Commentaires

Market Update Tsys trading higher, 10Y 2.83 (-3bps), ‘risk off’ rally with European equities down 1.0%, US equity futures also lower (S&P -7.5), the USD index higher for a 3rd day , the euro below 1.22 the lowest since Jan 12th. Fed chair Powell’s second day of testimony before the US senate, as well as PCE, ISM data. Core EGBs also higher, 10Y gilt 5bps lower @ 1.45% underpinned by Brexit concerns, despite smaller than exp decline in UK manufacturing and strong mortgage approval data.  GOCs higher, underperforming tsys ,10Y below 2.20% lowest since jan 18th. Provis opening 0.5bps wider , supply expected from Alberta after fiscal update – deficit for this FY 9.1bln vs 10.3bln in Q2 update.  In corps , primary supply yest with  $750mln GS July 2022 FRN @ 54, closed 53/51.  Heathrow issued $400mln 10Y Maple @ 115.

News headlines

Global Stocks Slide, Treasuries Rise Before Powell: Markets Wrap (Bloomberg) European shares dropped the most since a global rout last month following sharp declines in Asia. Treasuries climbed and the dollar jumped to the highest since January as traders awaited a second appearance from Federal Reserve Chairman Jerome Powell, whose comments riled markets earlier this week.

Trump Expected to Announce Stiff Steel, Aluminum Tariffs (Bloomberg) President Donald Trump is set to announce steep tariffs on steel and aluminum imports Thursday, people familiar with the matter said, in what would be one of his toughest actions yet to implement a hawkish trade agenda that risks antagonizing friends and foes alike.

Tusk to May: Don’t Expect Frictionless Trade After Brexit (Bloomberg) European Union President Donald Tusk warned the U.K. that it can’t expect frictionless trade outside the bloc’s single market, lowering again Prime Minister Theresa May’s expectations a day before she’s due to deliver a major speech on her vision for the post-Brexit relationship.

U.K. Manufacturing Loses Steam Amid Brexit Worry (Bloomberg) U.K. manufacturing lost a bit of steam last month, with growth slipping to an eight-month low. IHS Markit’s manufacturing Purchasing Managers Index eased to 55.2 from 55.3 in January. While the figure was better than forecast and still implies expansion, Markit said it suggests a “marked downshift” in the pace of growth so far this year.

Futures flat ahead of Powell’s testimony (Reuters) Futures for Canada’s main stock index were little changed on Thursday, as U.S. Federal Reserve chairman Jerome Powell is set to continue his testimony to lawmakers later in the day. Financial markets barely moved on Tuesday when Powell made his initial public statements as Federal Reserve chief, but the calm evaporated a few hours later, when Powell, testifying before a U.S. House of Representatives committee, struck a bullish, and personal, tone on the strength of the economy.

TD Bank sails past Q1 profit estimates, boosts dividend (BNN) Toronto-Dominion Bank sailed past first-quarter profit expectations, prompting its CEO to hint the bank could be on pace to top its internal targets this year. Adjusted profit in the three months ending Jan. 31 rose to $2.95 billion from $2.56 billion a year earlier. On a per share basis, TD earned $1.56. Analysts were expecting $1.46 in adjusted earnings per share.

CSX reaffirms plan to boost profitability (BNN) U.S. railroad operator CSX Corp on Thursday reaffirmed that it would lower its operating ratio by 2020, ahead of its first investor day after the death of former Chief Executive Officer Hunter Harrison. The company said it would post an operating ratio of 60 per cent by 2020 and revenue growth at a compound annual rate of 4 per cent in 2019 and 2020.

Overnight markets

Overview: US 10yr note futures are up 0.286% at 120-13, S&P 500 futures are down -0.33% at 2705.5, Crude oil futures are down -0.96% at $61.05, Gold futures are down -0.86% at $1306.6, DXY is up 0.25% at 90.837, CAD/USD is up 0.23% at 0.7775. 

