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Market Update

Tsys screaming higher, yields 5-7.5bps lower with longs outperforming after big misses on both May CPI & Retail Sales, 10Y 2.14%, after narrow overnite range on low volume before FOMC this aft. European equities extending yesterday’s rally, Stoxx up 0.80%, S&P fut +1.75, crude lower after API data showed invent rose 2.8mln bbls vs 2.7 mln decline exp. Core euro bonds higher after US data, UK gilts outperforming after larger than exp decline in UK avg weekly earnings, 10Y gilt below 1.0%. GOCs  higher , curve flatter lagging the rise in tsys by ~1bp, CAD continuing higher 75.25, up another 1.0% since yest as Poloz said rate cuts ‘have largely done their work’, affirming Wilkins earlier warning on rates.Provis tighter by ~1bp with the surge in underlying GOC yields the last two days, shorter maturities 15-20bps higher in yield since Thursday. New CMB 22s 42/41.5 after reopening at 42.5 yest, well oversubscribed.

News headlines 

Tech Bounce Spurs Europe Stocks; Oil Drops on Data: Markets Wrap (Bloomberg) European equity investors were in a bullish mood as technology companies extended their bounce, leading gains across almost all sectors. The dollar steadied and Treasuries rose, neither moving with conviction as traders tread water before the U.S. interest rate decision.

UK’s May faces calls to soften Brexit as political limbo drags on (Reuters) British Prime Minister Theresa May’s Conservative party resumed talks on a deal to prop up her minority government on Wednesday as she faced a battle over her Brexit strategy just days before EU divorce talks are due to begin.

China’s economy holds up in May but slowing investment points to cooling (Reuters) China’s economy generally remained on solid footing in May, but tighter monetary policy, a cooling housing market and slowing investment reinforced views that it will gradually lose momentum in coming months. Still, with half a year left to go, Beijing is expected to handily meet its annual 6.5 percent economic growth target without too many bumps, good news for President Xi Jinping ahead of a major political leadership reshuffle later this year.

Pound hit by wage disappointment, signs of delay to coalition deal (Reuters) Sterling handed back early gains to trade lower on Wednesday after a reading of UK wages missed forecasts and a report that a deal needed to form a government could be delayed until next week. The pound had been recovering from its almost 3 percent slide since Prime Minister Theresa May unexpectedly lost her parliamentary majority in elections last Thursday.

U.K. Squeeze Tightens as Real Wages Drop Most in Almost 3 Years (Bloomberg) The squeeze on U.K. households intensified in the three months through April as weaker wage growth inflicted the biggest loss of purchasing power in almost three years. Average earnings rose 1.7 percent, the slowest annual pace since early 2015, the Office for National Statistics said on Wednesday. Taking inflation into account, they fell 0.6 percent, the largest drop since August 2014. Barclays said the situation will continue to worsen this year, while HSBC said the pressure on consumers will last longer than it previously anticipated.

Vacant skyscrapers are an ‘albatross’ that Canada’s oil capital can’t shake off too soon (Financial Post) Naheed Nenshi was first elected mayor of Calgary in 2010 when the iconic Bow tower was rising to re-top the city’s skyline, new companies were opening their doors, established ones were expanding and luxury retailers were setting up shop. Office vacancy in the city’s bustling core was so tight, “You couldn’t get space downtown for love or money,” Nenshi recalled.

Overnight markets 

Overview: US 10yr note futures are up 0.371% at 126-27, S&P 500 futures are up 0.17% at 2442.25, Crude oil futures are down -0.71% at $46.13, Gold futures are up 0.43% at $1274.1, DXY is down -0.29% at 96.692, CAD/USD is down -0.54% at 0.7593.

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

Tsys opening slightly lower after core PPI 0.3% vs 0.1% exp for May, after a low volume overnite session, US 10Y 2.22%, tsy curve 0.5bps steeper as longs lag in front of today’s 30Y auction and tomorrow’s FOMC. Equity futures +3.75, crude lower after giving up early gains -0.46% 45.87.  GOCs continuing where they left off post BOC Wilkins yest – flatter and lower, 2s another 4bps higher 0.88%, 5s +3bps longs unch as the mkt views a pre-emptive move by the BOC as constructive for inflation. The Cdn mkt was caught flat footed by Wilkins Hawkins speech, coming barely three weeks after the Bank noted that while consumer spending and housing sector are improving, inflation remains subdued and export growth still weakish. We are pushing forward our call for the first rate hike to the October meeting.

News headlines 

CANADA STOCKS-Futures up as oil gains on Saudi pledge to make cuts (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday as oil rose on Saudi Arabia’s pledge to make sizable supply cuts in July. The world’s top oil exporter plans to curb volumes of crude to some Asian buyers and deepen cuts in allocation to the United States, as part of an OPEC-led agreement to prop up oil prices in an oversupplied market.

