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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

Market Update US tsys trading weaker with core EGBs , US 10Y 2.895 (+1.5bps) pressured by ‘risk on’ tone amid headlines that North Korea is open to denuclearization while Trump tariff’s facing stiffer opposition, while the EU is prepares to impose tariffs of their own. European equities +0.70%, S&P futures +12, crude extending gains +1.0% after on top of yest 2.2% gain.  The USD index 0.56% lower, Euro higher for a 4^th day @ 1.24. CVS $45bln mega deal to fund the purchase of CVS Health /Aetna expected today.  GOCs opening lower, underperforming tsys past 5Ys, reversing  ~1bp of yesterday’s 3bp narrowing which brought Can/US to new eight month lows. Mondelez (Baa1/BBB) priced $600mln 7Y maple yest @ 118.6, which looked cheap basd on USD MDLZ Feb 24s swapping back @ GOCs +90, so even allowing for 15bps in credit curve 118.6 is ~10bps.

News headlines

EU Raises Stakes for Trump by Aiming Levies at GOP Heartland (Bloomberg) The European Union is preparing punitive tariffs on iconic U.S. brands produced in key Republican constituencies, raising political pressure on President Donald Trump to ditch his plans for taxing steel and aluminum imports. Targeting 2.8 billion euros ($3.5 billion) of American goods, the EU aims to apply a 25 percent tit-for-tat levy on a range of consumer, agricultural and steel products imported from the U.S. if Trump follows through on his tariff threat, according to a list drawn up by the European Commission and obtained by Bloomberg News. The list of targeted U.S. goods — including motorcycles, jeans and bourbon whiskey — sends a political message to Washington about the potential domestic economic costs of making good on the president’s threat.

BOJ May Be Thinking But Not Doing Exit in 2019, Kuroda Says (Bloomberg) Governor Haruhiko Kuroda made clear on Tuesday that while the Bank of Japan may find itself thinking about exiting monetary stimulus in the 2019 fiscal year, this doesn’t mean it will actually be doing it then. His comments, during a second confirmation hearing in Japan’s parliament, follow remarks on March 2 that sent the yen surging and pushed yields on Japanese sovereign debt higher across the curve. 

Italy’s President Is Playing for Time (Bloomberg) From his study, Sergio Mattarella looks out on a prize collection of cacti in the manicured gardens of the presidential palace in Rome. After Italians elected a hung parliament with rival populist forces each claiming the right to lead, the head of state faces an equally prickly search for a new government. Matteo Salvini’s anti-migrant League supplanted Silvio Berlusconi as the dominant force on the Italian right, but their coalition is still short of an outright majority. Luigi Di Maio says the Five Star Movement’s status as the single biggest party gives him the right to govern. Though he doesn’t have the votes either.

Stocks Rise on Speculation Trade Threat Is Easing: Markets Wrap (Bloomberg) U.S. stocks rose with the dollar, while Treasuries fell as signs mounted that President Donald Trump’s tough tariff talk may not translate into the most severe protectionist policies. The Dow Jones Industrial Average added more than 300 points as megacaps that bore the brunt of the selling late last week led gains, while domestically-focused small caps lagged behind. The S&P 500 Index advanced for a second day after hedge fund billionaire Ray Dalio called the threat of a trade war “political show” and House Speaker Paul Ryan urged the president to reconsider tariffs on steel and aluminum. Trump when asked about the congressman’s comment said he won’t back down on trade.

OPEC-Shale Gathering Seen Rich in Platitudes: CERAWeek Update (Bloomberg) CERAWeek by IHS Markit kicked off Monday afternoon, a five-day gathering in Houston of some of the energy industry’s biggest names. This year, some of the highlights include appearances by the CEO of Saudi Aramco and the heads of BP Plc, Royal Dutch Shell Plc, ConocoPhillips, Petroleos Mexicanos and Petroleo Brasileiro SA. In addition, the OPEC Secretary General and oil ministers from Nigeria, Qatar, the United Arab Emirates and Ecuador are scheduled to speak.

Toronto home sales slump in February but prices stabilize (Reuters) Toronto home sales slumped in February from a year ago as the market continued to be dampened by tighter mortgage rules and higher borrowing costs, though demand for condominiums helped prices stabilize, data showed on Tuesday.

Trade threats will likely amplify Poloz’s caution on rates (BNN) Bank of Canada Governor Stephen Poloz’s preoccupation with uncertainty probably means a longer pause on interest rates, in a world of fraying trade alliances and volatile markets. The central banker is expected to leave his benchmark borrowing cost unchanged at 1.25 per cent at a rate decision Wednesday at 10 a.m, according to all 21 economists surveyed by Bloomberg News, with forward contracts pricing in just a 13 per cent chance of a hike.

Overnight markets

Overview: US 10yr note futures are down -0.13% at 119-28, S&P 500 futures are up 0.48% at 2731.5, Crude oil futures are up 0.99% at $63.19, Gold futures are up 0.77% at $1330.1, DXY is down -0.6% at 89.543, CAD/USD is down -0.57% at 0.7758. 

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