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Market Update

US tsys paring earlier  losses following comments from ECB that Draghi’s comments yesterday were misinterpreted, tys yields now ~1.5bps lower in the short end, slightly higher out the curve, 10Y 2.21 (+0.7bps), heavy volume in TY1 futures (600k). Overnite tsy prices once again relatively flat in Asia then pressured lower in EGBs in continuation of yest post Draghi selloff. 10Y bund yield hit 0.40% before reversing lower, now 0.35% (-2.2bps).  Gilts lower, extending the bear steepening move from yest was close to 1.15% -highest since May 16th  before ECB clarification. GOCs are lower, underperforming tsys as the curve bear flattens as BOC Poloz reiterated that rate cuts ‘have done their job’ in interview on CNBC, the CAD above 0.76 for first time since Feb. Provis tightened 1bp yest , Ontario issued 10Y @ 73 yest ,now 72/71, Ontario credit curve flatter out to 10Y on higher all in yields. In corps, financials under pressure on issuance, BNS 7Y dep note @90.4 – 4-5bps conc., now 89/87.

News headlines 

Euro Extends Gain, Bonds Drop; Europe Stocks Slump: Markets Wrap (Bloomberg) The euro touched a one-year high and government bond yields climbed as investors digested a series of hawkish messages from central banks. European stocks sank as the global selloff in technology companies spread.

Japan, EU press ahead on free trade pact to counter U.S. protectionism (Reuters) Japanese and European Union negotiators meeting in Tokyo aim to reach a free trade deal that would stand against a protectionist tide threatening the global economy, and make the United States think twice over pursuing inward-looking policies.

Oil Snaps Longest Gain in a Month on Signs U.S. Supplies Rose (Bloomberg) Oil fell, snapping the longest run of gains in a month, as U.S. industry data showed crude stockpiles rose. Futures lost as much as 1.3 percent in New York after climbing 4 percent the previous four sessions. U.S. stockpiles expanded by 851,000 barrels last week, the American Petroleum Institute was said to report on Tuesday. That runs counter to expectations for government inventory data due to be published Wednesday, which is forecast to show inventories extended declines.

Cyber attack hits property arm of French bank BNP Paribas (Reuters) A global cyber attack has hit the property arm of France’s biggest bank BNP Paribas (BNPP.PA), one of the largest financial institutions known to be affected by an extortion campaign that started in Russia and Ukraine before spreading.

Fed’s Yellen expects no new financial crisis in ‘our lifetimes’ (Reuters) U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash.

Five questions still facing Home Capital ahead of its annual general meeting (Financial Post) Executives at Home Capital Group Inc. will face the company’s shareholders Thursday for the first time since a crisis of confidence pushed the alternative mortgage lender to the brink of collapse last month.

Overnight markets 

Overview: US 10yr note futures are down -0.062% at 126-07, S&P 500 futures are up 0.28% at 2427.25, Crude oil futures are down -0.36% at $44.08, Gold futures are up 0.36% at $1251.4, DXY is up 0.06% at 96.452, CAD/USD is down -0.69% at 0.763.

US Economic Data 

Canadian Economic Data 

There is no major economic data release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys lower, under pressure from lower EGBs in reaction to hawkish Draghi comments, US 10Y 2.163 (+2.6bps). Core EGBs sharply lower after Draghi said the global recovery was firming and inflation is being boosted by temporary factors, deflationary forced are being replaced by reflationary ones. 10Y bund yields at a one month high 0.31% (+7bps), 10Y gilt 1.06% (+5.2bps).  European stocks off 0.60%, thou Euro banks are pushing higher on Draghi. The US auctions $34bln in 5Y notes after a solid 2Y yest – highest b/c since Nov 2015, @ 0.5bps thru. GOCs lower, underperforming tsys in the backup by ~1bp, curve 1bp steeper led by 10s, 10Y 1.508%. Provis opening unch, the Ont 28/27 box steeper by 1bp since last week 10.5/10.2, the underlying 10s30s GOC curve continues to narrow, trading up @ 48.3 this morn. New HSBC 5Y dep note 94/92 (priced at 101.9 yest).

News headlines 

Stocks Drop, Commodities Rise; Draghi Spurs Euro: Markets Wrap (Bloomberg) A mood of caution was evident in equity markets Tuesday, with European stocks falling in a broad-based retreat. The euro jumped as bonds and dollar fell after Mario Draghi said headwinds to inflation in the region are temporary.

