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Market Update Tsys weaker across the curve, 5Y above 2.55, 10Y 2.75%, futures near o/n lows on heavy volume (600k TY). Tsys lower with EGBs as Spanish & French supply weighed, 10Y bund above 0.73% . Stocks in Europe reversing gains unable to recover after a three day selloff, S&P futures -3.5, the USD also reversing post FOMC rally to trade close to low 88.96.  GOCs lower in line with tsys, 10s leading with 2s10s 2bps steeper, CGBS breaking Monday’s low below 132. Provis opening unch, MP long deal yest @ Onts +8, well received, now 7.5 bid.  Central One (AH) priced an 3Y FRN @ CDOR+35 which looked cheap vs DOLCN (BBB) 3Y @27 . BNS 10Y deposit note @ 80 traded slightly tighter in secondary. 

News headlines

Janet Yellen’s Fed Era Ends With Unanimous Vote of No Rate Hike (Bloomberg) Federal Reserve officials, meeting for the last time under Chair Janet Yellen, left borrowing costs unchanged while adding emphasis to their plan for more hikes, setting the stage for an increase in March under her successor Jerome Powell.

Euro-Area Manufacturers Start Year With Near-Record Momentum (Bloomberg) Manufacturing in the euro area grew at one of the fastest paces on record in January, with high demand fueling inflationary pressures. A Purchasing Managers’ Index for the sector slipped to 59.6 — matching a previous flash estimate — from 60.6 in December, IHS Markit said on Thursday. Companies raised selling prices by the most in almost seven years, partially due to a steep increase in energy costs, the London-based company said.

America Winning ‘Cold Currency War’ to Weaken Dollar, Pimco Says (Bloomberg) The U.S. is fighting — and winning — a “cold currency war” as it seeks to weaken the dollar, according to Pacific Investment Management Co. The greenback’s nearly 12 percent plunge since the start of 2017 is being fueled by fiscal and monetary policies as well as rhetoric intended to debase the U.S. currency, Pimco global economic adviser Joachim Fels wrote in a blog post. Central banks from Japan to Europe have refrained from pushing back too hard amid fears over increased protectionism from the Trump administration.

Europe Stocks Advance as Treasuries Lead Bond Drop: Markets Wrap (Bloomberg) Stocks in Europe and Asia kicked off February with gains, as investors decided the outlook for growth and corporate earnings was strong enough to quell concerns about the recent jump up in bond yields. Treasuries resumed a slide and the dollar edged higher.

Top iPhone Suppliers Warn of Slower Sales Ahead of Apple Results (Bloomberg) Qualcomm Inc. and Broadcom Ltd., key suppliers to Apple Inc., have implied that orders related to the iPhone tailed off more than normal at this time of year. Some of Apple’s iPhones are built with Qualcomm’s modems, which are chips for connecting to cellular networks. The San Diego-based chipmaker said Wednesday that orders from a large “thin modem” customer tailed off at worse-than-typical levels in the quarter. It was widely interpreted that the customer is Apple.

Canada PM says doesn’t think Trump will pull U.S. out of NAFTA (Reuters) Canadian Prime Minister Justin Trudeau on Wednesday said he did not think U.S. President Donald Trump would pull out of NAFTA, despite slow progress at negotiations to update the $1.2 trillion trade pact.

Canada economy picks up in Nov with broad-based growth (Reuters) The Canadian economy accelerated in November by the most in six months, with activity broad-based across a number of sectors including manufacturing and keeping the Bank of Canada on track to raise interest rates again before long.

Bitcoin skids to lowest since November after worst month in three years (Reuters) Bitcoin, the world’s largest cryptocurrency, skidded 9 percent on Thursday to its lowest level since late November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market rattled investors.

Overnight markets

Overview: US 10yr note futures are down -0.141% at 121-13, S&P 500 futures are down -0.21% at 2819.75, Crude oil futures are up 1.13% at $65.46, Gold futures are down -0.01% at $1343, DXY is down -0.15% at 89, CAD/USD is up 0.06% at 0.8116.

