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Market Update US tsys weaker, yields 2-3bps higher with the 10Y 2.87 (+2.6bps), weighed by weakness in German bunds & UK gilts, with European stocks -0.60% and S&P futures -13.75. Euro spiking to 1.2315, bund yields +3bps  on Reuters story that several ECB members see progress on the outlook for inflation while economic developments could allow the ECB to end bond buying by the end of the year. Also BN survey revealed German growth expected to rise at the fastest rate since 2011.   Gilts sharply lower on report that transitional Brexit deal between EU & UK is close, 10Y gilt 1.50% (+7bps). Data calendar in the US is fairly light, FOMC decision and press conference should garner outsized attention as it is Powell’s first meeting as chairman, and the Fed is expected to raise rates by 25bps to 1.50-1.75%. GOCs opening weaker, underperforming tsys in 10s  as 2s10s is 3bps steeper. Provi supply expected to be quiet despite end of spring break, with provinces in blackout, Ontario budget set for March 28th.

News headlines

Stocks Slide in Broad Selloff; Brexit Spurs Pound: Markets Wrap (Bloomberg) Stocks declined globally on Monday as investors braced for a week packed with risk events, from central bank decisions to a G-20 gathering. Commodities were broadly weaker, Treasury yields rose and the pound jumped on hopes for a Brexit breakthrough. U.S. stock futures slumped, with contracts on the Nasdaq 100 Index off 1.4 percent, as technology companies were roiled by weekend reports of a Facebook Inc. data breach and news that Apple appears poised to disrupt its supply chain. That sapped Asian equities, while tech shares also led a retreat for the Stoxx Europe 600 Index. The gauge’s drop is set to trigger a trading pattern known as a “death cross,” a bearish sign for many technical analysts.

EU, U.K. Agree to Transition Deal: Brexit Update (Bloomberg) The U.K. and EU have reached a deal on the transition agreement that businesses are keen to get pinned down for the period immediately after Brexit. Brexit Secretary David Davis and chief EU negotiator Michel Barnier are in Brussels and are due to brief reporters at 11:45 a.m. London time. Leaders are expected to sign off on the agreement at a summit on Thursday and Friday.

Weakening FANG Stocks Stir Overnight Volatility in U.S. Futures (Bloomberg) A steady weakening in U.S. equity futures snowballed into one of the biggest drops in a month for Nasdaq 100 contracts, as pre-market trading revealed losses of around 1.5 percent in Apple Inc., Facebook Inc., Alphabet and Amazon.com. Facebook was in the spotlight as government officials in the U.S. and Europe were demanding answers from the company after reports that Cambridge Analytica, the advertising-data firm that helped Donald Trump win the U.S. presidency, retained information on tens of millions of Facebook users without their consent. Apple suppliers including Samsung and LG Display fell in Asia as the iPhone maker was said to be producing its own displays for the first time.

Oil Slips as U.S. Shale Fears Untempered by Russian Reassurance (Bloomberg) Oil slipped as U.S. explorers resumed their drilling binge, raising concerns over whether output cuts by OPEC and its allies will be enough to clear a glut despite a pledge from Russia that it’s committed to the curbs. Futures in New York fell 0.4 percent after data showed American producers added oil rigs for the seventh time in eight weeks. U.S. output also continued to grow, touching a record 10.4 million barrels a day last week. Meanwhile, Russia’s assurance that it will prolong production cuts into 2019 if necessary failed to assuage fears over surging shale supplies.

Hedge Funds Suffer Worst Month in Two Years (Bloomberg) Hedge Fund returns overall fell 2.19 percent in February, wiping out January gains and leaving them nearly unchanged for the year at up 0.07 percent, according to the latest numbers out of the Bloomberg Hedge Fund Database. That came as markets were roiled by a 47 percent jump in the VIX Index in the month, a 3.9 percent slide in the S&P 500 and as 10-year yields backed up to 2.86 percent, leading to the worst month for hedge funds since January 2016, when they slumped 2.57 percent.

Canadian pension fund CDPQ wants to be its own private equity investor (Reuters) Caisse de depot et placement du Quebec (CDPQ), one of Canada’s biggest public pension funds, has relied on private equity firms to invest in leveraged corporate buyouts. Now it is building its own investing team to depend less on buyout firms as middle men.

World stocks on longest slide since November as Fed caution hits (Reuters) Shares were stuck on their worst run since November on Monday, as caution gripped traders in a week in which the Federal Reserve is likely to raise U.S. interest rates and perhaps signal as many as three more hikes lie in store this year.

Loonie struggles to stabilize as traders brace for Powell’s remarks (BNN) The Canadian dollar was struggling to find a floor on Monday as it fell as low as 76.19 cents US before breaking into positive territory. The currency’s instability comes as traders brace for Jerome Powell’s first rate decision as U.S. Federal Reserve Chair on Wednesday. Trade uncertainty and soft domestic data have also been weighing on the loonie in recent weeks.  On Friday, the currency hit its lowest level since last June in the wake of a dovish speech by Bank of Canada Governor Stephen Poloz, weak housing data, and NAFTA tension.

