Commentaires

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

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