Commentaires

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

Market Update Tsys lower, near low end of narrow range on below avg volume on TY futures (272k), US 10Y 2.88% (+2bps) Feb Employment on tap with 200k increase exp  and the unemployment rate expected to fall to 4.0% from 4.1%. There is likely to be more focus on AHE, which spiked to 2.9% in Jan and contributed to the recent uptick in financial mkt volatility.  GOCs lower, in line with tsys before Feb employment forecast to show a 21k rebound from the 88k drop in Jan. BOC gov Lane relatively upbeat yesterday, attributing the Q4 slowdown in GDP to a surge in imports. The April meeting pricing in ~40% chance of a 25bp hike, from 33% a week ago and 53% pre GDP.

News headlines

Trump Hails ‘Great Progress’ With Plan to Meet Kim Jong Un (Bloomberg) U.S. President Donald Trump hailed “great progress” in talks with North Korea after agreeing to meet Kim Jong Un in what would be an unprecedented summit. “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze,” Trump said on Twitter late Thursday in Washington. “Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”

Trump Launches Global Race for Exclusion From Steel Tariffs (Bloomberg) With the stroke of a pen, President Donald Trump has set off a race among nations and companies to win relief from his steel and aluminum tariffs. As expected, Trump slapped a 25 percent tariff on steel imports and 10 percent on aluminum on Thursday. But he showed more leniency than initially thought. The U.S. excluded Mexico and Canada, a concession that will remain in place as long as they reach agreement on a new North American Free Trade Agreement that meets U.S. satisfaction.

Fed Top Brass Is Keenly Watching These Jobs Day Data Points (Bloomberg) New Federal Reserve Chairman Jerome Powell feels good about the U.S. labor market, based on his recent congressional testimony. It’s been adding jobs at a steady clip, it’s drawn people back from the sidelines, and unemployment has plunged. Still, there are a few details he and his colleagues at the U.S. central bank might be watching carefully as they assess whether it makes sense to upgrade their outlook, which currently predicts three interest-rate increases in 2018.

Bonds Fall, Stocks Drift as U.S. Jobs Data Looms: Markets Wrap (Bloomberg) Bonds declined and a lull settled over European stocks before key jobs data in the U.S., where exceptions to import tariffs and surprise plans for North Korea talks have traders weighing the outlook for a range of assets. The dollar edged higher and gold fell. The Stoxx Europe 600 Index nudged higher along with U.S. equity-index futures, capping a week in which shares globally were roiled by President Donald Trump’s protectionist trade agenda. Asian stocks rose earlier on news of an agreement for an unprecedented summit between the leaders of the U.S. and North Korea. The yen fell and bond yields rose as investors ditched some safer assets. Crude advanced, but was still headed for a second week of declines as U.S. shale output climbed.

No Brexit Deal Until Next Year, U.K. Officials Say Privately (Bloomberg) U.K. officials don’t expect to clinch a Brexit deal until two months before exit day, increasing the chances of chaos for executives and lawmakers. European Union chief negotiator Michel Barnier has long said he wants the withdrawal agreement done by October so that there’s time for it to go to the European and U.K. parliaments for approval before Britain leaves in March 2019. Brexit Secretary David Davis has indicated in public that the timetable could slip a bit. But speaking privately, U.K. officials say the real deadline is January.

Canada hails tariffs exemption, says to keep lobbying Washington (Reuters) Canada on Thursday hailed the news it would not immediately be subject to U.S. tariffs on steel and aluminum while promising to continue lobbying Washington until the threat of duties had disappeared. President Donald Trump announced the imposition of 25 percent tariffs on steel imports and 10 percent for aluminum on Thursday but said Canada and Mexico would be exempt as long as talks to update the NAFTA trade deal progressed.

Canada would lose 91,000 jobs if NAFTA ends: Conference Board (BNN) Canada’s economy could lose close to 100,000 jobs over a two-year span if U.S. President Donald Trump makes good on his threat to terminate the North American Free Trade Agreement, according to a new report by the Conference Board of Canada. The report estimates the end of NAFTA would shave at least half a percentage point off Canada’s economic growth and result in 85,000 lost jobs in the first year after termination, with job losses rising to 91,000 by the second year of the post-NAFTA reality. 

Overnight markets

Overview: US 10yr note futures are down -0.039% at 120-04, S&P 500 futures are down -0.18% at 2739.25, Crude oil futures are up 0.8% at $60.6, Gold futures are down -0.49% at $1315.2, DXY is up 0.11% at 90.278, CAD/USD is down -0.12% at 0.7763. 

