Commentaires

Market Update

Tsys trading higher, avg volume in TY futures (lowest this week ~ 300k), 10Y 2.2.632% (-1.5bps).  Core Euro bonds higher since mid morning, 10Y bund 1.5bps lower, prices bid after ECB left rates unch but stmt dovish in that ECB ready to increase app ‘if conditions warrant’. Draghi press conference at 8:30 -look for any reference to QE taper, Draghi may want to cool speculation of early QE exit given rapid appreciation in the EUR. GOCs  maintaining slight gains after retail sales rose 0.2% in Nov vs 0.8% gain exp, as sales of cars/parts fell 3.6% reversing October’s gains. 

News headlines

ECB Debates If 270 Billion-Euro QE Pledge Will Be Enough (Bloomberg) When Mario Draghi addresses reporters on Thursday, he’ll probably repeat that returning inflation to target relies on the European Central Bank’s pledge to add at least another 270 billion euros ($330 billion) in stimulus. 

Mnuchin Defends Weaker Dollar Comments as ‘Clear,’ ‘Consistent’ (Bloomberg) Treasury Secretary Steven Mnuchin said he isn’t concerned about short-term fluctuations in the dollar and that there are economic pros and cons to where the exchange rate now is, a day after he suggested a weaker U.S. currency would help trade.

Mueller Almost Done With Obstruction Part of Trump Probe, Sources Say (Bloomberg) Special Counsel Robert Mueller is moving at a far faster pace than previously known and appears to be wrapping up at least one key part of his investigation — whether President Donald Trump obstructed justice, according to current and former U.S. officials.

Dollar Extends Drop; Euro Steady as ECB Holds Rate: Markets Wrap (Bloomberg) The dollar’s miserable week continued, with the greenback slipping against most major peers as traders digest the latest comments from White House officials. The euro was steady and European stocks rose as the region’s central bank kept interest rates unchanged, while crude gained.

Oil Extends Three-Year High After Record Pullback in Stockpiles (Bloomberg) Futures added as much as 1.3 percent in New York after climbing 1.8 percent on Wednesday.  A weaker U.S. dollar helped to underpin oil’s gain. Supplies slid to the lowest level since February 2015 and edged toward the five-year average, according to Energy Information Administration data. American producers are pumping crude at the highest rate in more than three decades.

Canada unveils ideas to save NAFTA, Trudeau lobbies U.S. firms (Reuters) Canadian negotiators at the NAFTA talks on Wednesday unveiled ideas to address contentious American demands for revamping the 1994 pact while Prime Minister Justin Trudeau urged top U.S. executives to back free trade.

Caterpillar profit beats estimates as sales surge 35 percent (Reuters) Caterpillar Inc beat estimates for fourth-quarter profit on Thursday as revenues surged 35 percent compared to a year earlier on the back of strong global demand for its construction and mining equipment.

Poloz says even he doesn’t know future of rate hikes (BNN) Bank of Canada Governor Stephen Poloz said on Thursday that even he did not know what potential there may be for further interest rate hikes this year, reiterating that policymakers remained both data dependent and alert to developments with NAFTA.

Overnight markets

Overview: US 10yr note futures are up 0.115% at 122-11, S&P 500 futures are up 0.29% at 2849.25, Crude oil futures are up 0.99% at $66.26, Gold futures are up 0.22% at $1364.4, DXY is down -0.12% at 89.102, CAD/USD is down -0.2% at 0.8115.

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 above 2.65% (+3.7bps), curve 2bps steeper, above avg volume in TY futures (380k). Tsys pressured by UK gilts after strong UK labor mkt data (102k vs -12k exp) – 10Y gilt above 1.40% for the first time since Feb. USD fell to a new low (DXY -0.64%) after Mnuchin said a weaker USD ‘is good for us’.  The Eurozone PMI rose to 58.6 in Jan, the highest since 2006 and above 57.9 consensus. In Canada GOCs are lower, outperforming tsys in 2s & 30s (~2bps) with 10s wider on the curve +2bps vs 2s30s, the cheapest since August. OIS mkt pricing in  ~40% odds of a rate hike at the April BOC meeting vs 98% pre rate hike last Wednesday.  

News headlines

Trump Team at Davos Backs Weaker Dollar, Sharpens Trade War Talk (Bloomberg) President Donald Trump’s top economic advisers set the stage for the rollout of his « America First » manifesto on the world stage. A day before Trump’s scheduled arrival in the Swiss ski resort of Davos for the World Economic Forum’s annual meeting, Treasury Secretary Steven Mnuchin endorsed the dollar’s decline as a benefit to the American economy and Commerce Secretary Wilbur Ross said the U.S. would fight harder to protect its exporters.

Euro-Area Economy Opens 2018 With Best Growth in Almost 12 Years (Bloomberg) The euro-area economy strengthened further at the start of 2018, bringing with it signs of a long-awaited pickup in inflation. The improvement lifted IHS Markit’s Purchasing Managers’ Index to 58.6 from 58.1 in December, higher than economists had forecast. The gauge is now at a level suggesting quarterly economic growth of close to 1 percent, according to the report.

U.K. Labor Market Unexpectedly Strong as Employment Rises (Bloomberg) The U.K. labor market displayed unexpected resilience in the three months through November as employment jumped and wage growth ticked higher. The number of people in work rose 102,000 to a record high, confounding market expectations that employment would fall. Basic pay growth quickened to 2.4 percent, the highest in almost a year, though it still lags well behind the rate of inflation.

