Comments

Market Update

US tsys slightly lower, 10Y 2.158% on low volume in TY futures (200k), narrow 4 tick range.  Core EGBs mixed – Bund curve flatter, 5Y +2bps, demand for flatteners , much higher than ag volume in the current 5Y ‘Bobl’ contract, the 5s30s curve 5bps flatter to lowest levels this yr. GOCs lower, curve 2bps flatter after strong April retail sales part the core (1.5% vs 0.7%)curve flatter led by 10s, 5s30s curve 86bps new lows, 10Y roll unch 8.7/8.5 – unch from auction lvls yest.. Provis trading up to start, Ont 27s @74, Ont 48s @ 83.5. Quebec/Ontario 48 -0.6/-1.0 from -0.5 yest – Quebec’s latest fiscal projection shows 2016-17 budget surplus @ 2.5bln vs 250mln forecast in March.

News headlines 

Weakness Persists in Europe Stocks; Gold, Yen Rise: Markets Wrap (Bloomberg) Stocks across Europe were headed for a third day of losses as yet another slump in oil prices on Wednesday fed into markets. Amid a risk-off mood havens were in demand, and the yen gained with precious metals.

Oil prices slip as physical excess overpowers OPEC (Reuters) Oil slid back toward multi-month lows on Thursday, after a brief recovery early in the session, as traders warily eyed a glut of physical supply that has persisted despite OPEC-led efforts to balance the market.

Warren Buffet’s company buys into troubled Home Capital Group (Financial Post) Home Capital Group Inc. (TSX:HCG) says American investment firm Berkshire Hathaway Inc. has agreed to indirectly acquire $400 million of its common shares in a private placement and provide a new $2 billion line of credit to its subsidiary, Home Trust Company.

UK factories have best month for orders since 1988: CBI (Reuters) British factory orders have hit their highest level in nearly 30 years, according to a monthly Confederation of British Industry survey which is likely to encourage Bank of England policymakers who favor an interest rate hike.

Quebec Sees 2016-17 Surplus Swelling Tenfold to C$2.5 Billion (Bloomberg) Quebec’s second straight budget surplus will likely be a whopper. Canada’s second most populous province posted a surplus of C$2.49 billion ($1.87 billion) for the fiscal year ended March 31, according to preliminary data released Thursday by the government. That’s 10 times as large as the C$250 million surplus forecast by Finance Minister Carlos Leitao in his March 28 budget. Final figures will be announced “in the fall,” Leitao told reporters Wednesday.

Yellen’s Future at Fed Resisted by Trump Aides Wanting New Blood (Bloomberg) Federal Reserve Chair Janet Yellen’s candidacy for another term is encountering resistance from some Trump administration advisers who want a new leader at the U.S. central bank, according to two administration officials, even as the Treasury secretary indicated she may still be in the running.

Closed-Door Talks Have Bank of Canada Concerned About Trust (Bloomberg) The Bank of Canada’s top policy makers spoke almost twice as often behind closed doors as they did in public over a three year span, according to an internal review that also said private speeches could undermine public trust.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 126-23, S&P 500 futures are down -0.07% at 2431.75, Crude oil futures are up 0.75% at $42.85, Gold futures are up 0.58% at $1253, DXY is down -0.04% at 97.522, CAD/USD is down -0.53% at 0.754.

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

Market Update

US tsys lower, 10Y 2.167% (+1bp), on moderate volume in TY futures (250k).  Tsys pressured lower in Europe as gilts tumbled on hawkish comments from BOE Haldane said rates may have to move higher in the second half of the yr. Bunds mixed, longer maturities outperforming after solid 30Y auction. The BOC is scheduled to auction $3bln in reopened June 27s, the second 10Y auction this qtr. The 10Y roll (27/26) is opening unch 8.6/8.5 – having flattened ~3bps since month end consistent with the broader flattening in the broader 5s10s curve after the BOC’s hawkish tone. 10s have retraced ~4 bps of their 17bp move higher since the lows as long term US tsy yields have been pressured lower. AIMCO Realty has launched its 7Y this morning @ 100bps +/-3bps.

News headlines 

Oil Slide Weighs on Stocks; Haven Assets Advance: Markets Wrap (Bloomberg) Global stocks retreated and the yen strengthened after oil tumbled into a bear market on concern a supply glut will persist. Havens including bonds, the yen and gold gained.

Britain’s May promises to listen on Brexit as queen presents government program (Reuters) British Prime Minister Theresa May promised on Wednesday to listen more to businesses’ concerns about Brexit as Queen Elizabeth formally opened parliament by announcing the government’s program for the next two years.

China shares get MSCI nod in landmark moment for Beijing (Reuters) China’s stocks took a major step toward global acceptance on Wednesday, finally winning a long campaign for inclusion in a leading emerging markets benchmark, in what was seen as a milestone for global investing.

