Commentaires

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

Market Update US tsys slightly lower before PPI, Retail Sales , 10Y 2.852(+1bp), avg volume in TY futures (278k), curve  bps flatter as the 2Y is 2bps higher @ 2.27%, longs outperforming. USD index slightly higher, off the lows , S&P futures +6.0.  Slight losses in EGBs, in line with tsys, 10Y bund +0.5bps @ 0.62%. Draghi said monetary policy changes will remain predictable and gradual, while noting that he is optimistic on the Philips curve and a pickup in inflation. In Canada, GOCs lower, outperforming tsys , 10Y 2.20%. Provis open unch, Quebec/Ont rolls tighter, QC/Ont 48 -3.0/-3.5 – Quebec will pay down $10bln in debt over the next 5yrs, which will reduce debt service costs by $1bln per yr. CMB 5Y expected this morning- CMB 2.35/23 34/33.5 on screen.

News headlines

Trump Moves Closer to Presidency of One With Tillerson Firing (Bloomberg) In accepting the Republican nomination for president in 2016, Donald Trump described a nation plagued with problems and declared: “I alone can fix it.” Now, as he fires top aides who were a moderating force and replaces them with loyalists who share his world view and won’t object to his most controversial impulses, his administration is fast becoming a presidency of one.

May Plots to Punish Russia as Crisis Over Poisoned Spy Deepens (Bloomberg) U.K. Prime Minister Theresa May will set out how she aims to retaliate against Russia over the nerve agent attack on a former spy and his daughter, deepening tensions between Vladimir Putin and the West.

China Economy’s Strong Start Faces Risks at Home and Abroad (Bloomberg) China’s crackdown on financial risks and trade tensions with the U.S. threaten to undermine a stronger-than-expected start to the year for the world’s second-largest economy. Factory output and investment in fixed assets exceeded economists’ expectations in the first two months of this year, climbing 7.2 percent and 7.9 percent respectively from a year earlier as Chinese exports surged. Retail sales also remained robust, statistics bureau data — combined for January and February to smooth effects from the Lunar New Year holiday — showed on Wednesday.

Stocks Gain as China Data Lift Miners; Euro Dips: Markets Wrap (Bloomberg) Stocks in Europe advanced as economic data from China lifted mining shares after a day of market turmoil sparked by the latest shakeup in the Trump administration. The euro slipped as Mario Draghi said recent gains weren’t all warranted by economic fundamentals. The Stoxx Europe 600 Index reversed some of Tuesday’s 1 percent drop, with raw-material producers outperforming after factory output and investment growth in China unexpectedly accelerated. U.S. equity-index futures also climbed. Benchmarks dropped across Asia earlier after the sudden firing of U.S. Secretary of State Rex Tillerson. U.S. Treasuries held onto yesterday’s gains while the dollar edged lower. Crude oil halted a decline.

Draghi Promises to Avoid Surprises as ECB Tiptoes to QE End (Bloomberg) Mario Draghi said the European Central Bank will avoid surprising investors with sudden changes to its stimulus plans, stressing that inflation is still too low and U.S. trade policies and a stronger euro are concerns. “Adjustments to our policy will remain predictable, and they will proceed at a measured pace,” the institution’s president said in his opening speech at the annual ECB and Its Watchers conference in Frankfurt. “We still need to see further evidence that inflation dynamics are moving in the right direction. So monetary policy will remain patient, persistent and prudent.”

Bank of Canada: degree of untapped potential remains in economy (Reuters) A degree of untapped potential remains in the Canadian labor market, meaning the economy may be able to generate more growth without higher inflation, the head of the Bank of Canada said on Tuesday, suggesting the central bank can take its time raising interest rates.

Credit quality of Canadian banks under strain: Moody’s (Reuters) Rising interest rates along with strong job growth has led to more uninsured mortgages and longer tenure of car loans, putting a strain on the lending quality of Canadian banks, Moody’s Investor Service said in a report released on Tuesday.

Quebecor profit slips in fourth quarter (BNN) Quebecor Inc. reported its fourth-quarter profit fell compared with a year ago, as its revenue crept higher. The telecommunications and media company says it earned a profit attributable to shareholders of $65.6 million or 27 cents per share for the quarter ended Dec. 31, down from $123.3 million or 50 cents per share a year earlier. Revenue totalled $1.06 billion, up from $1.05 billion.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 120-10, S&P 500 futures are up 0.25% at 2779.75, Crude oil futures are up 0.87% at $61.24, Gold futures are up 0.05% at $1327.8, DXY is up 0.06% at 89.718, CAD/USD is down -0.19% at 0.7728.