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 higher, US 10Y 2.705 (-1.5) despite stronger Jan ADP (234k vs 185k) and the US Treasury raising auction sizes for  3, 10 & 30 yr qrtly refunding. Tsy curve pairing back yesterday’s steepening as well, 2bps flatter led by the long end. Busy day with month end extensions a factor, Chicago PMI and FOMC this aft. Yellen expected to acknowledge the pickup in growth and inflation prospects in her final FOMC. US equity futures +12, Boeing blew past estimates forQ4, core eps $4.80 vs $2.90 exp on better than exp revenues, shares up ~6% pre-mkt. GOCs higher, wider vs tsys after Nov GDP came in as exp 0.4%, goods producing 0.8% – largest increase since May ’17 on oil&gas, utilities. 

News headlines

Inflation Debate Grips Fed as Yellen Exits: Decision-Day Guide (Bloomberg) As Janet Yellen prepares to hand over the leadership of the Federal Reserve to Jerome Powell, the central bank is gripped by the same issue that’s marked her four-year term as chair: puzzlingly low inflation. The rate-setting Federal Open Market Committee is likely to maintain the range of its benchmark lending rate at 1.25 percent to 1.5 percent at the conclusion of a two-day meeting in Washington on Wednesday. It releases a statement at 2 p.m. and no press conference is scheduled to follow.

Euro-Area Inflation Slowdown Highlights ECB’s Uphill Battle (Bloomberg) Inflation in the euro area slowed at the start of the year, highlighting the hurdles faced by the European Central Bank as it attempts to foster price growth in a region still beleaguered in places by high unemployment. Consumer prices rose 1.3 percent in January, the European Union’s statistics office said on Wednesday. The reading exceeds the median forecast of 1.2 percent in a Bloomberg survey but is below December’s rate of 1.4 percent.

Trump Connects Presidency With Prosperity in ‘American Moment’ (Bloomberg) Donald Trump sought to connect his presidency to the nation’s prosperity in his first State of the Union address, arguing that the U.S. has arrived at a “new American moment” of wealth and opportunity. The president largely dispensed with his trademark antagonism in a bid for bipartisanship, portraying his administration — marked in his first year by discord — as working to build a “safe, strong and proud America.” In contrast with polling that shows most Americans consider him divisive, he promised to unify the country “as one team, one people and one American family.”

Stock Declines Ease as Dollar Drops; Oil Retreats: Markets Wrap (Bloomberg) The global stock declines that have shaped the week showed signs of easing on Wednesday, with U.S. futures climbing and European equities edging higher. The dollar slump deepened in the wake of President Donald Trump’s State of the Union address, and the euro rose after inflation data.

Oil Pares Strongest January Since 2013 on U.S. Supply Outlook (Bloomberg) Oil slipped for a third day in New York, continuing its retreat from a three-year high, on estimates that U.S. crude stockpiles increased last week. West Texas Intermediate futures fell 0.5 percent, bringing their monthly advance to 6.2 percent. Data from the U.S. Energy Department is forecast to show that inventories probably rose by 900,000 barrels to 412.5 million, according to a Bloomberg survey.

Toronto, Vancouver drive overvaluation in Canada housing (Reuters) Canada’s housing market still shows evidence of overvaluation, particularly in and around Toronto and Vancouver, despite slowing growth in prices, the federal housing agency said on Tuesday.

Japan’s Fujifilm to take over Xerox in $6.1 billion deal, create joint venture (Reuters) Japan’s Fujifilm Holdings is set to take over Xerox Corp in a $6.1 billion deal, combining the U.S. company into their existing joint venture to gain scale and cut costs amid declining demand for office printing.

Canadian drillers moving rigs south to chase better prospects in Texas oilfields (BNN) A growing number of Canadian drilling rigs are being moved south of the border to take advantage of brighter prospects in the United States — and observers say it’s unlikely they will ever return home. A week ago, Calgary-based Akita Drilling Ltd., primarily a Canadian driller, announced it would deploy its first rig into the prolific Permian Basin in West Texas by moving one from Western Canada.