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 higher, 10Y 2.88 (-1bp) – no reaction to Q4 GDP revision (2.5% vs 2.6% initial reading). Tsy prices supported by sharp rise in UK gilts after the release of the latest EU Brexit proposal – gilt yields 3-4bps lower.  Big slide in Asian equities, Nikkei -1.44% after Fed Powell’s hawkish testimony, European stocks -0.30%, while S&P futures are +2.75. GOCs are higher, outperforming tsys by 1bp, 10Y 2.25%. The BOC auctions $3.0bln 2Y bonds at noon – reopening of the 1.75% May 1 2020 issue- – which should do well in the context of reduced bond issuance outlined in yesterday’s budget. Month end extensions also a factor with March 1st cpn payments. Expect more corp issuance after another day in primary yest – $2.2bn including $1.25bln BMO dep note and 2 tranche $740mln Bruce Power deal .

News headlines

Stocks, Treasuries Sink on Hawkish Powell Remarks: Markets Wrap (Bloomberg) U.S. stocks sold off for the first time in three sessions and Treasuries slumped as investors weighed the potential for added interest rate hikes this year following Federal Reserve Chairman Jerome Powell’s assessment that the economy is strengthening and inflation could be gaining speed. The dollar advanced.

Slowing Euro-Area Inflation Helps Draghi Push Back Exit Talk (Bloomberg) A third month of slowing inflation in the euro-area has given European Central Bank President Mario Draghi ammunition to ward supporters of a faster stimulus exit a little while longer. The rate of price growth slowed to 1.2 percent this month from 1.3 percent, dropping to its weakest since 2016. The core measure was unchanged at 1 percent. The figures follow a series of releases that have checked the economy’s thundering momentum at the start of 2018, which had emboldened policy makers who want a faster unwinding of the central bank’s crisis-era monetary stimulus.

Mnuchin Says Trump ‘Willing’ to Negotiate U.S. Return to TPP (Bloomberg) U.S. Treasury Secretary Steven Mnuchin said Tuesday he had « begun to have very high-level conversations » on the Trans-Pacific Partnership, and rejoining the regional trade pact is an option for President Donald Trump. Trump repeatedly attacked the TPP deal on the campaign trail and pulled the U.S. out of it soon after he took over early last year. However, last month he expressed openness to rejoining if the terms were improved. Mnuchin told the U.S. Chamber of Commerce in Washington that this was significant.

U.K.’s May Is Ready to Fight With EU Over Draft Brexit Deal, Official Says (Bloomberg) Prime Minister Theresa May is preparing to reject the European Union’s draft Brexit deal when it’s published Wednesday, a senior official said, as her government steps up its fight with the bloc over the terms of Britain’s departure.

Toronto’s housing supply challenge and the growth plan paradox (Reuters) Toronto, Canada’s largest city and one of the world’s hottest property markets, has a supply problem and the nation’s housing agency admits it is not quite sure why soaring prices have not spurred more construction. New homes replace demolished ones at a sharply lower rate than early this decade, completion times for multi-family projects have doubled and prospective buyers have far fewer new homes to choose from than only a few years ago. The reason, in part, may lie in an ambitious growth plan for the greater Toronto area the Ontario province forged over a decade ago.

Valeant reports profit in fourth quarter on $1.3 billion tax benefit (Reuters) Valeant Pharmaceuticals (VRX.N) (VRX.TO) on Wednesday reported a profit in the fourth quarter compared to a year-earlier loss, as it booked a one-time benefit because of new U.S. tax laws. The Canada-based drugmaker reported a net income of $513 million or $1.45 per share in the quarter ended Dec. 31, compared to a loss of $515 million or $1.47 per share a year earlier.

Hesitant 2018 federal budget sets lofty goals, but light on spending (BNN) Three years into its mandate, the federal government has presented Canadians with a budget perhaps best described as “hesitant” – one that sets lofty ambitions for gender equity, support for the marginally employed and reconciliation with First Nations, but falls short of game-changing spending commitments on those goals.

Overnight markets

Overview: US 10yr note futures are up 0.117% at 120-17, S&P 500 futures are up 0.08% at 2749.75, Crude oil futures are down -0.05% at $62.98, Gold futures are up 0.11% at $1320.1, DXY is up 0.16% at 90.496, CAD/USD is up 0.03% at 0.7825. 