Overnight markets

Overview: US 10yr note futures are down -0.169% at 120-05, S&P 500 futures are down -0.5% at 2742.25, Crude oil futures are down -0.26% at $62.18, Gold futures are down -0.09% at $1311.1, DXY is down -0.18% at 90.072, CAD/USD is down -0.21% at 0.7651. 

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

Market Update Tsys mixed, slightly higher in the short end, with the 10Y 1bp lower @ 2.82%, on very light volume in TY (~200k). Data calendar is second tier – Feb Housing Starts &  Ind Prod as well as March Univ of Michigan Sentiment. EGBs higher in line with tsys, gilts outperforming. Eurozone inflation fell to 1.1% in Feb from 1.3%, below the 1.2% exp.  peripheral spreads continue to narrow with notable outperformance from 30Y Spanish & Italian bonds. There is no peripheral supply next week.  GOCs trading higher, in line with tsys, 10Y 2.13% low since early Jan, while GOC curve has flattened to new lows , 5bps since Poloz speech on Tuesday. Provi spreads fairly stable this week, Ontario credit curve flattening out to 10Y this week.

News headlines

White House Denies McMaster Is Next to Be Ousted (Bloomberg) President Donald Trump is not about to oust his national security adviser, H.R. McMaster, according to White House Press Secretary Sarah Huckabee Sanders, even as speculation intensified that McMaster’s departure had already been decided. Sanders tweeted on McMaster’s status late Thursday night following a Washington Post report that Trump had decided to replace the Army lieutenant general, who has led the National Security Council for more than a year. The Wall Street Journal later reported that Trump wants to remove McMaster and has conveyed his wishes to White House Chief of Staff John Kelly.

Irish Border Spat Complicates Brexit Transition Talks (Bloomberg) The U.K. has significant ground to make up on the Irish border issue before next week’s summit where it aims to clinch a deal on a Brexit transition period, European diplomats said. While both sides are keen have a deal signed off by EU leaders at the meeting, the gap on the Irish question remains wide, according to three diplomats, who asked not to be identified as talks are ongoing. If the EU isn’t satisfied with British proposals for avoiding a hard border, they might attach more conditions to a transition agreement, one of the officials said.

Aramco Gets Cool Response on IPO From U.S. Investors (Bloomberg) Saudi Arabia’s willingness to delay the initial public offering of state oil company Aramco to 2019 has several motivations, from regulatory risk to competing projects in the government’s crowded agenda. There’s another, perhaps more significant hurdle: it appears some American investors aren’t that interested.

Dollar Slips Amid Political Noise; Stocks Mixed: Markets Wrap (Bloomberg) The dollar edged lower and Treasuries gained as investors considered the potential for further churn of White House personnel. European stocks and U.S. futures drifted after Asian shares slipped, with equities traders showing little conviction.

After Tillerson, the Iran Deal Hangs By a Thread (Bloomberg) President Donald Trump’s decision to fire his top diplomat has put the Iran nuclear agreement at risk and cast new uncertainty on a meeting of the accord’s signatories. Diplomats from six world powers and Iran convened in Vienna on Friday to review the nuclear deal, called the Joint Comprehensive Plan of Action, which restricts the Persian Gulf country’s nuclear work in exchange for sanctions relief. It’s the last scheduled meeting of the group before Trump’s May 12 decision on whether the U.S. sticks to the accord.

Canada’s Trudeau ‘very optimistic’ of NAFTA win for all three countries (Reuters) Canadian Prime Minister Justin Trudeau said on Wednesday that he was “very optimistic” of a successful result for his country, the United States and Mexico as they renegotiate the North American Free Trade Agreement. Speaking in a Bloomberg TV interview in Regina, Saskatchewan, Trudeau said there was an “eminently achievable win-win-win” result available, and that NAFTA has been good for all three countries.

Loonie at lowest since last June amid murky trade outlook (BNN) The Canadian dollar fell to its lowest level since last June on Friday, as the currency hunts for a floor amid a host of factors that are weighing it down. The loonie was trading at 76.46 cents U.S. at 6:05 a.m. ET, more than five cents below its year-to-date high of 81.52, and extending a rough stretch that has seen the dollar post just five winning sessions since the middle of February.

Canada’s fourth quarter household debt-to-income nears record high (BNN) Canadian household debt as a share of income, a measure closely watched by policy makers, slipped slightly in the fourth quarter from a record high in the third quarter, Statistics Canada said on Thursday. The ratio of debt to disposable income dipped to 170.4 per cent from 170.5 per cent in the third quarter. Statscan revised the third quarter down from an initial 171.1 per cent.

