Commentaires

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

Market Update

Tsys trading mixed, short end yields slightly higher, 10Y 1bp lower @ 2.65%, longs outperforming with the 30Y -2bps @ 2.916%. Above avg volume in TY futures (>400k). US shutdown likely to delay release of key retail sales, GDP data.  US equity futures back to unch, recovering earlier losses. Core EGBs lower, 10Y gilt +3bps @ 1.37% highest since Oct, bunds lower despite positive news on German govt coalition over the weekend.  GOCs opening unch, yields slightly lower in longs. GOC 5s30s steepening 2bps Friday after reaching new narrows in wake of BOC hike, similar move in US tsy curve.  OIS mkts are pricing in at least two more 25bp rate hikes by year end which would put the o/n rate at 1.75%. NAFTA  talks start this Tuesday in Montreal. Provi spds ~2bps wider last week with resumption of supply, despite 5-7 bp rise in underlying GOC yields.  

News headlines

Shutdown Extends Into Third Day as Senate Fails to End Impasse (Bloomberg) Lawmakers failed to negotiate an end to the government shutdown Sunday despite a bipartisan effort to broker a deal, raising the political stakes as federal agencies begin closing at the start of their normal workweek.

OPEC, Russia Signal Global Oil Alliance May Endure Past 2018 (Bloomberg) OPEC and Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signaled their readiness to cooperate beyond that.

Merkel Closes in on Fourth Term With Her Familiar Coalition Ally (Bloomberg) Chancellor Angela Merkel moved forward in her bid to form a fourth-term government after her prospective coalition partner agreed to shelve its misgivings and enter negotiations on a common policy platform for Germany.

Dollar Slips as Shutdown Drags On; Stocks Mixed: Markets Wrap (Bloomberg) The dollar declined and Treasuries halted a recent selloff as investors assessed the impact of the U.S. government’s partial shutdown. European and Asian equities were mixed.

The Global Economy Is Doing Just Fine, But the Davos Elite Is Worried (Bloomberg) If things seem too good to be true in the global economy, they probably are. That’s according to some of the investors, Nobel laureates and academics attending the World Economic Forum’s annual meeting in Davos, Switzerland, which kicks off on Monday.

Sobeys CEO vows to provide best home delivery ‘on the planet’ with Ocado partnership (BNN) Sobeys is vowing to step up its game online, announcing a deal on Monday that its CEO says will give it the best delivery service « on the planet ». The Canadian supermarket operator is teaming up with Hatfield, U.K.-based Ocado to launch a new digital shopping platform. Under the agreement, Ocado will work exclusively with Sobeys on its web site, a new automated warehouse, and delivery management.

Canada PM to boost support for NAFTA in U.S. as talks intensify (Reuters) Canadian Prime Minister Justin Trudeau will visit three major U.S. cities next month to bolster support for NAFTA as negotiators revising the trade pact tackle major differences, officials said on Friday.

Halliburton posts wider fourth-quarter loss on tax provision (Reuters) Halliburton Co (HAL.N) reported a wider loss in the fourth quarter, as it set aside $1.05 billion for income tax payments related to recently-passed changes in U.S. corporate taxation.

Overnight markets

Overview: US 10yr note futures are down -0.102% at 122-05, S&P 500 futures are down -0.05% at 2809.5, Crude oil futures are down -0.09% at $63.31, Gold futures are down -0.15% at $1331.1, DXY is down -0.02% at 90.557, CAD/USD is down -0.15% at 0.8016. 

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 slightly weaker led by the 10Y rising above 2.63% for the first time since March 14th, curve steeper for a second day after 5bps selloff in longs yesterday.  Fear of a govt shutdown weighing on stocks, giving a boost to tsys which are off the o/n lows. Core Euro bonds lower in line with tsys, 10Y bund 0.58%, closing in on the 0.60% level from last July. In Canada, despite BOC ‘dovish hike’, yields pressured higher led by the 10Y sector . The 5Y auction yest (March 2023 reopening) saw better than avg b/c with a 0.2bp tail. Longs continue to be bid on the curve, even as the tsy curve steepened 10s30s, the 10s30s Can/US box at a two month low. provis ended 1-2bps wider despie a well received 10Y Quebec issue @ 54 , now 56/55, QC/Ont 10Y unch -3.2bps.  Primary mkt busy yest with H&R reit 5Y,  Toyota 5Y & 2.5Y FRN , as well as Lloyds 7Y Maple @ 135 which broke 3bps tighter. 

