Commentaires

Market Update US tsys higher, yields 1-3 bps lower led by the 7Y, with the 10Y another 2bps lower @ 2.84%, after declining 5bps Friday. Core EGBs lagging the rally in tsys, bunds giving back some of outperformance which left the 10Y bund/tsy spd at 1yr wides. Gilts/bunds lower on hawkish comments from BOW Ramsden, stronger European equities – the stoxx up for a 3rd day, 0.60%, 36% retracement of the January pullback. GOCs higher in line with tsys, – data calendar is light this week after GOCs brushed off stronger Jan CPI, highlight is tomorrow’s Federal budget.  provis bettenfitting from ‘risk on’ environment, spds enfing ~1bp lower Friday.

News headlines

U.S. Stocks Rise With Treasuries, Dollar Mixed: Markets Wrap (Bloomberg) U.S. stocks rallied, Treasuries advanced and the dollar slipped as investors grew confident that the Jerome Powell-led Federal Reserve won’t rush to raise interest rates as the economy picks up steam. The S&P 500 Index pushed past its average price for the past 50 days and erased losses for the week with its biggest gain in almost three weeks. The gauge extended gains in afternoon trading, reversing a four-day pattern had seen it swoon. The 10-year Treasury yield slipped to 2.87 percent, roughly where it started the week, as investors dissect the Fed’s semiannual monetary policy report to Congress. The dollar was flat versus major peers.

Bond Traders Step Back From 3% to Watch Powell Navigate Fedspeak (Bloomberg) Bond traders came the closest in four years to a 3 percent yield on the 10-year Treasury note. Whether it breaches that level may be determined by how new Federal Reserve Chairman Jerome Powell handles the limelight. Powell, who took over from Janet Yellen this month, will speak before the House Financial Services Committee on Tuesday and the Senate Banking Committee two days later, in what’s known as the Humphrey-Hawkins testimony. It’ll be the first time since Powell was sworn in that bond traders get a chance to parse every word from the new Fed leader, as they did with his predecessors.

China Faces Rule by Xi for Decades With Repeal of Term Limits (Bloomberg) China’s Communist Party is set to repeal presidential term limits in a move that would allow Xi Jinping to rule beyond 2023, completing the country’s departure from a political system based on collective leadership. The party’s Central Committee announced Sunday it was seeking to end a constitutional provision that bars the head of state from serving more than two consecutive terms. That would remove the only formal barrier to Xi, who is also party leader and commander-in-chief of the military, staying in power indefinitely.

Oil Steady on Libya Halt as Saudis Promise a Smooth End to Curbs (Bloomberg) Oil steadied as Libya’s crude exports from a key terminal were disrupted and Saudi Arabia pledged that global producers will ease their output curbs without shocking the market. Futures in New York were little changed, after rising 3 percent the previous two sessions. Libya’s crude loadings from the Mellitah terminal will be “modified” after protests impeded output at the El-Feel field. Cuts by OPEC and its allies may be phased out in 2019 in a way that won’t disturb the market, Saudi oil minister Khalid Al-Falih said. Still, U.S. supply remains a threat, with the nation’s rig count rising for a fifth week to the highest since April 2015.

Federal budget plan aims for long-term resilience against volatility (BNN) With so much economic uncertainty radiating from the United States, the Trudeau government will table a federal budget Tuesday that aims to establish a firewall against all that volatility next door. Canadians can expect a budget designed to make the economy more resilient over the long term, insiders say — rather than one featuring more immediate, targeted measures to address those ever-present, Donald Trump-fuelled competitiveness and trade unknowns.

Trump says U.S. re-entering TPP a ‘possibility’ (BNN) U.S. President Donald Trump said he would consider rejoining the Trans-Pacific Partnership if the U.S. could negotiate more favourable terms. “TPP was a very bad deal for the United States. There’s a possibility we would be going in” if offered better terms, Trump said at a news conference with Australian Prime Minister Malcolm Turnbull on Friday at the White House. Turnbull was expected to encourage Trump privately to renew talks on a Pacific trade pact. The U.S. has adopted protectionist trade policies since Trump took office on a nationalist “America First” campaign.

