Commentaires

Market Update

Tsys trading weaker, 10Y 2.88% (+3bps) – new four year high thou on low volume with Japan on holiday (320k TY futures).  Libor higher across the term structure – 3M @ 1.833% (+1.2bps). Risk on start with S&P futures +28, European equities +1.25%, crude up 2.0% rebounding from last week’s 10% decline.  Focus on Trump budget statement this afternoon and Wednesday’s Jan CPI (0.3% m/m vs 0.1% in Dec). UK gilts sharply lower, 10Y 1.62% (+5bps) – bearish comments from BOE Vlieghe that three rate hikes may not be enough to cool excess demand. In Canada, GOC yields higher , lagging the pullback in tsys by ~1bp across the curve. The GOC curve steepened 6bps last week led by the long end which rose above 2.50% Thurs the highest since May 2014 – despite  Cdn stocks being down for a second straight week 7.5%, the steepest two week decline since July 2011 and a weak jobs report Friday.

News headlines

Stocks Bounce Back With S&P Futures; Dollar Falls: Markets Wrap (Bloomberg) Equities advanced in Europe and Asia, giving investors a reprieve from the rout in stocks and the highest volatility spike since 2015. The dollar fell with Treasuries amid concern President Donald Trump’s budget proposal will drop his party’s goal to balance the budget in 10 years.

U.S. Budget Director Warns Interest Rates May ‘Spike’ on Deficit (Bloomberg) The U.S. will post a larger budget deficit this year and could see a “spike” in interest rates as a result, but lower deficits are possible over time based on sustained economic growth from Donald Trump’s tax cuts, said Budget Director Mick Mulvaney.

Kim Jong Un Invites South Korea’s Moon to Summit in Pyongyang (Bloomberg) North Korean leader Kim Jong Un has made a dramatic gesture that may raise prospects for easing tensions on the Korean Peninsula by inviting South Korean President Moon Jae-in to meet in Pyongyang.

Trump to Urge Wall, Opioid Spending While Congress Sets Its Own Course (Bloomberg) President Donald Trump will seek billions of dollars in new spending to build a border wall, improve veterans’ health care and combat opioid abuse in a budget proposal that’s likely to get little traction in a Republican Congress that has its own, very different spending priorities.

Zuma’s D-Day Nears as Ramaphosa Promises Power Transition (Bloomberg) South African President Jacob Zuma’s fate is set to be sealed when the top leadership of the ruling African National Congress meets to conclude the transition to a new administration. The National Executive Committee will assemble on Monday in the capital, Pretoria, as Zuma, 75, has defied growing pressure to resign since his deputy, Cyril Ramaphosa, replaced him as party leader in December. His nine-year tenure has been marred by scandal and eroded support for the ANC.

Restaurant Brands’ profit tops estimates on Burger King boost (Reuters) Restaurant Brands International Inc’s profit topped analysts’ forecasts in the fourth quarter as it lured more diners to its Burger King restaurants through new snacks and affordable burgers.

Canada sheds most jobs since 2009, leaving room for central bank to pause (Reuters) The Canadian economy lost the most jobs in nine years in January, pulling back after a robust 2017 and solidifying expectations the Bank of Canada will hold interest rates steady next month.

Aecon extends deadline to close $1.5B sale to Chinese conglomerate amid national security review (BNN) Aecon Group announced on Monday its proposed takeover by the overseas investment arm of China Communications Construction Company (CCCI) is being subjected to a national security review by the federal cabinet.

Overnight markets

Overview: US 10yr note futures are down -0.335% at 120-25, S&P 500 futures are up 1.15% at 2649, Crude oil futures are up 1.74% at $60.23, Gold futures are up 0.46% at $1321.7, DXY is down -0.18% at 90.276, CAD/USD is down -0.04% at 0.7951.

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 mildly higher over since early NA trade reversing declines in Asia, on heavy volume (650K TY1), longs underperforming with the 10Y 2.817 (-0.7). Tsys lagging the strong rally in bunds, gilts. EGBs underpinned by late day selloff in US equities, followed by weaker Euro equities (Stoxx -1.6%). GOCs higher before employment data – consensus is for only a 10K increase in employment for Jan after a Nov/Dec saw the strongest two month increase since 2012 (145k). The minimum wage increase in Ontario as well as colder weather also expected to hold down January’s increase.  Also worth watching will be the unemployment rate which fell to a new low 5.7% in Dec, while hourly earnings rose to a cycle high 2.9% and hours worked up 3.3%.

