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Market Update Tsys trading higher on strong volume (485k TY futures), US 10Y 2.852% (-3bps), rising in Asia in follow thru to yest psot FOMC rally, and recently with UK gilts after BOE voted to leave rates unch by 7-2 vote.  Risk off tone with European stocks -1.3%, S&P futures -19.25. GOCs higher, lagging tsys by 1 bp on top of yest huge 6-10 bp underperformance after a dovish Fed along with the rally in crud and news of progress on NAFTA – 11 bps in 2s post FOMC.  Provis mostly unch despite higher GOC yields yest and no supply.

News headlines

Trump Plans to Impose $50 Billion in China Tariffs, Source Says (Bloomberg) President Donald Trump is set to announce about $50 billion of tariffs against China over intellectual-property violations on Thursday, according a person familiar with the matter. The president is considering targeting more than 100 different types of Chinese goods, according to the person, who spoke on the condition of anonymity. The value of the tariffs was based on U.S. estimates of economic damage caused by intellectual-property theft by China, the person said.

Fed Lifts Rates, Steepens Path Through 2020 for More Hikes (Bloomberg) Federal Reserve officials, meeting for the first time under Chairman Jerome Powell, raised the benchmark lending rate a quarter-point and forecast a steeper path of hikes in 2019 and 2020, citing an improving economic outlook. Policy makers continued to project a total of three increases this year. “The economic outlook has strengthened in recent months,” the policy-setting Federal Open Market Committee said in a statement Wednesday in Washington. Officials repeated previous language that they anticipate “further gradual adjustments in the stance of monetary policy.”

Zuckerberg Response Fails to Quiet Critics Scorning Mea Culpas (Bloomberg) Facebook Inc. CEO Mark Zuckerberg broke his silence on the crisis over political-advertising firm Cambridge Analytica’s access to user data on the social network, outlining concrete steps the company is taking to make sure such a leak doesn’t happen again. Critics were underwhelmed. The billionaire finally spoke in a series of media interviews, and a blog post, promising to probe the extent to which “rogue apps” are harvesting sensitive data on the social network. Zuckerberg told CNN that Facebook would inform every one of its two billion-plus users that may have gotten their personal data compromised.

China’s Central Bank Raises Borrowing Costs After Fed Hikes (Bloomberg) China’s central bank increased the cost of short-term loans to commercial lenders, tightening policy in step with the U.S. Federal Reserve. The People’s Bank of China raised the interest rates it charges on 7-day reverse-repurchase agreements by five basis points, the central bank said in a statement. The move is “in line with market expectations and a normal reaction to the Fed’s rate hike”, the PBOC said in a statement on the website.

Bonds Rise, Stocks Drop on Trade Fear; Pound Jumps: Markets Wrap (Bloomberg) Government bonds advanced and European stocks declined alongside U.S. equity futures as investors switched their focus from the Federal Reserve to the uncertain outlook for global trade. The dollar steadied, the euro fell and the pound jumped as the Bank of England held interest rates. The tone of trading was largely risk-off, and the Stoxx Europe 600 Index dropped a second day as a slowdown in private-sector growth offset reports the European Union believes it’s on track to be exempted from imminent U.S. tariffs. The greenback was fractionally higher after plunging on Wednesday in the wake of the Federal Reserve meeting, where policy makers signaled the pace of monetary tightening won’t accelerate this year. In Asia, Japanese and Korean stocks advanced while Hong Kong and Chinese shares retreated after China’s central bank also lifted market interest rates.

Canadian PM optimistic over NAFTA as deal on autos seen possible (Reuters) Canadian Prime Minister Justin Trudeau said on Wednesday for the first time that a deal to renegotiate NAFTA was likely, amid signs negotiators may be closer to settling one of the regional trade pact’s most contentious issues. “We remain very confident that a win-win-win deal is not only possible, but likely,” Trudeau told a Toronto business audience.

Bank of England keeps rates steady, two policymakers unexpectedly back hike (BNN) The Bank of England kept rates steady on Thursday but two of its policymakers unexpectedly voted for an immediate rate rise, in a statement that will boost investors’ confidence that borrowing costs will rise in May. Ian McCafferty and Michael Saunders – who were the first officials to call for rates to rise in 2017 – said it was now time for rates to increase again for only the second time since the 2008 financial crisis. Globally, the economy is growing at its fastest rate since the 2007-2008 financial crisis, helping Britain’s at a time when it is suffering from uncertainty about Brexit.

Morneau open to changes on Canadian inflation target (BNN) Finance Minister Bill Morneau said he’d be open to changes in the Bank of Canada’s 2 per cent inflation target when the mandate review comes up in 2021, though the bar for any adjustment remains high. Morneau, speaking to Bloomberg in Buenos Aires, said he hasn’t directly discussed the issue with the central bank, but he’s paying attention to its deliberations. The Bank of Canada has already begun the process of vetting ideas.