U.K. Inflation Rate Rises More Than Forecast to Four-Year High (Bloomberg) U.K. inflation resumed its upward march last month, accelerating more than forecast to the fastest pace in four years. An increase in prices for computer games, laptops and package holidays — partly reflecting the impact of the weaker pound — lifted the inflation rate to 2.9 percent, the highest since June 2013. Economists had forecast that it would remain at 2.7 percent.

Canadian dollar leaps after odds of a rate hike in Canada this year rise above 50% (Financial Post) The Canadian dollar climbed in an otherwise quiet trading day on Tuesday, hitting its highest level in nearly two months after comments from Canada’s central bank raised the prospect that interest rates could rise as soon as this year.

Record Foreign Sales Boost Returns For Canadian Provincial Bonds (Bloomberg) Canadian provinces are selling an unprecedented amount of bonds overseas, easing pressure on the domestic market and offering investors the highest annual return since 2014.

Deutsche Bank reaches $170 million Euribor-rigging settlement (Reuters) Deutsche Bank AG (DBKGn.DE) will pay $170 million to settle an investor lawsuit claiming it conspired with other banks to manipulate the benchmark European Interbank Offered Rate and related derivatives.

Bearish Bets on Home Capital Have Dropped to 20% (Bloomberg) Short sellers are easing pressure on Home Capital Group Inc. as speculation builds that Canada’s embattled alternative mortgage lender may be closer to a takeover of the company or refinancing its costly rescue loan.

Overnight markets 

Overview: US 10yr note futures are down -0.049% at 126-09, S&P 500 futures are up 0.23% at 2432, Crude oil futures are down -0.5% at $45.85, Gold futures are down -0.45% at $1263.2, DXY is down -0.11% at 97.031, CAD/USD is down -0.68% at 0.7556.

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

Tsys slightly lower on low volume in TY futures, US 10Y 2.209, before FOMC Wednesday, key eco data (CPI, retail sales…)  and 3,10 & 30Y supply this week. Equites weaker, emini -6, gold higher, crude continuing higher from Friday, now up 1.57% on bullish outlook from Saudi Energy Min. GOCs mixed, short end lower, curve flatter as 5-10 yr yields ~0.5bps lower, GOC 10Y 1.42%. Provincial spreads closed 1bp wider last week, NB long deal @ 89.5 Friday adding to pressure on spds. CMB 5Y expected to be launched today, weve seen good expressions of interest , CMBs look cheap vs provis and have lagged the tightening.

News headlines 

Stock futures down as tech rout continues (Reuters) U.S. stock index futures were lower on Monday, with Nasdaq futures taking the biggest hit as investors locked in gains on the richly-valued technology sector. Technology stocks have been enjoying a record-setting rally, helped largely by strong quarterly earnings. The S&P 500 technology index .SPLRCT has risen 18.5 percent this year and is on track for its best yearly performance since 2014.

GE’s Immelt Steps Down Amid Trian Pressure as Flannery Named CEO (Bloomberg) Jeffrey Immelt is stepping down as chairman and chief executive of General Electric Co., ending a 16-year tenure during which he dramatically reshaped one of the world’s top manufacturers yet struggled to win the approval of Wall Street.

U.K.’s Hung Parliament Raises Business Hopes for a Softer Brexit (Bloomberg) Most business leaders are dismayed at the political chaos unleashed by the U.K. election, which left a damaged Prime Minister Theresa May trying to forge a shaky coalition government. But some are quietly hoping that it may lead to softer terms for the country’s exit from the European Union.

UK PM May’s Brexit plan has not changed, her spokesman says (Reuters) Britain’s plan for leaving the European Union has not changed, Prime Minister Theresa May’s spokesman said on Monday, despite a disastrous election gamble that has plunged British politics into chaos days before formal Brexit talks begin.

MIDEAST STOCKS-Qatari banks fall after UAE red flag; UAE’s Dana Gas, DSI rise (Reuters) June 11 Shares in Qatari banks fell on Sunday after the United Arab Emirates central bank ordered UAE banks to be wary of accounts which they hold with six Doha-based lenders, while Dana Gas and Drake & Scull outperformed in the UAE.

Encana and Centrica sell natural gas assets in deals worth $1.7 billion (Financial Post) A pair of natural gas deals worth a combined $1.7 billion were struck Friday and experts say more acquisitions and divestitures are expected in the sector as companies move to refocus their portfolios.

Overnight markets 

Overview: US 10yr note futures are down -0.074% at 126-11, S&P 500 futures are down -0.14% at 2424.75, Crude oil futures are up 1.7% at $46.61, Gold futures are down -0.14% at $1269.6, DXY is down -0.13% at 97.144, CAD/USD is down -0.22% at 0.7442.

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