BOJ’s Kuroda: need to stick with easing, watch price trend (Reuters) Bank of Japan Governor Haruhiko Kuroda said maintaining the current easy monetary conditions is appropriate because prices are lagging improvements in the economy and remain distant from the central bank’s inflation target.

Sears Canada Is Said to Prepare to Seek Creditor Protection (Bloomberg) Sears Canada Inc., the struggling offshoot of Sears Holdings Corp., is preparing to seek court protection from creditors in the coming weeks, according to people familiar with the matter.

Saudi King’s Surprise Shakeup Clears Son’s Path to the Throne (Bloomberg) The abrupt shake-up that made Saudi Prince Mohammed bin Salman heir to his father’s throne gives the 31-year-old extraordinary powers to push through his vision to wean the economy off oil and exert his influence in regional conflicts.

Overnight markets 

Overview: US 10yr note futures are down -0.136% at 126-19, S&P 500 futures are down 0% at 2437.5, Crude oil futures are up 0.41% at $43.69, Gold futures are up 0.05% at $1244.1, DXY is down -0.16% at 97.606, CAD/USD is up 0.17% at 0.7524.

US Economic Data 

Canadian Economic Data 

There is no major economic news 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 trading higher, yields 0.5bps – 2bps lower led by the long end in a bull flattening move with the 10Y 2.177 (-1.1bps), US 10/30 curve new lows 59bps, 6bps since last week’s FOMC. S&P futures -2.75, crude off 2.6% below $44 before DOE inventory data at 10:00am. Tsys buoyed by rally in core EGBs, UK gilt yields 3-4bps lower after BOE Carney warned of risks from Brexit, the GBP off1.0% since yest back to levels post the April 18th election call. GOCs higher, outperforming tsys out to 10yrs, 2bps wider in longs, CAD at the lows 1.3266 consolidation lows. Provis ended yest 0.5bps tighter led by longs, the Ontario 48/27 curve flattening 0.2bps ,now 9.3/8.8 new narrows. Alberta underperforming with crude, Alta/Ont 46 12/11 +1bp since last week.

News headlines 

Pound Slides on Brexit Worry; No Respite for Crude: Markets Wrap (Bloomberg) The pound sank and gilt yields fell as Britain’s central bank governor underlined his dovish stance in the face of Brexit. Oil dropped again on supply concerns and the dollar was steady as this week’s stream of Fed speakers continued.

Oil prices hit seven-month lows on global oversupply (Reuters) Oil prices fell to seven-month lows on Tuesday after news of increases in supply by several key producers, a trend which has undermined attempts by OPEC and other producers to support the market through reduced output.

Carney Ends Silence With Brexit Warning to Rebuff Rate-Hike Call (Bloomberg) Mark Carney ended more than a month of silence with a major speech that pushed back against rate hawks in the Bank of England and re-emphasized his concerns about the impact of Brexit on the economy.

Consumption, euro zone recovery lift German growth: Ifo (Reuters) Vibrant domestic demand and strong export growth fueled by a recovery in the euro zone will boost growth in Germany this year and next, the Ifo economic institute said on Tuesday, raising its 2017 growth forecast for Europe’s largest economy.

Poloz Weighs the Sudden Urgency of a July Rate Hike in Canada (Bloomberg) There is nothing in the Bank of Canada’s market-moving statements last week to indicate an interest rate hike is imminent, but investors aren’t taking chances. The central bank’s next decision on July 12 is now a toss up, with traders assigning a 50 percent chance of an increase.

Japan government-led group tells Toshiba to fix chip spat with Western Digital: sources (Reuters) A Japanese government-led consortium has told Toshiba Corp it needs to resolve its legal dispute with Western Digital Corp before it will invest in the firm’s chip unit, sources briefed on the matter said.

Bombardier agrees to sell up to 50 Q400s to India’s SpiceJet (Reuters) Canadian airplane maker Bombardier Inc (BBDb.TO) said on Tuesday it agreed to sell up to 50 Q400 turboprop aircraft to Indian budget carrier SpiceJet Ltd (SPJT.BO). SpiceJet will buy 25 Q400 turboprop aircraft from Bombardier, as per a letter of intent between the two companies. The Indian airline has the option to buy 25 more planes.

Overnight markets 

Overview: US 10yr note futures are up 0.025% at 126-16, S&P 500 futures are down -0.09% at 2445.25, Crude oil futures are down -2.58% at $43.06, Gold futures are up 0.05% at $1247.3, DXY is up 0.04% at 97.586, CAD/USD is up 0.36% at 0.7538.

US Economic Data 

Canadian Economic Data 

There is no major economic news 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