Commentaires

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

Market Update US tsys trading higher, 10Y 2.84% (-2.5bps), heavy volume in TY futures (530k). The risk off move in tsys & bunds following the Italian election results has largely faded, with  the German 10Y yield 2bps lower @ 0.623% after initially falling to 0.60% after news of a right wing coalition a and strong result from the 5-star movement.  The USD index is higher, US equity futures -8.25. In Canada, GOCs are higher, outperforming tsys 1.5-2bps with the 10Y 2.15% (-4.5bps) and the CAD at a new 8 month low  -74pps @ 1.2964 on stepped up Trump rhetoric on trade . Provis  opening wider for a sixth day Ont 27s 63/62 , QC/Ont 48 -2/-2.5 unch.  BOC rate decision Wednesday – BOC expected to be on hold this week while odds of a hike at the April meeting have fallen to ~35% from 53% a month ago. The CITI eco surprise index has seen a steep decline since the Jan 17th meeting, and this was before the threat of a trade war with the US.

News headlines

Trump Trade Crackdown Shows ‘America First’ Happening at Last (Bloomberg) President Donald Trump’s March 1 announcement that he’ll slap stiff tariffs on imported steel and aluminum roiled markets, spurred warnings of harsh economic and political ramifications from some Republican lawmakers, and provoked threats of retaliation from allies such as the European Union. Trump doesn’t intend to bow to pressure for exemptions for some nations when he signs the formal tariffs order as early as this week, according to two of his trade advisers, though there could be business exemptions in select cases.

Italy Populists Break Establishment Grip, Quest for Power Opens (Bloomberg) Italy’s anti-establishment groups surged in Sunday’s election as voters punished the mainstream parties for years of economic decline, rising taxes and a wave of immigration, casting doubt on the country’s future political direction.

China Turns Fiscal Screws While Maintaining 6.5% Red Line on GDP (Bloomberg) China stepped up its push to curb financial risk, cutting its budget deficit target for the first time since 2012 and setting a growth goal of around 6.5 percent that omitted last year’s aim for a faster pace if possible. The deficit target — released Monday as Premier Li Keqiang delivered his annual report to the National People’s Congress in Beijing — was lowered to 2.6 percent of gross domestic product from 3 percent in the past two years. The 6.5 percent goal is consistent with President Xi Jinping’s promise to deliver a “moderately prosperous” society by 2020.

Stocks Mixed as Trade War Looms; Italy Bonds Drop: Markets Wrap (Bloomberg) The threat of a global trade war loomed large over equities on Monday, with heavy losses across many Asian markets and U.S. futures trading lower even as European shares rose. The dollar edged higher and Treasuries gained, while Italian assets fell as the nation faced a hung parliament.

IEA Sees American Energy Dominance Squeezing OPEC Into 2020s (Bloomberg) The U.S. will dominate global oil markets for years to come, satisfying 80 percent of global demand growth to 2020 as the shale boom keeps OPEC under pressure, the International Energy Agency said.

Key U.S. lawmaker urges steel tariff exemptions for NAFTA allies (Reuters) An influential U.S. lawmaker said on Sunday all fairly traded steel and aluminum, especially from Canada and Mexico, should be excluded from President Donald Trump’s proposed tariffs, as he sought to calm tensions at major trade talks in Mexico.

TSX futures dip on trade war threat (Reuters)  March futures on the S&P TSX index were down 0.19 percent at 7:15 a.m. ET. Canada’s main stock index slipped to a two-week low on Friday, ending the week with a 1.6 percent decline, as the trade war threat weighed on energy and industrial shares. Dow Jones Industrial Average e-mini futures were down 0.20 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were down 0.20 percent and Nasdaq 100 e-mini futures were up 0.12 percent.

CN launches search for new CEO after abrupt exit by Luc Jobin (BNN) CN Rail () is hunting for a new chief executive officer after the abrupt exit of Luc Jobin. The rail company announced Jobin’s departure early Monday morning, saying it’s effective immediately. Jobin is being replaced on an interim basis by Chief Marketing Officer Jean-Jacques Ruest until a permanent chief executive is selected. 

Overnight markets

Overview: US 10yr note futures are up 0.143% at 120-12, S&P 500 futures are down -0.23% at 2684, Crude oil futures are up 0.03% at $61.27, Gold futures are up 0.05% at $1324.1, DXY is up 0.18% at 90.097, CAD/USD is up 0.39% at 0.7732. 