News headlines

U.S. House Passes Spending Bill to Avoid Government Shutdown, Senate in Doubt ( Bloomberg) The House passed a spending bill Thursday to avoid a U.S. government shutdown, but Senate Democrats say they have the votes to block the measure in a bid to force Republicans and President Donald Trump to include protection for young immigrants.

IEA Sees ‘Explosive’ Growth in U.S. Oil Output as Prices Rally (Bloomberg) OPEC’s fear that another surge of shale oil could neutralize its production cuts might be coming true. U.S. oil output is set for “explosive” growth this year as prices rally, the International Energy Agency said on Friday. That was just one of a chorus of voices from Goldman Sachs group Inc. to OPEC itself warning of a looming output surge reminiscent of the “heady days” of the first shale boom.

Morneau Was Reassured About Higher Canadian Rates Last Summer (Bloomberg) Canadian government officials reassured Finance Minister Bill Morneau last summer to not worry too much about coming hikes in interest rates, claiming they would be easily absorbed by the nation’s growing economy. In an analysis delivered to Morneau in August on the impact of higher rates, the finance department said the extent of likely increases — based on economist expectations at the time — would be gradual and take place within a backdrop of a growing economy.

White House Considers Fed Insider Williams for Vice Chair (Bloomberg) Long-time Federal Reserve insider John Williams has been interviewed by the White House for the post of vice chairman of the U.S. central bank, according to a person familiar with the discussions, though he was not viewed as being on the short-list for the job. Williams, 55, is currently president of the Fed’s regional bank in San Francisco, where he took the reins in 2011 from Janet Yellen, who went on to become Fed Chair. He began his Fed career in 1994 in Washington and has also lectured at Stanford University. Williams served as a senior economist in President Bill Clinton’s Council of Economic Advisers.

U.K. Retailers See Black Friday Hangover as Sales Slump (Bloomberg) U.K. retail sales fell the most in 18 months in December as a post-Black Friday lull rounded off a rough year for British shops. It’s further evidence that inflation and shaky consumer confidence are hitting British stores, many of whom remain cautious about the outlook for the coming year. Fourth quarter sales gained just 0.4 percent, half the pace seen in the previous three months.

Bond Markets’ Last Line of Resistance Faces Digital Encroachment (Bloomberg) Digital disruption, which has changed the face of trading equities, currencies and some government debt, is arriving at one of the last bastions of resistance: the syndicate desk, where corporate bonds are priced and distributed. Selling new issues is a linchpin of investment banks’ profitability. Bond arranging generated about $14 billion for the eight largest banks in the first three quarters of 2017, more than double the haul from equity underwriting, according to data compiled by Bloomberg Intelligence.

U.S. said to be losing patience over NAFTA talks (BNN) The U.S. is running out of patience with Canadian and Mexican resistance to key American proposals ahead of talks next week on a new North American Free Trade Agreement, two people familiar with the matter said. The U.S. is serious about its threat to withdraw from the North American Free Trade Agreement if there’s no breakthrough on proposals the Trump administration has made that are intended to rebalance trade, said one of the people, who spoke on condition of anonymity because the negotiations aren’t public. The Trump administration wants to see serious counteroffers to U.S. demands like tightening content requirements for cars.

Overnight markets

Overview: US 10yr note futures are down 0% at 122-15, S&P 500 futures are up 0.1% at 2799, Crude oil futures are down -1.34% at $63.09, Gold futures are up 0.59% at $1335, DXY is down -0.05% at 90.452, CAD/USD is up 0.19% at 0.8039.

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