular Gulfstream G550 and G650s and the larger Boeing () Business Jet 1 that competes against models from European rival Airbus SE (AIR.PA).

Overnight markets

Overview: US 10yr note futures are down -0.168% at 120-20, S&P 500 futures are up 0.55% at 2661.5, Crude oil futures are down -0.22% at $63.23, Gold futures are down -0.8% at $1329.5, DXY is up 0.19% at 90.312, CAD/USD is up 0.19% at 0.7816.

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

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