Commentaires

Market Update

Tsys higher, thou off highs from Asian session as US equity futures pare losses (S&P fut -8.25), 10Y 2.838% (-2bps) and the curve 2s/30s 3bps flatter.  The 2Y getting hit after Fed Meister remarked  that economic fundamentals are sound and that the latest mkt moves shouldn’t curb risk taking… Core EGBs mixed – gilts lower with yield curve flatter as UK inflation surprised to the upside for Jan, CPI 3.0% vs 2.6% exp, core 2.7% vs 2.5% in Dec –  probability of May rate hike inching higher to 75% from 73% pre-release. Crude lower, back below $60, as IEA said the pickup in shale production in the US could offset a forecasted rise in demand.  GOCs opening better bid, outperforming tsys in the short end. Provis  opening unch, supply expected in the 10Y. The CAD is steady vs the USD , 1.2598, yet is off 0.53% vs the euro close to recent lows 64.35 on crude weakness. 10Y CMB and FRN expected to launch today – CMB 2.35/28 36/35.5 unch.

News headlines

Stock Recovery Falters; Yen Rallies With Havens: Markets Wrap (Bloomberg) European shares edged lower following a late downswing in Asia and haven assets rallied as last week’s surge in volatility continued to hang over markets. The dollar weakened against most major currencies. S&P 500 futures pointed to a retreat in U.S. stocks at the market open after two days of gains. The yen headed for the strongest close since Nov. 2016 and the Swiss franc gained with gold. Bonds climbed, with the 10-year Treasury yield falling back after touching 2.89 percent on Monday. Metals found support from the weaker dollar. The pound advanced as data showed U.K. inflation held at 3 percent in January.

Trump’s $4.4 Trillion Budget Boosts Defense With More Red Ink (Bloomberg) President Donald Trump proposed a $4.4 trillion federal budget on Monday for fiscal 2019, a plan Congress is expected to all but ignore that would slash entitlements and other domestic programs in favor of higher spending on the military and immigration enforcement.

VIX Manipulation Costs Investors Billions, Whistle-Blower Says (Bloomberg) A whistle-blower told U.S. regulators that a scheme to manipulate the VIX, the volatility gauge thrust into the spotlight last week during a wild trading session, costs investors hundreds of millions of dollars a month. A Washington-based lawyer told the Securities and Exchange Commission and Commodity Futures Trading Commission — the nation’s top markets regulators — in a letter Monday that his client found a flaw that allows traders “with sophisticated algorithms to move the VIX up or down by simply posting quotes on S&P options and without needing to physically engage in any trading or deploying any capital.” Billions in purportedly ill-gotten profits have been scooped up by “unethical electronic option market makers,” according to the letter.

Zuma Defies ANC’s Call to Quit, Leaving South Africa in Limbo (Bloomberg) South Africans awoke to find their nation in limbo after President Jacob Zuma’s refusal to obey his ruling African National Congress’s request to resign voluntarily prompted its top leadership to order his removal from office. The ANC’s National Executive Committee decided to “recall” Zuma, 75, during a 13-hour meeting that ended early Tuesday, according to five people familiar with the matter who asked not to be identified because the decision hasn’t been made public. It marked the failure of efforts to convince Zuma to agree to an amicable transfer of power from his scandal-ridden administration to one headed by party leader Cyril Ramaphosa.

Dalio Says ‘We’re Past the Top’ in Bonds, Sees Rising Risks of a U.S. Recession (Bloomberg) Billionaire hedge fund manager Ray Dalio said the risks of a recession in the next 18 to 24 months are rising and bonds are past their peak. In a LinkedIn post on Monday, Dalio said the U.S. is further along in the business cycle than he thought and that it’s difficult to make a call on equities.

Stock futures little changed amid drop in oil prices (Reuters) Stock futures for Canada’s main stock index were little changed on Tuesday, as oil prices edged lower after the International Energy Agency estimated world crude supply could overtake demand this year.

TMX posts profit beat as lower expenses offset revenue fall (BNN) Toronto Stock Exchange operator TMX Group Ltd reported on Monday a higher-than-expected fourth-quarter profit as lower operating expenses before acquisition costs helped offset a fall in revenue. Total revenue fell 2 per cent to $170.9 million in the quarter ended Dec. 31 due to a 9 per cent decline in revenue from the global solutions, insights and analytics segment. Derivatives trading revenue also fell 3 per cent to $27.6 million in the period from a year earlier.

Sears pensioners try to recoup missing money by going after billions paid to shareholders (CBC) Sears Canada pensioners are heading to court to try to recoup close to $300 million they say is missing from their pension fund following the retailer’s demise. Representatives for Sears pensioners will ask Ontario Superior Court on Thursday to appoint a trustee to scrutinize nearly $3 billion paid in dividends to Sears shareholders — the biggest recipient of which was Eddie Lampert, CEO of U.S. hedge fund ESL Investments.

Overnight markets

Overview: US 10yr note futures are up 0.078% at 120-32, S&P 500 futures are down -0.4% at 2644.75, Crude oil futures are down -0.81% at $58.81, Gold futures are up 0.17% at $1328.7, DXY is down -0.47% at 89.783, CAD/USD is up 0.09% at 0.7944. 

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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 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