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 weakening after the text of Fed chair Powell testimony released – says gradual rate rises are needed, outlook remains strong, curve steeper, 10Y 2.88% 9+1.7bps). Focus now on Powell testimony at 10:00,  Durable Goods weaker than exp, -3.7% vs -2.0% exp. Core EGBs lower led by 10Y gilts, which reversed earlier gains as bunds slid despite weaker German inflation. GOCs lagging the decline in  tsys post Powell, with the 10Y 2.255% – the 10Y reached a one month low 2.21% yesterday mid morn before reversing higher on the strong rally in equities pressured yields higher to close unch. Busy primary market yest – $1.75bln in supply including $500mln GWL 10Y @ 107, $500mln NIssan Cda 3Y @ 70, 2 tranche offering from Telus – $600mln new 10Y @ 148 and $150mln 2048s (reopening) @ 220. – the 10Y closed 3bps narrower in secondary trade.

News headlines

Powell Faces Policy ‘Combativeness’ in Riskier Post-Yellen World (Bloomberg) Federal Reserve Chairman Jerome Powell’s embrace of his predecessor’s gradual approach to tightening monetary policy is about to be tested. Since Powell accepted President Donald Trump’s nomination almost four months ago, the near-term outlook has changed significantly.

Stocks Fall With Bonds; Dollar Steady Before Powell: Market Wrap (Bloomberg) European stocks and bonds slipped as investors await the first public comments from Federal Reserve Chairman Jerome Powell on Tuesday. Treasuries steadied and the dollar was little changed. Most industry groups in the Euro Stoxx 600 Index declined, led by real estate and telecoms companies. S&P 500 Index futures signaled the first down day in four for the underlying gauge. Asian equities edged higher earlier, with Japanese stocks climbing to the highest in more than three weeks. The 10-year Treasury yield steadied after falling to a two-week low, while German bunds and U.K. gilts led a retreat in European bonds.

Dalio Says Central Banks Face Challenge After ‘Goldilocks’ Phase (Bloomberg) Central banks face a challenge getting things right a year or two down the road as they struggle to balance growth and inflation, said Ray Dalio, the billionaire founder of the world’s biggest hedge fund. The U.S. is further ahead than Europe in the economic cycle, meaning it may cut monetary stimulus and raise interest rates sooner, Dalio, whose Bridgewater Associates manages about $160 billion, said during an interview in Beijing with Bloomberg Television.

Why Trudeau Will Have a Hard Time Financing His Election Agenda (Bloomberg) Prime Minister Justin Trudeau’s low-key budget Tuesday will mark a major inflection point for Canada as the federal government’s interest burden rises for the first time in two decades. After hitting what’s likely an all-time low last year, the cost of covering public debt as a share of gross domestic product will probably tick up in 2018 — something that hasn’t happened since 1995. Governments relied heavily over the past 15 years on falling public debt charges to finance budget initiatives, meaning the end of the trend will leave Trudeau with fewer options as he eyes an election next year.

Bank of Montreal earnings beat market expectations (Reuters) Bank of Montreal reported first-quarter earnings which were ahead of market expectations, reflecting strong sales growth in Canada and the United States. BMO reported earnings per share, excluding one-off items of C$2.12 per share. Analysts had on average forecast earnings of C$2.06 per share, Thomson Reuters I/B/E/S data showed.

TSX futures dip ahead of budget, Powell testimony (Reuters) Canadian stock futures edged lower on Tuesday ahead of the government unveiling its federal budget and U.S. Federal Reserve Chairman Jerome Powell’s first congressional testimony. Canadian Finance Minister Bill Morneau is expected to unveil a restrained budget, with just enough spending to assuage middle class voters under pressure from rising rates – while keeping his powder dry amid uncertainty over NAFTA.

Scotiabank tops first-quarter profit estimates, raises dividend (BNN) Bank of Nova Scotia beat fiscal first-quarter profit estimates on the back of double-digit gains in its Canadian and international retail banking operations. Net income in the three months ending Jan. 31 was $2.34 billion, compared with $2.01 billion a year earlier. After stripping out a $150-million gain tied to the “remeasurement of an employee benefit liability,” the bank’s adjusted profit per share was $1.74. Analysts, on average, were expecting $1.68. Scotia also announced it will raise its quarterly dividend three cents to 82 cents per share.

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-24, S&P 500 futures are down -0.08% at 2782.25, Crude oil futures are down -0.42% at $63.64, Gold futures are down -0.26% at $1329.4, DXY is up 0.15% at 89.988, CAD/USD is up 0.27% at 0.7862. 

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