Overnight markets

Overview: US 10yr note futures are up 0.391% at 120-14, S&P 500 futures are down -0.68% at 2699.75, Crude oil futures are down -0.51% at $64.84, Gold futures are up 0.73% at $1337, DXY is down -0.04% at 89.747, CAD/USD is down -0.22% at 0.7767. 

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 slightly weaker, 10Y back above 2.90% , above avg volume in TY futures(~270k), curve 0.5bps flatter ahead of FOMC , 3M libor set higher for 31^st day +2.3bps  to 2.711%.  European bonds lower, gilt yields 4-7bps higher after solid UK employment and wage data – UK unemployment rate fell back down to 4.3% cycle low, as employment rose 168k between Dec and Feb, while wages rose at the fastest rate since Sep 2015. GOCs weaker, underperforming tsys across the curve, with provis trading up to start 0.5bps.

News headlines

Powell to Ponder Hawkish Tone in FOMC Debut: Decision Day Guide (Bloomberg) Jerome Powell will likely make headlines Wednesday with an interest-rate hike in his first meeting as Federal Reserve chairman. But look to the fine print for his biggest news.The rate-setting Federal Open Market Committee is expected to lift the target federal funds rate by a quarter percentage point to 1.5 percent to 1.75 percent after its two-day meeting in Washington on Wednesday. A policy statement will be released at 2 p.m. and he’ll host a press conference that begins 30 minutes later.

Facebook Besieged by Wall Street, Washington and Europe (Bloomberg) The company on Tuesday was beset on two continents by governments suddenly focused on data security and investors unliked its stock to the point that it lost $60 billion in value. The Menlo Park, California, company, whose social network is a ubiquitous venue for social and political life, is drawing the unaccustomed unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump. The company, Cambridge Analytica, has been implicated in dirty tricks in elections around the globe.

European Stocks Steady, Dollar Weakens Before Fed: Markets Wrap (Bloomberg) Shares in Europe pared earlier declines and the dollar fell as traders await the Federal Reserve’s first policy decision since Jerome Powell took the helm. Treasuries steadied and oil touched a the highest in almost seven weeks. Leisure and mining companies were among the biggest losers in the Stoxx Europe 600 Index, following a mixed performance in Asian equities. An index tracking the dollar’s value against trading partners dropped the most in two weeks. Oil advanced on renewed tension between producers Saudi Arabia and Iran. European bonds fell and the pound extended its advance after data on stronger wage growth, and before a Bank of England policy meeting. U.S. equity-index futures edged higher and gold climbed.

Soaring U.S. Libor Rate Trickles Into Funding Markets Worldwide (Bloomberg) From Riyadh to Sydney, short-term funding markets worldwide are starting to feel the effects of soaring U.S. dollar Libor rates. The surge in recent weeks in this key global short-term financing indicator may have a mostly technical explanation, meaning it’s probably not flashing warning signals like it was during the credit crunch or the European sovereign debt crisis. Nonetheless, it’s still making funding more costly for some borrowers outside the U.S.

Congress Stymied on $1.3 Trillion Bill With Days to Go Before Shutdown (Bloomberg) Congressional Republicans missed another target to unveil a $1.3 trillion spending bill, as talks continued early Wednesday with just days remaining for House and Senate votes to avert a third government shutdown this year. Lawmakers had hoped to announce a bill by the end of the day Tuesday, but disagreements persisted over immigration, border security, tax breaks and a rail tunnel under the Hudson River between New York and New Jersey.

TSX futures drop as Fed caution weighs (Reuters) Canada’s main stock index futures dipped on Wednesday as with investors brace for a near-certain raise U.S. interest rates and watch for signals from the Federal Reserve on how many more to expect for this year. The Fed is expected to raise interest rates at its first policy meeting under Chairman Jerome Powell, and may signal more hikes are coming in response to tax cuts and government spending that could further stoke a robust U.S. economy.

Canada regulator halts trading in First Quantum Minerals shares (Reuters) A Canadian securities regulator halted trading in shares of First Quantum Minerals Ltd on Tuesday after the stock dived 12.4 percent by late afternoon. Investment Industry Regulatory Organization of Canada did not give a reason for the trading halt, but the regulator imposes suspensions to a ensure fair and orderly market.

G20 commits to fighting protectionism, calls for ‘further dialogue’ on trade (BNN) The world’s financial leaders on Tuesday reaffirmed their commitment to fighting protectionism but called for “further dialogue and actions” on trade, just days before U.S. metals tariffs take effect and U.S. President Donald Trump readies sanctions on China. Finance ministers and central bankers of the world’s 20 biggest economies, the G20, issued the change to their communique as a two-day meeting in Buenos Aires drew to a close amid worries about the potential for a global trade war.