Overnight markets

Overview: US 10yr note futures are up 0.142% at 120-29, S&P 500 futures are up 0.39% at 2759.5, Crude oil futures are down -0.05% at $63.52, Gold futures are up 0.62% at $1338.5, DXY is down -0.22% at 89.685, CAD/USD is up 0.3% at 0.7892. 

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 below 2.90% @ 2.88 (4bps), following move in bunds after weaker German GDP. Also supporting bunds is the widening in peripherals, particularly Italy , BTP/bund 10Y spd @ 1 mnth wides on pre Italian election jitters. USD index is firmer, equities stronger (emini +11), crude unch 62.75 consolidating after yesterday’s rally on surprise draw in DOE crude inventories. Focus on Fed speakers and Fed MPR to congress at 11:00. In Canada, GOCs are lower after Jan CPI surprised to the upside 0.7% vs 0.5% exp with the y/y falling to 1.7% vs 1.5% exp, and the range of BOC 3 core measures up to 1.8-1.9 from 1.6-1.9 in Dec.  By region Ontario’s inflation rate rose 0.9% vs -0.5% in Dec reflecting a 20% hike in the minimum wage on Jan 1st.

News headlines 

Mnuchin Urges Markets to Shrug Off Worries Over Tax Cuts, Debt (Bloomberg) Treasury Secretary Steven Mnuchin brushed aside signs that investors are nervous about rising prices and criticism that growing debt will harm U.S. economic security, declaring that President Donald Trump’s policies won’t cause inflation. “There are a lot of ways to have the economy grow,” Mnuchin said in an interview aboard a train to Philadelphia on Thursday, where he toured the U.S. Mint. “You can have wage inflation and not necessarily have inflation concerns in general.”

Wall Street May Be Rethinking Its Relationship With Guns (Bloomberg) Will Wall Street ever let go of guns? That question has come up before — after the shootings in Newtown, in Orlando, in Las Vegas, and on and on. Now, with the nation’s emotions raw over the killings in Florida last week, evidence is mounting that investors may be rethinking their long, fraught relationship with the firearms industry.

VIX Funds Face Fresh Scrutiny From U.S. Regulators (Bloomberg) U.S. regulators are scrutinizing this month’s implosion of investments that track stock-market turmoil, including whether wrongdoing contributed to steep losses for VIX exchange-traded products offered by Credit Suisse Group AG and other firms, several people familiar with the matter said.

With Elections to Win, One Nafta Team May Prefer to Keep Talking (Bloomberg) Few people are cheering the prospect of several more months of Nafta talks. Mexico’s ruling party may be among that small group. The country is cranking into campaign mode at the same time as it prepares to host the latest round of trade wrangling next week. That means Mexican negotiators have a kind of dual mandate. They have to pursue the best outcome for the nation, while keeping one eye out for their bosses in the governing PRI, which is seeking to hang on to the presidency in July’s election.

RBC tops first-quarter profit expectations, raises dividend (BNN) Royal Bank of Canada is boosting its payout to shareholders after topping first-quarter profit estimates on the back of growth in its core retail banking division. Net income in the three months ending Jan. 31 held steady at $3.01 billion as RBC took a $178-million charge tied to U.S. tax changes. On an adjusted basis, the bank earned $2.05 per share. Analysts, on average, expected $1.99 in earnings per share.

Global stocks subdued as U.S. dollar edges higher (BNN) A stronger U.S. dollar and slightly higher global borrowing costs kept world shares subdued on Friday and left gold limping toward its worst week since December. Europe’s main London, Frankfurt and Paris markets barely budged in early moves, keeping MSCI’s 47- country world index just in the black on the day but facing its third red week in the last four. Modest gains for the dollar meant the euro was set to post its second biggest weekly loss in nearly four months, as caution over the Italian election gave bond markets there their toughest week of 2018.

Overnight markets

Overview: US 10yr note futures are up 0.182% at 120-21, S&P 500 futures are up 0.42% at 2723, Crude oil futures are down 0% at $62.77, Gold futures are down -0.04% at $1332.2, DXY is up 0.17% at 89.893, CAD/USD is down -0.05% at 0.7875. 

