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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

Market Update Tsys trading steady/mixed on very light volume (TYM <200k), curve flattening out last few minutes with long end bouncing to modest session highs, trail EGBs post Smets comments on inflation.ECB’s Smets says that inflation may take longer to rise. Mkt absorbs accelerated Auction schedule ($28B 3Y note auction 1130ET and $21B 10Y note auction re-open 1300ET today; $13B 30Y Bond auction Re-open 1130ET Tue). Otherwise, Fed blackout; data watch w/focus on Wed’s Feb Retail Sales (+.4% est). Treasury auctions (3Y, 10Y and 30Y) will occur Monday and Tuesday in addition to 1-, 3- and 6M bill auctions, making the auctions a bit more challenging ahead the Thursday, March 15 coupon settlement.

News headlines

Kim Jong Un Wants a Peace Treaty From Trump, Report Says (Bloomberg) Kim Jong Un wants to sign a peace treaty after meeting with U.S. President Donald Trump, South Korean media reported, reviving a long-held goal of the North Korean regime. Kim is likely to raise the possibility of a peace treaty, along with establishing diplomatic relations and nuclear disarmament, during a meeting with the U.S. leader, the Dong-A Ilbo newspaper said Monday, citing an unidentified senior official in South Korea’s presidential office. Trump last week agreed to meet Kim, although key details of the summit have yet to be decided.

EON, RWE Shares Gain as Innogy Deal Gives Germany a Champion (Bloomberg) EON SE and RWE AG surged after their 22 billion-euro ($27.1 billion) bid to restructure the German energy industry and take control of Innogy SE established a national champion to cope with Angela Merkel’s move to upend once-mighty utilities. With investors from Italy and France weighing their own offers for the operator of green power plants and grid networks, EON on Sunday announced a complex deal with Innogy’s main shareholder, RWE. The transaction, first reported by Bloomberg March 10, would solidify EON and RWE as the main German electricity and gas providers and keep Innogy out of the hands of foreign utilities that have made gains in scale over their German counterparts.

U.S. Oil Export Surge Means OPEC’s Output Cuts May Be Doomed (Bloomberg) Oil risks sliding back under $60 a barrel as a surge in U.S. shipments to Asia threatens to undermine a deal between OPEC and its allies, according to ING Groep NV. While the producer group complied with a pledge to curb output and ease a glut in 2017, U.S. flows that are gaining a bigger slice of the prized Asian market may prompt some nations to boost supplies, said Warren Patterson, a commodities strategist at the Dutch bank. The resulting fallout could drag down crude prices after a rally of more than 40 percent since June, he said.

Stocks Rally on Upbeat Outlook; Dollar Pares Drop: Markets Wrap (Bloomberg) European stocks advanced, tracking gains across Asian markets as trade-war concerns took a back seat to economic optimism following a report Friday of stronger U.S. jobs growth. Treasuries edged lower and the dollar pared its decline while most commodities fell. The Stoxx Europe 600 Index rose for a sixth day, poised for the longest winning streak since October, as utility companies set the pace. U.S. equity futures joined the global rally, after gauges from Tokyo to Sydney jumped. The yen strengthened as political clouds gathered around Japan’s Finance Ministry, run by a stalwart ally of Prime Minister Shinzo Abe. Part of Abenomics focuses on weakening the yen to boost the nation’s exports.

May’s Next Brexit Headache Is Trying to Keep Scotland Happy (Bloomberg) No sooner does Theresa May put one Brexit dilemma to rest than another rears its head. After finally winning her Cabinet’s approval for an ambitious set of negotiating goals, the prime minister now faces threats from her political opponents in Scotland and Wales to derail her crucial European Union exit law. The Scottish and Welsh devolved governments want May to guarantee that when the U.K. leaves the EU in one year’s time, powers that return to London are automatically passed on to them.

Canada’s steel town still nervous despite tariff reprieve (Reuters) A temporary exemption from U.S. tariffs is little comfort to the Canadian steel city of Hamilton, coping with months of uncertainty as U.S. President Donald Trump has threatened a potentially devastating 25 percent duty unless the North American Free Trade Agreement is renegotiated.

‘Back to reality’: Canadian economy adds only 15,400 jobs in February (BNN) The Canadian economy added 15,400 jobs in February after a big loss in January but full-time positions shrank and wage growth decelerated, prompting analysts to predict the Bank of Canada will be in no rush to raise rates. Statistics Canada said on Friday the unemployment rate dipped to 5.8 per cent from 5.9 per cent in January.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 119-31, S&P 500 futures are up 0.24% at 2795.5, Crude oil futures are down -0.71% at $61.6, Gold futures are down -0.48% at $1317.7, DXY is up 0.1% at 90.183, CAD/USD is up 0.15% at 0.7794. 

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