Overnight markets

Overview: US 10yr note futures are up 0.051% at 121-23, S&P 500 futures are up 0.42% at 2836.5, Crude oil futures are down -0.6% at $64.11, Gold futures are up 0.46% at $1346.1, DXY is down -0.3% at 88.89, CAD/USD is down -0.49% at 0.8145. 

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  slightly lower, US 10Y 2.707% (+1.3bps), after moving above 2.73% overnite, prices seeing some support as equities weaken for a second day with S&P futures -12.5. Bund curve steeper, 10Y unch after weaker than exp German Jan CPI (1.6% vs 1.7%). GOCs lower in line with tsys, 10Y 2.295% , long outperformance bringing 10s30s below 6bps. Provis ~0.5bp narrower yest, expectations for long supply (Ont, QC, MP) – Ont 27/48 credit curve 2bps wider over the last week yet issuing longs here very attractive option given ~20bp narrowing in underlying GOC curve. National Bank issued $750MM 10NC5 NVCC @ 110.9 yest, closing 112/110. 

News headlines

Euro-Area Economy Posts Strong 2017 Finish Buoyed by ECB (Bloomberg) The euro-area economy finished off last year with another quarter of robust growth, and confidence among businesses and households suggests there’s no slowdown in sight. Gross domestic product rose 0.6 percent in the three months through December, in line with forecasts and marking a 19th straight expansion. The French and Spanish economies, two of the bloc’s largest, both recorded similarly solid rates of growth.

Stocks Fall Most in 2018 as Treasury Yields Climb: Markets Wrap (Bloomberg) The Standard & Poor’s 500 Index declined by the most since September and yields on benchmark Treasuries touched the highest levels since early 2014 as traders gear up for a hectic week of data and policy announcements. The dollar strengthened against all its major rivals.

Trump’s Agenda Faces Tough Fiscal Reality After State of the Union (Bloomberg) President Donald Trump plans to promote the Republican tax overhaul he signed into law in his first State of the Union speech on Tuesday night, but fiscal headwinds mean he’s likely to have less legislative success in his second year in office.

U.S. Names Oligarchs, Kremlin Elite But Avoids New Sanctions (Bloomberg) The U.S. identified 210 Russian billionaires and top officials in a sweeping list required under last summer’s sanctions law, but underlined that those named aren’t being targeted for new restrictions.

U.K. Consumer Confidence Increases as New Year Brings Hope (Bloomberg) Britons are starting 2018 with renewed optimism as a measure of consumer confidence rose by the most in a year in January. The jump was driven by the biggest increase in households’ assessment of their financial position in the past month since November 2014, according to YouGov and the Centre for Economics and Business Research. The firms’ overall index of sentiment climbed to 108.2 in January, from 107.1 previously.

Blackstone in talks to buy majority stake in key Thomson Reuters unit (Reuters) U.S. private equity firm Blackstone Group LP is in advanced talks to buy an approximate 55 percent stake in the Financial and Risk business of Thomson Reuters Corp, a deal that would value the unit at about $20 billion including debt, three sources familiar with the matter said on Monday.

Amazon, Berkshire, JPMorgan team up to lower ‘hungry tapeworm’ healthcare costs (BNN) Amazon.com Inc (AMZN.O), Berkshire Hathaway (BRKa.N) and JPMorgan Chase & Co. (JPM.N) are teaming up in a new venture aimed at lowering healthcare costs for their U.S. employees, the companies said on Tuesday. The companies will create an independent firm “free from profit-making incentives and constraints” that will initially focus on technology solutions to provide employees and their families with healthcare “at a reasonable cost.”

Canada’s economy going from a ‘sprint to a marathon’ pace (CBC) The Canadian economy’s surprising run for most of 2017 will likely start to decelerate this year as the country reaches its peak capacity for rapid growth, experts say. Gross domestic product (GDP) figures for November, to be released Wednesday, are expected to show the Canadian economy grew 0.4 per cent from the previous month.

Overnight markets

Overview: US 10yr note futures are down -0.077% at 121-23, S&P 500 futures are down -0.39% at 2842.25, Crude oil futures are down -0.85% at $65, Gold futures are up 0.19% at $1347.7, DXY is down -0.2% at 89.126, CAD/USD is down -0.21% at 0.8121.

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