Commentaires

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

Market Update Tsys lower , US 10Y 2.835 (+1bp) , on heavy volume in TY futures (575k), with the USDJPY lower for a third day, the yen reaching the highest level since before the US election,  concerns over potential trade war as China announced $3bln in retaliatory tariffs. S&P futures recovering from earlier losses, now up 3.5pts.  Core Euro bonds  lower led by long term gilts with the gilt curve 3.5bps steeper, some profit taking in bunds after yesterday’s risk off rally in global bonds. Fed governor Bostic saying rate hikes will be needed over the next couple of years. GOCs lower before key CPI/Retail Sales data, 10Y 2.19% (+1.6bps).   CPI expected to rise 0.4% m/m in Feb, reflecting positive seasonal factors, with the closely watched core rate approaching 2.0% y/y.Provi spds 1-2bps wider in risk off session, Alberta budget yest no impact on spds.

News headlines

China Hits Back on Trump Tariffs as Europe Off Hook for Now (Bloomberg) The trade conflict between China and the U.S. escalated, with Beijing announcing its first retaliation against metals levies hours after President Donald Trump outlined fresh tariffs on $50 billion of Chinese imports and pledged there’s more on the way. On Friday, China unveiled tariffs on $3 billion of U.S. imports in response to steel and aluminum duties ordered by Trump earlier this month. The White House then declared a temporary exemption for the European Union and other nations on those levies, making the focus on China clear. Though Beijing’s actions so far are seen by analysts as measured, there may be more to come.

Oil Gains as Trump Picks Iran Hawk Bolton as Security Adviser (Bloomberg) Oil advanced on concerns that the U.S. president’s choice of a noted hawk as his new security adviser could inflame political tensions in oil-producing regions. President Donald Trump’s plans to appoint hardliner John Bolton as White House national security adviser raises the likelihood the U.S. will re-impose sanctions on Iran, the third-largest oil producer in the Middle East, analysts say. Prices are headed for their biggest weekly gain in a month, despite slumping Thursday after Trump’s call for tariffs on at least $50 billion of Chinese imports fanned worries about global economic growth.

Senate Averts Shutdown by Passing $1.3 Trillion Spending Bill (Bloomberg) The Senate narrowly averted a government shutdown by passing a $1.3 trillion spending bill early Friday that increases military and domestic spending and strengthens background checks for gun buyers. The 65-32 vote came after Republican conservatives objected to the higher spending and Republican Rand Paul of Kentucky held open the possibility that he’d delay the vote past a Friday midnight deadline that would have triggered a cloture.

Europe Stocks Slump as U.S. Futures Pare Decline: Markets Wrap (Bloomberg) Stock declines deepened on Friday, with European equities sliding to the lowest in more than a year and gauges tumbling across Asia as the negative news cycle for risk assets continued. Treasury yields and U.S. equity futures both pared a drop, however, signaling the selloff may yet ease. China announced retaliation against President Donald Trump’s tariffs and there was further turnover in the U.S. administration, compounding a retreat that started in technology shares and escalated when the White House upped its protectionist agenda on Thursday. Traditional havens including gold and the yen jumped as investors sought safer assets, though government bonds failed to add to gains from a day earlier.

EU Blames Russia, Expulsions Now in Sight: EU Summit Update (Bloomberg) European Union leaders sided with the U.K. and said it’s “highly likely” that Russia was behind the nerve agent poisoning in Britain of a former double agent. It’s an outcome that will please Prime Minister Theresa May. The language of the bloc was toughened significantly: It could find “no other plausible explanation” for the attack and believes it’s “highly likely” Russia is to blame.

TSX futures dip on trade war fears (Reuters) Futures for Canadian main stock index fell on Friday on rising fears of a global trade war after U.S. President Donald Trump announced tariffs on Chinese goods. Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, but only after a 30-day consultation period that starts once a list is published. June futures on the S&P TSX index SXFc1 were down 0.25 percent at 7:15 a.m. ET.

Alberta budget sets out plan to balanced books in 5 years (BNN) Alberta’s 2018 budget includes more spending, an $8.8-billion deficit and a five-year plan to balance the books that’s tied to the ups and downs of oil prices and the vagaries of pipeline politics. « This budget continues to support the vital programs and services Albertans need, » Finance Minister Joe Ceci said Thursday. « It continues to work on the diversification of our economy and we need that vitally because of the wild swings in our revenues. » The budget, as in past years, increases funding for core programs in education, health and community services.

Overnight markets

Overview: US 10yr note futures are up 0.013% at 120-17, S&P 500 futures are up 0.11% at 2646.25, Crude oil futures are up 0.22% at $64.44, Gold futures are up 1.07% at $1347.5, DXY is down -0.26% at 89.623, CAD/USD is down -0.16% at 0.7741. 

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 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