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 paring back gains, thou still higher after better than expected ADP 235k and stronger rise in ULC 2.5% vs 2.1% exp. , 10Y 2.855 (-3bps), heavy volume in TY (>700k). S&P futures clawed back from steep losses following the announcement of Gary Cohn’s resignation, still down 16 pts (-0.63%),  were down as much as 43 pts overnite. GOCs higher, undeforming tsys for a second day before the BOC later this morning. BOC expected to stand pat with heightened event risk adding to the narrative of an economy that lost a good deal of momentum last qtr. Provis another 1bp wider, Ont 48 77.5/76.5, QC 48 75.5/74.5, Q/Ont 48 -2.0 unch. CHoice Properties 2 tranche $1.3bln deal yest putting additional pressure on spds, with bank supply expected to pick up to fund March maturities.

News headlines

Gary Cohn to Resign as Trump Adviser After Dispute Over Tariffs (Bloomberg) Gary Cohn is resigning as President Donald Trump’s top economic adviser, leaving his post as the administration prepares to impose steep tariffs on steel and aluminum that Cohn has opposed. Cohn didn’t mention the dispute in a statement distributed by the White House, saying only that “it has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform.”

EU Signals Mounting Concern Over Trump Tariffs as Cohn Resigns (Bloomberg) The European Union voiced mounting concern over U.S. President Donald Trump’s plan to impose punitive import tariffs, as Germany signaled alarm over the resignation of pro-trade Trump adviser Gary Cohn in an emerging trans-Atlantic dispute over protectionism.

Global Stocks Drop on Trade Gloom; Bonds Advance: Markets Wrap (Bloomberg) The prospect of escalating protectionism depressed European and Asian stock markets on Wednesday as President Donald Trump’s plans to punish foreign imports appeared to gather force. U.S. equity futures slumped, while most government bonds climbed.

Hammond Demands Brexit Trade Deal for Banks in Challenge to EU (Bloomberg) The European Union needs the U.K.’s world-leading financial services industry to stay strong after Brexit, Chancellor of the Exchequer Philip Hammond will say, as he warns “skeptics” there’s no excuse for blocking a deal. In a tough message aimed at European politicians who have previously ruled out such a deal, Hammond will insist that every trade agreement the bloc strikes is unique — and the Brexit accord should be “so much better” than any other.

Oil Dips on Forecast for Rising Stockpiles, Trump Trade-War Risk (Bloomberg) Oil dropped for the first time in four sessions on a reported expansion in U.S. crude inventories and the risk of an intensifying global trade war sparked by President Donald Trump. Futures in New York fell as much as 1.3 percent. U.S. stockpiles rose by about 5.7 million barrels last week, the American Petroleum Institute was said to report. Broader financial markets were also rattled after Gary Cohn said he’ll resign as economic adviser to the White House, while the Trump administration is said to be considering clamping down on Chinese investments in the U.S.

CN Rail to invest C$250 million to clear Western Canada grain backlog (Reuters) Canadian National Railway Co said on Wednesday it would invest more than C$250 million ($193 million) this year to improve its infrastructure to ease grain supply issues in Western Canada. CN Rail, once considered the standard in railroad efficiency, has struggled with capacity constraints amid growing demand from the Western Canada grain market. The company on Monday installed Jean-Jacques Ruest as its interim chief executive after Luc Jobin stepped down abruptly.

TSX futures dip on U.S. protectionism worries (Reuters) Canada’s main stock index futures fell on Wednesday after White House economic adviser Gary Cohn resigned, stoking fears President Donald Trump would go ahead with tariffs. Cohn, the top economic adviser to Trump and a voice for Wall Street in the White House, said on Tuesday he would resign, a move that came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs.

Canada well-positioned to handle turmoil over NAFTA talks: Finance minister (BNN) A strong economy is allowing Canadian officials to push for a better deal in negotiations on the North American Free Trade Agreement, Finance Minister Bill Morneau said Tuesday. Talks on the deal are « critically important » but Canada will remain firm in getting the best possible agreement, he told the Business Council of British Columbia. « Are there challenges? Yes. Do we need to be prepared to deal with them? Yes. We think that having our economy in the best possible position is the place from which we can do that, make decisions in a measured way, considering all the facts at hand, » he said.

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-05, S&P 500 futures are down -0.54% at 2709.25, Crude oil futures are down -0.43% at $62.33, Gold futures are down -0.31% at $1331, DXY is down -0.04% at 89.578, CAD/USD is up 0.27% at 0.7745. 

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