News headlines

Stocks Enter Correction as Rate-Hike Fears Return: Markets Wrap (Bloomberg) The dread that gripped equity markets earlier in the week re-emerged Thursday as U.S. stocks plunged into a correction on concern that rising interest rates will drag down economic growth. Selling accelerated in the final hour of trading as major indexes breached round-number milestones they blew past just weeks ago. The S&P 500 tumbled through 2,600 and the Dow failed to hold 24,000. Both are headed toward their average price for the past 200 days, a level that technical analysts say may act as a magnet and a floor.

Senate Passes Delayed Budget Deal in Bid to End U.S. Shutdown (Bloomberg) The Senate passed a two-year budget agreement early Friday that would boost federal spending by $300 billion and suspend the debt ceiling for a year, as lawmakers sought to end a partial government shutdown that began at midnight after Congress missed a funding deadline.

Never Compromise on U.K.’s Brexit Demands, May Tells Team (Bloomberg) After last year’s disastrous election result, U.K. Prime Minister Theresa May was described as a dead woman walking. Yet despite numerous mishaps, she still refuses to accept she’s finished. Now May is taking the same determination that has kept her in office against the odds into the latest chapter in Brexit negotiations, according to officials who work closely with her.

China Ends 25-Year Wait as Yuan Oil Futures to Start Trading (Bloomberg) After a wait of about a quarter of a century, the world’s biggest oil buyer is finally getting its own crude-futures contract. In a challenge to the world’s dollar-denominated oil benchmarks Brent and West Texas Intermediate, China will list local-currency crude futures in Shanghai on March 26, according to the nation’s securities regulator. The start of trading, open to foreigners, will mark the end of years of delays and setbacks since China’s first attempt at a domestic contract in 1993.

Qualcomm Rejects Broadcom’s Higher $121 Billion Hostile Bid (Bloomberg) Broadcom Ltd. said its $121 billion acquisition proposal for Qualcomm Inc. is the “best and final” offer after the target’s board unanimously rejected the sweetened bid, likely leaving the future of the hostile takeover bid to be decided by shareholders next month. Broadcom Chief Executive Officer Hock Tan urged Qualcomm to meet this weekend to discuss the $82 a share offer and dangled the prospect of an $8 billion reverse termination fee in a letter to Paul Jacobs, chairman of the board. Tan said he was “astonished” the target wasn’t willing to meet until Tuesday, after the companies are scheduled to meet with proxy advisers Glass Lewis and ISS.

Canada says will clamp down on arms exports amid rights concerns (Reuters) Freeland told legislators that Canada would not allow the export of a weapon “if there were a substantial risk that it could be used to commit human rights violations.” She made her remarks a day after Ottawa said it was reviewing the sale of 16 helicopters to the Philippines amid concerns the aircraft could be used to fight rebels. Current regulations mean governments need only carry out a study of the general risks that might be involved in a sale.

Futures lower ahead of jobs report (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday as investors awaited monthly jobs data, a week after a similar U.S. report sparked a week-long sell off. However, compared with a strong U.S. jobs market, Canadian employment growth is expected to have slowed in January, the report due at 8:30 a.m. ET is expected to show. Economists polled by Reuters expected that just 10,000 jobs were created last month, with the unemployment rate forecast to have increased 5.8 percent.

Expedia shares sink after disappointing 2018 forecast (BNN) Shares of U.S. online travel services company Expedia fell 19 per cent in premarket trading on Friday, after forecasting 2018 selling and marketing costs would outpace revenue growth as it battles rivals for market share. The company, which owns brands including Expedia.com and Hotels.com, reported equally disappointing previous quarter results in October partly due to underperformance by its Trivago hotel-search website.

Overnight markets

Overview: US 10yr note futures are up 0.116% at 121-01, S&P 500 futures are up 0.04% at 2594.5, Crude oil futures are down -1.34% at $60.33, Gold futures are down -0.08% at $1317.9, DXY is up 0.07% at 90.288, CAD/USD is down 0% at 0.7935.