Overnight markets

Overview: US 10yr note futures are down 0% at 120-16, S&P 500 futures are up 0.03% at 2756.25, Crude oil futures are up 0.23% at $61.33, Gold futures are up 0.22% at $1320.7, DXY is down -0.18% at 89.973, CAD/USD is up 0.22% at 0.7644. 

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 lower & flatter, the 10Y 2.82%, narrow o/n range in TY futures on above avg volume (395k) –  prices moving lower after 8:30 data – claims lower and import prices up for the 7^th month in a row, 0.4% in Feb vs 0.2% exp. The 10Y almost back to 2.80% low from late Feb after rising above 2.90% in the wake of the Feb payroll data. Equities futures +1.25, USD index slightly higher, crude +0.32 @ 61.28.  Core EGBs higher, gilt curve in bullish flattener reaching new narrows after solid 10Y gilt auction (b/c 2.62 vs 2.38 prior), 10Y yield at a two week low 1.43% . In Canada, GOCs slightly higher, outperforming tsys, GOC curve in flattening mode, 2s30s 54bps lowest since Feb 1^st, while Can/US spreads 3bps tighter since BOC Poloz comments Tuesday. In provis the story is Quebec outpeformance, Qc/Ont 48 spread trading up at -3.2 yest aft, now -3.1/-3.7.

News headlines

Kudlow Backs Strong Dollar, Tough China Stance as Trump Adviser (Bloomberg) Incoming White House economic adviser Larry Kudlow signaled that President Donald Trump would support a strong dollar, pursue a second phase of his tax overhaul to make cuts permanent and take a tougher line on trade with China.

Davis to Go to Brussels for Brexit Talks Before Crunch Summit (Bloomberg) Brexit Secretary David Davis will go to Brussels on Sunday for talks on issues including the transition arrangement that businesses are keen to pin down. Davis’s team are in negotiations with their EU counterparts on the transition — the two year grace period that’s due to come into effect after Brexit day — and the divorce agreement. Davis will join them on Sunday and have a meeting with chief EU negotiator Michel Barnier on Monday, he told BBC Newsnight, according to a transcript from his office.

May Targets Putin Over Poisoned Former Spy as Ties Deteriorate (Bloomberg) Prime Minister Theresa May threw 23 Russian diplomats out of Britain in retaliation for the poisoning of a former spy and his daughter on U.K. soil, as she braced the country for further attacks.

Stocks, Bonds Fluctuate as Traders Size Up Kudlow: Markets Wrap (Bloomberg) Stocks and bonds fluctuated in Europe and Asia as traders assessed the first statements of President Donald Trump’s new economic adviser. U.S. equity futures pared gains and Treasuries drifted higher. The Stoxx Europe 600 Index was steady, with gains in insurance shares offsetting drops in retail and household goods. Gold edged lower as new White House appointee Larry Kudlow said he’d sell the metal and buy the dollar, which was little changed on Thursday. Norway’s krone rose to its strongest level since early February after its central bank signaled faster interest-rate increases. The yen gained for a second day and benchmark Treasuries advanced after a brief drop earlier.

Trudeau Dodged Steel Tariffs. Now He’s Trying to Save Nafta (Bloomberg) Donald Trump is already taking up a lot of Justin Trudeau’s bandwidth. Steel tariffs sent it to another level. The Canadian prime minister is on an impromptu tour of steel and aluminum country this week, a denim-clad, open-collared victory lap with workers after Canada and Mexico were excluded from new U.S. tariffs. The exemption came after frenzied lobbying by the Trudeau government, throughout Washington and as far away as Seoul and Berlin.

Quebec government says to cut debt by C$10 billion as election looms (Reuters) Quebec plans to draw about C$10 billion ($7.72 billion) over the next five years from a specialized fund to tackle the Canadian province’s debt, Premier Philippe Couillard said on Wednesday. Couillard’s Liberal government, which is lagging in polls ahead of October elections, said it would use the province’s Generations Fund, a trust fund set up to reduce public debt, to pay it down by C$2 billion a year, starting in 2018-2019.

Canadian small business lending inches up in January: PayNet (BNN) ending to small Canadian businesses was little changed in January as stronger activity in the accommodation and food industry was offset by weakness in support services for the resource sector, data showed on Thursday. The PayNet Small Business Lending index rose to 110.6 in January from a downwardly revised 110.2 in December. But medium-sized companies fared worse, with the measure of lending falling to 184.6 from 192.3. Compared to a year earlier, lending to small companies was down 6 per cent, moderating from December’s 8 per cent annual drop and suggesting the recent declines in lending may be leveling off, said PayNet President Bill Phelan

Overnight markets

Overview: US 10yr note futures are up 0.026% at 120-19, S&P 500 futures are up 0.02% at 2754.5, Crude oil futures are up 0.57% at $61.31, Gold futures are down -0.16% at $1323.5, DXY is up 0.14% at 89.833, CAD/USD is up 0.1% at 0.7711.

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