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 trading slightly higher, curve steeper, 10Y 2.865% on light volume in TY futures (209k). Quiet ahead of CPI at 8:30 and $13bln 30Y bond auction this aft.  USD index firmer, S&P futures +5, crude unch 61.30. EGBs higher as well, gilt curve flatter on expectations of lower gilt issuance announcement in today’s budget. In Canada, GOCs are higher in line with tsys, 10Y 2.23%, provincials unch after closing 0.5bps tighter yest on no issuance. Manitoba fiscal update – deficit for this FY projected at $726mln vs $827mln in last update, $521mln for 2018-19.   CMB 5Y deal expected today.

News headlines

Trump Blocks Broadcom Takeover of Qualcomm on Security Risks (Bloomberg) President Donald Trump issued an executive order Monday blocking Broadcom Ltd. from pursuing its hostile takeover of Qualcomm Inc., scuttling a $117 billion deal that had been scrutinized by a secretive panel over the tie-up’s threat to U.S. national security.

What to Look Out for in Hammond’s First U.K. Spring Statement (Bloomberg) At this time of year, the British finance minister is usually preparing to step out of Downing Street brandishing a red briefcase containing his new tax and spending proposals. This year Philip Hammond has decided to do things differently, moving the main Budget announcement to the Autumn and reducing the Spring Statement one to a handful of forecasts on the shape of the economy that will last less than half an hour.

The Five Most Important Moves in Xi’s Big China Cabinet Shake-Up (Bloomberg) China’s sweeping government restructuring plan gives President Xi Jinping more direct control over the levers of money and power by consolidating, creating or eliminating dozens of agencies. The plan presented to the National People’s Congress on Tuesday leaves 26 cabinet-level ministries tasked with regulating industries and initiatives at the heart of Xi’s policy agenda. Their duties range from curbing risk in the country’s $43 trillion banking and insurance sectors to overseeing aid programs for the president’s Belt and Road trade-and-infrastructure initiative.

Stocks Mixed, Dollar Climbs Before CPI; Yen Drops: Markets Wrap (Bloomberg) U.S. stock futures climbed and the dollar strengthened ahead of a key inflation report that may affect the outlook for Federal Reserve policy-tightening. European equities fluctuated after a mixed session in Asia, and the Japanese yen slumped.

What Goes Up, Must Come Down Is Why U.S. Inflation May Be Tamer (Bloomberg) Some consumer prices that skyrocketed in January probably returned to Earth in February, indicating fears of runaway U.S. inflation that jarred financial markets were overblown. The consumer price index probably rose 0.2 percent in February from the previous month, after a 0.5-percent jump in January, according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures due Tuesday. Excluding food and energy, prices were projected to advance 0.2 percent following a bigger-than-forecast 0.3 percent increase in January.

Trump spoke with Canada’s Trudeau about tariffs, NAFTA talks: White House (Reuters) President Donald Trump spoke on Monday with Canadian Prime Minister Justin Trudeau about the steel and aluminum import tariffs Trump announced last week, the White House said. Trump also emphasized the importance of quickly concluding ongoing negotiations on the North American Free Trade Agreement (NAFTA)“to ensure the vitality of United States and North American manufacturing industries and to protect the economic and national security of the United States,” the White House said in a statement.

OECD sees trade boosting global growth to 7-year high (BNN) The global economy will see its strongest growth in seven years in 2018 thanks to a rebound in trade and investment, the OECD said on Tuesday, while also warning a trade war could threaten the improved outlook. Updating its outlook for G20 economies, the Organisation for Economic Cooperation and Development raised its global growth forecast for both 2018 and 2019 to 3.9 per cent – the highest since 2011 – from a previous estimate of 3.6 per cent for both years. 

Overnight markets

Overview: US 10yr note futures are up 0.026% at 120-08, S&P 500 futures are up 0.21% at 2794.75, Crude oil futures are down -0.18% at $61.25, Gold futures are down -0.09% at $1319.6, DXY is up 0.12% at 90.006, CAD/USD is up 0.19% at 0.7771. 

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