Euro surges on Draghi comments, dollar slips (Reuters) The euro surged to its highest in over a week against the dollar on Tuesday after European Central Bank President Mario Draghi said factors weighing on inflation in the euro zone were mainly temporary and the Bank could look through them.

Yuan Surges in Afternoon Trade Amid Talk PBOC Supported Currency (Bloomberg) China’s yuan surged both onshore and overseas amid speculation of central bank intervention and a decline in the dollar. The offshore currency jumped as much as 0.7 percent in a sudden afternoon spike, after spending much of the day little changed. The yuan traded in Shanghai’s onshore market climbed 0.5 percent to 6.8100.

U.S. slaps more duties on Canadian lumber shipments (Financial Post) The Canada-U.S. softwood lumber trade dispute intensified Monday after the U.S. Department of Commerce boosted the levy it imposes on Canadian lumber shipments to 26.75 per cent from 19.88 per cent.

Tim Hortons’ U.S. franchisees form alliance as tensions boil (Financial Post) Tim Hortons’ U.S. franchisees are banding together to lobby for corporate-level changes at the coffee chain, which is owned by Restaurant Brands International Inc., the fast-food giant that also runs Burger King.

Google Gets Record $2.7 Billion EU Fine for Skewing Searches (Bloomberg) Google lost its biggest regulatory battle yet, getting a record 2.4 billion-euro ($2.7 billion) fine from European Union enforcers who say the search-engine giant skewed results to thwart smaller shopping search services.

Overnight markets 

Overview: US 10yr note futures are down -0.296% at 126-13, S&P 500 futures are down -0.08% at 2434, Crude oil futures are up 1.31% at $43.95, Gold futures are up 0.27% at $1249.8, DXY is down -0.6% at 96.841, CAD/USD is down -0.24% at 0.7568.

US Economic Data 

Canadian Economic Data 

There is no major economic data release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys opening slightly weaker out the curve on light volume, 10Y 2.16%, pressured lower with EGBs. UK gilts lower, curve 3bps flatter on hawkish comments from BOE Forbes hat there shouldn’t be delay in raising rates, 2Y gilt 3bps higher @ 0.24% highest since last Nov. Short sterling heavy selling volume in whites/reds (proxy for 2Y). GOCs higher, steeper after CPI came in below exp 0.1%/1.5% vs 0.2%/1.5% exp – CGBs spiked higher but have since retraced most of the move, while the short end is well bid, CAD reeling on the news 1.33 vs 1.3233 cls.

News headlines 

European Shares Struggle; Oil Holds Weekly Loss: Markets Wrap (Bloomberg) European equities slipped, extending the longest run of weekly losses in a year as U.K.-listed stocks struggled on the anniversary of Britain’s vote to leave the European Union. Oil was poised for a fifth week of decline as a supply glut shows no sign of ending.

Oil slide muddies inflation outlook, weighs on stocks (Reuters) World stocks struggled to hold onto earlier gains on Friday and were poised for a flat end to the week following another wobble in energy shares, while a tentative bounce in oil prices helped commodity-related currencies gain against the dollar.

Forget euro zone breakup, sterling now deemed riskier (Reuters) For years the options market that companies and investors use to hedge against big swings in currencies viewed the euro as a bigger political and structural risk than Britain’s pound. In the political and market turmoil immediately before and following Britain’s decision last June to leave the European Union, financial market investors flipped their long-held bias against the euro and now expect sterling to be the riskier party for years to come.

Britain’s finance industry warns of threat from Brexit law changes (Reuters) Britain’s finance industry will warn the government next week to limit ministers’ powers to change legislation when it begins the mammoth task of converting European Union laws into domestic legislation in preparation for its exit from the bloc, according to a draft report seen by Reuters.

Buffett’s Home Capital Bet Backs Turbulent Canada Housing Market (Bloomberg) Warren Buffett’s deal to back Home Capital Group Inc. does more than support a struggling mortgage lender — it’s a vote of confidence for a housing market that everyone from investors to global ratings companies say is a bubble ready to burst.

Canada Ponders an Unusual Drug Problem: a Shortage of Marijuana (Bloomberg) The biggest challenge for Justin Trudeau’s forthcoming legal recreational marijuana market is a shortage of pot, the finance minister of Canada’s most-populous province says.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 126-23, S&P 500 futures are up 0.06% at 2433.25, Crude oil futures are up 0.35% at $42.89, Gold futures are up 0.72% at $1258.4, DXY is down -0.23% at 97.365, CAD/USD is up 0.45% at 0.7522.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230