Dollar Woes Deepen as Stocks Edge Up; Gold Rises: Markets Wrap (Bloomberg) There was no respite for the dollar on Wednesday, with the greenback extending the decline that’s taken it to the lowest level in three years. U.S. stock futures advanced as European equities nudged higher, and gold added to recent gains.

China Vows Further Opening as U.S. Talks Trade War: Davos Update (Bloomberg) Billionaires, world leaders and investors are gathered in Davos, Switzerland, for the World Economic Forum’s annual meeting to hobnob and discuss topics ranging from the global economy and sexual harassment, to the risks and opportunities of artificial intelligence. Not to mention hear a speech by President Donald Trump.

NAFTA negotiators open key round of talks amid upbeat signs (Reuters) Officials opened a key round of negotiations to modernize NAFTA on Tuesday amidst optimistic signs, as U.S. President Donald Trump said the talks were going “pretty well” and Canada’s chief negotiator said he had high hopes for progress.

U.S. Senate approves Powell to follow Yellen as Federal Reserve chair (CBC) The U.S. Senate on Tuesday approved President Donald Trump’s selection of Jerome Powell to be the next chairman of the Federal Reserve beginning next month. Senators voted 85-12 to confirm Powell to lead the nation’s central bank, a post that is considered the most powerful economic position in government. 

Overnight markets

Overview: US 10yr note futures are down -0.166% at 122-07, S&P 500 futures are up 0.31% at 2848.25, Crude oil futures are up 0.29% at $64.66, Gold futures are up 1.14% at $1357, DXY is down -0.7% at 89.494, CAD/USD is down -0.76% at 0.8114.

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 higher, TY futures near top of overnight range on relatively strong volume (405k), 10Y 2.622%. Tsys rising in Asia after the BOJ announced unch policy, maintaining stimulus with Kuroda stressing inflation is still far from 2.0% target. Trump announced tariffs on imported solar panels & washing machines.  Equities higher in Europe, thou S&P futures are lower (-2.0), giving up earlier gains, while crude remains close to $64 before inventory data later this morning. GOCs higher in line with tsys, 10Y 2.225% after reaching briefly above 2.25% yest aft.  Provincials unch yest after ~4bp widening off the lows of last week. We like 5Y provis after the rise in underlying GOC yields, while provi spds have lagged the narrowing in IG, particularly over 5Y product in ‘high beta’ sectors like reits/telcos.  If rates consolidate around these levels, there is an oportunity to play the bank sub/senior basis which will narrower since y/e, we feel has room to narrow further. 

News headlines

Trump Signs Bill Ending Shutdown as Immigration Battle Looms (Bloomberg) President Donald Trump signed a government spending bill Monday evening that ends a three-day partial shutdown, the White House said in a statement. But that leaves the fight over a politically charged immigration proposal unresolved for at least another three weeks.

Trump Marks Second Year With Asia Tariffs World Has Feared (Bloomberg) After a year of chest thumping, President Donald Trump has finally delivered the type of trade blow his political base has been craving. Trump slapped tariffs on imported solar panels and washing machines on Monday in his first major move to level a global playing field he says is tilted against American companies. The decision came two days after the one-year anniversary of his inauguration as he prepares to travel to the World Economic Forum in Davos, Switzerland, where his “America First” stance is likely to be at odds with the global business and political elite.

Kuroda Pushes Back Against Speculation Tightening Is Near (Bloomberg) Governor Haruhiko Kuroda delivered a message to investors speculating that the Bank of Japan might be nearing the start of policy normalization: Not so fast. Kuroda said the BOJ wasn’t in a position to even consider exiting its current policy, after it maintained its massive stimulus program and kept its inflation and economic forecasts unchanged earlier on Tuesday.

Bonds Advance as Stock Rally Sputters; Oil Climbs: Markets Wrap (Bloomberg) Government bonds advanced after the Bank of Japan signaled the age of easy money isn’t over yet, while U.S. stock futures and European equities pared a gain as optimism around corporate earnings and the end of the shutdown began to ebb. Gold and oil rose.

Netflix crosses US$100B market cap as subscribers surge (BNN) Netflix Inc snagged two million more subscribers than Wall Street expected in the final three months of last year, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.

IMF raises outlook for Canadian economy, upgrades global economic projections (CBC) The International Monetary Fund raised its estimate for economic growth in Canada this year as it said U.S. tax cuts are expected to help boost global economic growth. The international lending agency said Monday it now projects Canada’s economy will grow 2.3 per cent this year, up from an estimate of 2.1 per cent in October. Growth for 2019 is forecast at 2.0 per cent, up from an earlier projection for 1.7 per cent.

BMO and China’s largest bank ICBC expand tie up to sell more products (CBC) The Bank of Montreal has signed a new memorandum of understanding with China’s largest state-owned bank, Industrial and Commercial Bank of China Ltd. (ICBC), in an effort to expand its footprint in the world’s second largest economy. The new agreement will allow BMO and ICBC to cooperate on everything from asset management to corporate financing and trade in China and Canada.

Overnight markets

Overview: US 10yr note futures are up 0.282% at 122-14, S&P 500 futures are down -0.08% at 2833, Crude oil futures are up 0.93% at $64.16, Gold futures are up 0.34% at $1336.4, DXY is down -0.08% at 90.332, CAD/USD is up 0.15% at 0.8024.

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