US Economic Data

There is no US Economic data for today

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, rebounding from yesterday’s post FOMC minutes sell-off, the 10Y 2.92%(-3bps), on heavy volume in TY futures (~540k).  Equities lower in Europe, S&P futures +5.25, crude slightly lower 61.53. Core EGBs mixed – gilts lower, bunds slightly higher. Bunds rallying on weaker German IFO – the expectations component dropping to the lowest since last March. Gilts lagging bunds, tsys despite downward revision in Q4 GDP to 0.4% from 0.5%.  The US auctions $29bln in 7Y notes at 1:00pm.  GOCs sharply higher, outperforming tsys 2-4bps after Retail Sales fell 0.8% in Dec vs unch exp , with the core down 1.8% vs 0.3% increase exp.

News headlines

Fed’s Quarles Says U.S. Economy in ‘Best Shape’ Since Crisis (Bloomberg) Federal Reserve Governor Randal Quarles delivered an upbeat assessment of the U.S. economy and endorsed a “gradual” path for raising interest rates in his first public speech on monetary policy since joining the central bank in October. “The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis,” Quarles said in prepared remarks Thursday in Tokyo.

ECB Keeps Policy Unchanged as Euro Gains Risk Curbing Inflation (Bloomberg) The European Central Bank maintained its pledge to move slowly in removing euro-area stimulus, setting the stage for President Mario Draghi to face questions on the strength of the single currency. Policy makers reiterated that they’ll continue buying 30 billion euros ($37 billion) of assets a month until at least the end of September. They kept interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net bond purchases.

Top Political Donors Have Already Given $66 Million for Midterms (Bloomberg) Billionaire Tom Steyer and packaging king Richard Uihlein are leading the charge among mega-donors seeking to influence the November elections, with the top 10 contributors logging a combined $65.7 million so far in the current campaign cycle.  With control of Congress at stake, the top Democratic and Republican donors will be pressed to finance a battle that’s already triggering television advertising and expected to set a spending record. The first midterm elections under President Donald Trump will be a high-priced test of whether the GOP can keep majorities in both the House and Senate. As many as a dozen Senate seats and 80 in the House could be in play.

Big Banks in U.S. Forced to Reevaluate Hiring Foreign Workers (Bloomberg) Big banks in the U.S., which have been seeking to hire more foreign workers in recent years under the H-1B visa program, are now being forced to reconsider their approach after the Trump administration made it harder to obtain the work permits. Eight major investment banks increased their H-1B applications for high-skilled workers by almost 60 percent over five years to more than 7,000 in fiscal year 2017, according to a Bloomberg analysis of visa filing data.

Canada close at 2-1/2-week high, led by financials (Reuters) Canada’s main stock index closed at a 2-1/2-week high on Wednesday, led by financials and industrials, with all sectors but technology posting gains. The Toronto Stock Exchange’s S&P/TSX composite index closed up 84.57 points, or 0.55 percent, higher at 15,524.01, its strongest close since Feb. 2. Canadian stocks bucked a downward trend in global stocks that were driven lower by a stronger U.S. dollar and rising government bond prices after minutes of the Federal Reserve’s January policy meeting showed confidence in the need to keep raising interest rates.

CIBC beats first-quarter profit estimates, raises dividend (BNN) Canadian Imperial Bank of Commerce set the bar for its peers on Thursday with fiscal first-quarter profit easily beating expectations. Overall net income in the three months ending Jan. 31 was $1.33-billion. On an adjusted basis, CIBC earned $1.43-billion or $3.18 per share. Analysts, on average, were expecting $2.83 in earnings per share.

Loblaw books $107-million charge on bread scandal, warns of ‘exceptional headwinds’ (BNN) The head of Loblaw Companies is warning of major headwinds facing his food retailing empire as it contends with fallout from last year’s stunning bread price-fixing admission. Total revenue at Loblaw dipped 0.9 per cent in the fourth quarter to $11.03-billion. Adjusted quarterly profit rose 12.2 per cent to $441-million or $1.13 per share. Analysts, on average, expected $1.11 in earnings per share.

Overnight markets

Overview: US 10yr note futures are up 0.104% at 120-11, S&P 500 futures are up 0.25% at 2705.5, Crude oil futures are down -0.42% at $61.42, Gold futures are down -0.43% at $1326.4, DXY is up 0.12% at 90.112, CAD/USD is down -0.06% at 0.7877. 

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