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 lower, 10Y 2.855 (+2bps) , paring gains with UK hilts after BOE.  European equities lower, S&P futures +5, crude extending Wednesday’s losses down 0.53 @ 61.25. Tsys pressured by gilts after BOE MPC decision to leave rates unch thou the BOE members believed policy would have to be tightened earlier and to a greater degree than what was  projected in Nov – 5Y gilt taking the brunt of the selling ~7bps higher @ 1.07%, thou the 10Y @ 1.60% at a new high since Feb 2016. GOCs lower outperforming the pullback in tsys by ~1bp out to 10s, with the curve unch .

News headlines

Stocks’ Bumpy Ride Resumes as Bond Jitters Linger: Markets Wrap (Bloomberg) U.S. stocks remained on unsteady footing as the bout of volatility that’s gripped global financial markets persisted amid signs that the rise in Treasury yields has yet to run its course. Pressure Wednesday came from a weak 10-year note auction, sending the rate toward the four-year high that days ago sparked the biggest equity selloff in seven years. Stocks swung between gains and losses throughout the session before ending lower after heavy selling in the final 15 minutes of trading. Volume on U.S. exchanges topped 9 billion shares for a fourth straight day after surpassing that total just once in the past seven months.

Senate Deal Would Avoid Shutdown as Funding Fight Turns to House (Bloomberg) Senate leaders announced a bipartisan two-year budget agreement Wednesday that would provide nearly $300 billion in additional funding, a crucial step toward averting a Friday government shutdown and ending a months-long impasse on spending priorities. The plan would suspend the federal debt ceiling until March 1, 2019, and would provide almost $90 billion in hurricane and wildfire disaster aid. A Senate vote is expected Thursday, followed by the House.

The Bank of England’s Forecast Horizon Is Increasingly Clouded (Bloomberg) The Bank of England’s job of predicting the future is getting more and more difficult as Brexit increasingly dims its vision. The U.K. central bank will lay out how it expects the economy to perform over the next three years at noon on Thursday in London, and Governor Mark Carney will face questions on the topic from journalists. Yet two-thirds of its forecast period comes after the nation’s exit date from the European Union, and there is little clear indication yet as to what any alternate trading relationship might look like.

China’s Yuan Toppled From Two-Year High as Trade Data Surprises (Bloomberg) China’s yuan sank the most since the aftermath of its shock 2015 devaluation, after data showed the country’s trade surplus more than halved last month, and investors speculated controls on outward cash flows will be eased. The yuan weakened as much as 1.2 percent in Shanghai, touching as low as 6.3550 per dollar on Thursday. The slump marks a reversal for the managed currency, which acts as an anchor for the wider Asian region and has been rallying amid the dollar’s retreat.

Canada’s Telus reports higher fourth-quarter profit (Reuters) Telus Corp, one of Canada’s three big telecom providers, reported higher fourth-quarter earnings compared with a year earlier, helped by lower spending. Telus said on Thursday its net income rose to C$282 million ($224 million) or 47 Canadian cents per share in the quarter ended Dec. 31, from C$87 million or 14 Canadian cents per share, a year earlier. Operating revenue rose to C$3.48 billion from C$3.31 billion, the Vancouver-based company said.

Stock futures little changed, with earnings in focus (Reuters) March futures on the S&P TSX index SXFc1 were up 0.11 percent at 7:15 a.m. ET. New housing price index data is due at 8:30 a.m. ET ECONCA Canada’s main stock index closed lower on Wednesday, dragged down by energy companies and miners as oil and metal prices dropped. Dow Jones Industrial Average e-mini futures 1YMc1 were down 0.073 percent at 7:15 a.m. ET, while S&P 500 e-mini futures ESc1 were down 0.09 percent and Nasdaq 100 e-mini futures NQc1 were up 0.12 percent.

Canadian blockchain ETF launches, shrugging off bitcoin volatility (BNN) Canada’s first blockchain exchange-traded fund is shrugging off bitcoin’s bust and will launch Wednesday as planned. Harvest Portfolios Group Inc.’s Blockchain Technologies ETF began trading on the Toronto Stock Exchange under the symbol HBLK, amid extreme market volatility that saw the Dow swing more than 900 points in 25 minutes Tuesday after plummeting the most ever Monday.

Overnight markets

Overview: US 10yr note futures are down -0.103% at 120-28, S&P 500 futures are up 0.49% at 2681.25, Crude oil futures are down -1.08% at $61.12, Gold futures are up 0.12% at $1316.2, DXY is up 0.04% at 90.29, CAD/USD is down -0.05% at 0.7961.

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