Commentaires

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

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