Overnight markets

Overview: US 10yr note futures are down -0.143% at 119-30, S&P 500 futures are down -0.15% at 2719.5, Crude oil futures are up 1.05% at $64.21, Gold futures are up 0.24% at $1315.1, DXY is down -0.27% at 90.128, CAD/USD is down -0.62% at 0.7698. 

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 trade weaker, near overnight lows on avg volume in TY futures (240k), 10Y 2.87 (+1bp). USD recovering from earlier slide vs yen on BOJ deputy comments that they could adjust rates before inflation hit 2%, reports Trump to announce $60bln of import tariffs on China weighing on tsys, core EGBS. Gilts lower, despite weaker Feb CPI – 2.7% from 3.0% in Jan, mkt reacting more to Brexit transition and US tarrifs. GOCs  lower, outperforming tsys by 1-1.5bps,  Jan Wholesale Trade rose 0.1% vs 0.0% exp. Provis fairly rangebound, Ont 27s 59.5/59.

News headlines

China Pledges Action on Tech Transfer as Trump Plans Tariffs (Bloomberg) China made further promises to protect the intellectual property of foreigners investing in its economy, addressing a long-standing grievance as U.S. President Donald Trump plans new tariffs aimed at Beijing. Speaking Tuesday at the end of the annual National People’s Congress, Premier Li Keqiang said that China wants to avoid a trade war and that the government plans to further open the manufacturing sector — and that it won’t force foreign companies to transfer technology to domestic ones while doing so.

Disputes Stall Work on $1.2 Trillion Spending Bill in Congress (Bloomberg) Republican attempts to cobble together a comprehensive $1.2 trillion spending bill stalled late Monday, pushing House and Senate votes on the package closer to a deadline at the end of the work week to keep the government operating. Lawmakers, who’ve had a month to work out the details of a budget agreement aimed at ending a cycle of stopgap measures, blew past another target to finish their work as disagreements persisted over immigration, border security, tax breaks and a tunnel under the Hudson River between New York and New Jersey.

How Facebook Made Its Cambridge Analytica Data Crisis Even Worse (Bloomberg) Facebook Inc. tried to get ahead of its latest media firestorm. Instead, it helped create one. The company knew ahead of time that on Saturday, the New York Times and The Guardian’s Observer would issue bombshell reports that the data firm that helped Donald Trump win the presidency had accessed and retained information on 50 million Facebook users without their permission.

Bond Traders’ March Fed Guide: Beware the Four-Hike Hype So Soon (Bloomberg) For a Federal Reserve meeting at which an interest-rate hike is virtually guaranteed, the decision still holds plenty of market-moving potential for bond traders. That’s because new Federal Reserve Chairman Jerome Powell gave markets the impression last month that he’s open to tightening four times in 2018, rather than the three currently reflected in policy makers’ “dot plot” projections. Officials will update those forecasts this week, and Powell will hold a press conference, after his February signals encouraged a fresh round of U.S. yield-curve flattening.

Stocks Seek to Shrug Off Tech Woes; Dollar Climbs: Markets Wrap (Bloomberg) European stocks swung from a gain to a loss and back again and Asian equities nudged lower as investors sought to put the technology selloff behind them before a series of potentially market-moving events this week. The dollar rose with Treasury yields and the pound erased an advance. Trading was mixed and muted in equities across both Europe and Asia following Monday’s selloff, which was sparked by a series of negative tech stories including Facebook Inc.’s data issues and a fatal accident involving an Uber Technologies Inc. self-driving car. Still, both the European gauge and U.S. stock futures reversed declines, and contracts for the Nasdaq 100 eventually edged higher. Metals were once again under pressure, but Bloomberg’s broader index of raw materials increased.

Canada’s Trudeau says will discuss U.S. steel tariffs at Group of 7 meeting: Seoul (Reuters) Canada’s Prime Minister Justin Trudeau said steel tariffs will be discussed at the upcoming Group of 7 summit in June, South Korea’s presidential office said on Tuesday after Trudeau had a phone call with South Korean President Moon Jae-in. Trudeau was cited as saying Canada had been granted a temporary waiver on U.S. steel import tariffs and does not believe trade issues involving the United States have been resolved yet, the Blue House said.

Budget watchdog calls out Liberals for lack of details in budget plans (BNN) Parliament’s spending watchdog urged the federal government to come clean Thursday on billions of dollars’ worth of expenditure outlined in last month’s budget that includes little or no explanation — be it on infrastructure, programs for Canadians or the military. The Liberal government’s third budget, tabled late last month, showed billions in planned infrastructure spending was being shifted to future years. The document also showed declines in program spending totalling about $16 billion over six years, thereby reducing the government’s bottom line.

Overnight markets

Overview: US 10yr note futures are down -0.169% at 120-06, S&P 500 futures are up 0.16% at 2727, Crude oil futures are up 1.24% at $62.83, Gold futures are down -0.51% at $1311.1, DXY is up 0.46% at 90.18, CAD/USD is up 0.08% at 0.7641. 

US Economic Data

There is no US economic data for today.

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