Commentaires

Market Update

Tsys weaker, 10Y 2.64%,(+2.4bps), above avg volume in TY futures, reversing some of yest late aft rally. Equities firmer (S&P fut + 9.25), gold higher, crude unch 65.60 , USD weaker reversing Trump bounce on Trump. Tsys lower with bunds after Draghi sounded optimistic on EU growth , while ECB member Coeure noted inflation is picking up  with wages, while the ECB remains data dependent.  GOCs lower in line with tsys, 10Y 2.26%, longs continue to outperform on the curve 10s30s @ 8bps, the flattest relative to the US since October.  Provincial spds unch yest, longs 1bp wider as the GOC curve narrows. Dollarama in the mkt with a 3Y FRN @ 27 yest, now 25/23. 

News headlines

Trump Woos CEOs in Davos Debut While Others Consider Boycott (Bloomberg) It was a scene more reminiscent of President Donald Trump’s own Cabinet meetings than a staid forum of global elites in the Swiss Alps: Trump, at a table of top executives from Europe’s most important companies, holding court as they took turns trying to impress him.

Trump Says Dollar to Strengthen, Mnuchin ‘Taken Out of Context’ (Bloomberg) President Donald Trump declared that the dollar would continue to strengthen and that remarks made by his Treasury secretary suggesting support for a weaker U.S. currency the day before had been taken out of context.

U.K. Economy Remains a Laggard Even as GDP Beats Forecasts (Bloomberg) The 0.5 percent expansion in the fourth quarter announced on Friday was better than the 0.4 percent forecast by economists in a Bloomberg survey. For the full year, growth slowed to 1.8 percent, the weakest in five years, as consumers and companies felt the repercussions of the 2016 vote to the leave the European Union.

Trump Rallies Dollar as Stocks Wobble, Crude Falls: Markets Wrap (Bloomberg) President Donald Trump waded into the unusual public debate over currency valuations, roiling markets after he said that he favored a strong greenback just a day after his Treasury secretary endorsed a weak dollar.

Oil Set for Weekly Gain as Crude Stockpiles and Dollar Decline (Bloomberg) Futures have climbed 3.8 percent in New York this week after reaching the highest since December 2014 on Thursday. Crude stockpiles fell for a 10th week to the lowest level since February 2015, according to Energy Information Administration data Wednesday. The weaker dollar has made oil more attractive to investors.

Bombardier expected to lose U.S. trade dispute: Canadian government source (Reuters) Planemaker Bombardier Inc is expected to lose a hotly contested U.S. trade dispute this week, a Canadian government source told Reuters on Thursday, likely inflaming tensions between the two countries during talks to modernize NAFTA.

World stocks set for 10th straight week of gains, euro jumps (Reuters) World stocks were set for their 10th straight week of gains on Friday, while the euro jumped more than half a percent as comments by U.S. officials this week advocating their support for a weak dollar reverberated through currency markets.

Dividend increases predicted as energy companies prepare 4th-quarter reports amid oil price rebound (CBC) A rally in oil prices that started late last year and shows no signs of stopping in 2018 is expected to pave the way for bigger payouts for long-suffering Canadian energy investors as fourth-quarter reporting season gets underway in the next month.

Overnight markets

Overview: US 10yr note futures are down -0.166% at 122-08, S&P 500 futures are up 0.33% at 2850.75, Crude oil futures are up 0.05% at $65.54, Gold futures are down -0.91% at $1355.6, DXY is down -0.37% at 89.057, CAD/USD is down -0.52% at 0.8123.

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, 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