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 trading mixed, slightly higher in the short end on strong volume in TY futures (520k), 10Y 2.81% (unch). Light data calendar with only Univ of Michigan Sentiment, so focus will remain on equities which are looking weaker with the Euro stoxx -1.9%, S&P futures extending yest losses, -20 pts.  The USD index down for a second day, down ~1.0% since Trump announced steel & aluminum tariffs yest afternoon, USDJPY at a new low for the cycle , Kuroda said  the BOJ is considering exiting its easy mon policy if target inflation is achieved by next yr. GOCs higher, outperforming tsys by 1bp before Dec GDP, CAD weaker 1.2876 approaching 1.29 support from late Dec. Provi spds another 1-2 bps wider yest on ‘risk off’ as well as competition from heavy corp supply.

News headlines

Trump Says Trade Wars Are ‘Good, and Easy to Win’ (Bloomberg) President Donald Trump pushed back against a wave of criticism against steel tariffs, telling the world that not only are trade wars good, they are easy to win. Trump is facing anger from manufacturers and trade partners in China and Europe after announcing tariffs of 25 percent on imported steel and 10 percent on aluminum for “a long period of time.” The formal order is expected to be signed next week.

Stocks Sink, Bonds Rally on Trump’s Metals Duties: Markets Wrap (Bloomberg) U.S. stocks plunged and Treasuries climbed Thursday after U.S. President Donald Trump promised to impose substantial tariffs on foreign metals, drawing a rebuke from a manufacturing industry group and the European Commission.

Brexit Talks in Peril After May Rejects EU Draft Deal (Bloomberg) U.K. Prime Minister Theresa May vowed she will never accept a draft Brexit agreement published by the European Union on Wednesday, raising the prospect that the negotiations are heading for a breakdown. The pound fell. The EU commission set out in minute detail how it wanted to arrange Britain’s withdrawal, but key passages on avoiding new customs checks at the U.K.’s land border with Ireland made the 118-page draft impossible for May to support. It proposes keeping Northern Ireland in the bloc’s customs union, under the jurisdiction of the European Court of Justice — both of which May wants the whole of the U.K. to leave.

Four Possible Outcomes in Italy’s Election This Weekend (Bloomberg) Italy is long used to managing political instability, but giving birth to the country’s 65th government since World War II looks a particularly tough order. With Sunday’s election forecast to produce a hung parliament, weeks of political uncertainty could hang over an economy burdened with a feeble recovery and a public debt mountain.

Unhappy Canada vows to retaliate against any U.S. steel tariffs (Reuters) Canada will retaliate against any U.S. tariffs on steel and aluminum products, officials said on Thursday, as Ottawa faced what could be one of the biggest economic threats since Donald Trump became president. Trump unveiled the tariffs on Thursday but did not make clear whether they would apply to Canada and Mexico, which together with the United States are trying to renegotiate the 24-year-old North American Free Trade Agreement.

TSX futures down on trade war fears, lower oil prices (Reuters) A day after announcing steep tariffs on imports of steel and aluminum, U.S. President Donald Trump tweeted that“trade wars are good, and easy to win”. March futures on the S&P TSX index were down 0.31 percent at 7:15 a.m. ET. Canada’s gross domestic product report for the fourth quarter is due at 8:30 a.m. ET. The country’s economy likely cooled in the second half of last year, with analysts expecting the annualized report to come in below the Bank of Canada’s 2.5 percent forecast.

Canadian commercial real estate sees record investments in 2017: CBRE (BNN) The Canadian commercial real estate market set another record for investments in 2017 and was one of only four countries in the world to do so, according to a new report from CBRE Ltd. The report said there were more than $43.1 billion in investments last year, surpassing $34.7 billion in 2016, and CBRE predicts another record will be established in 2018. CBRE said strong tenant demand, coupled with declining vacancy rates which are at, or near, all-time lows in many Canadian markets, will lead to strong increases in rental rates.

Overnight markets

Overview: US 10yr note futures are down -0.039% at 120-18, S&P 500 futures are down -0.73% at 2658.75, Crude oil futures are down -0.64% at $60.6, Gold futures are up 1.33% at $1322.6, DXY is down -0.37% at 89.991, CAD/USD is up 0.28% at 0.7768. 

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