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Market Update

Tsys opening weaker, US 10Y 2.204 (+1.6bps), narrow trading range on above avg volume (350K TY1) after surprise UK election result. UK election produced hung parliament with conservatives losing their majority  and Brexit uncertainty. EGBs mixed with most of the vol seen in FX, UK gilt yields lower by 2bps, bunds slightly weaker. The GBP is off 1.5% rebounding somewhat, still the largest decline since early October. GOCs lower spds 1bo wider vs tsys after huge beat in Cdn employment 54.5K vs 15k exp- 77K in full time with the unemployment  rate at 6.6% as exp.  Provis opening unch after closing unch yest.

News headlines 

Sterling Slides on U.K. Vote; Dollar, Oil Advance: Markets Wrap (Bloomberg) The pound tumbled as the U.K.’s ruling Conservative Party lost its parliamentary majority, plunging the country into uncertainty just days before Brexit negotiations were due to start. Crude advanced and the dollar strengthened.

China’s easing factory gate prices hint at broader economic slowdown (Reuters) China’s producer price inflation eased for the third straight month in May on tumbling prices of raw materials, signaling a broader cooling in economic activity as profits are squeezed by slackening domestic demand and rising financing costs.

May Digs In as U.K. Premier After Election Debacle (Bloomberg) Theresa May launched a desperate fightback to hold on to her premiership following a disastrous election that cost her party its parliamentary majority and with it the right to rule the U.K. on its own.

In China, some firms ask workers to buy shares in a bid to raise stock price (Reuters) Around two dozen mainly small listed Chinese companies have taken the unusual step of urging their employees to buy shares in a bid to prop up stock prices and help fend off collateral calls on stock-backed loans.

Hudson’s Bay Co is eliminating 2,000 positions to offset retail sector challenges (Financial Post) Hudson’s Bay Co. announced Thursday a major overhaul of its operational structure, laying off 2,000 employees as part of a plan to save $350 million per year by the end of fiscal 2018.

Enbridge Inc. expands oil and gas pipeline capacity as production surges (Financial Post) Enbridge Inc. plans to expand its main oil pipeline system and its newly acquired natural gas pipeline system in B.C. as production of both commodities continue to rise in Western Canada.

Overnight markets 

Overview: US 10yr note futures are down -0.136% at 126-09, S&P 500 futures are up 0.11% at 2433, Crude oil futures are down -0.07% at $45.61, Gold futures are down -0.56% at $1272.3, DXY is up 0.53% at 97.428, CAD/USD is down -0.39% at 0.7432.

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 NY lower, US 10Y 2.197 (+2.4bps), curve 1bp steeper before Comey testimony later this morning. Core EGBs lower – the ECB dropped a reference to further interest rate cuts as expected – press conference at 9:00ET. Bunds were already trading weaker prior to ECB, Bund-BTP spread 7bps tighter as early election seems less likely after law failed to pass in parliament, also Reuters reported that Italian banks are combining to inject E1.2bln into Venetian banks. Gilts weaker led by 10Y 1.03% (+3bps) – latest polls showed Tories actually increasing their lead ahead of today’s vote.  Crude continuing lower, down 0.50% after yesterday’s 5% plunge on DOE data which showed both gasoline and crude inventories rising. GOCs opening lower, curve slightly steeper – longs experiencing  buyer fatigue yest after 10s30s traded below 60bps and long Alberta deal.

 News headlines 

Investors Avoid Big Moves as Key Events Draw Near: Markets Wrap (Bloomberg) Financial markets were mostly steady as investors avoided adding big positions ahead of key events in Europe and the U.S. As British voters head to polls in a general election, the pound and government bonds weakened as the risks of shock outcomes weighed on sentiment.

Oil crawls off one-month lows, but supply gloom caps gains (Reuters) Oil edged up on Thursday, having hit one-month lows the previous day after an unexpected surge in U.S. inventories and the return of more Nigerian crude to an already oversupplied market. The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing output cut of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories.

ECB to keep taps open as economic outlook uncertain (Reuters) The European Central Bank is likely to keep the money taps fully open at its meeting on Thursday as inflation remains below its target despite stronger economic growth in the euro zone. The currency bloc’s economy has been on its best run for a decade but ECB President Mario Draghi is yet to be convinced that the recent rebound in inflation is durable because wage growth remains sluggish.

Euro zone growth revised up to highest rate in a year in first quarter (Reuters) The euro zone economy grew by more than previously estimated in the first quarter and at its fastest rate in a year, EU statistics agency Eurostat said on Thursday, ahead of a European Central Bank meeting likely to keep policy unchanged.

Canadian non-mortgage debt hits $21,696 as Alberta consumers struggle (TheGlobeAndMail) A new report from credit-monitoring agency TransUnion has found that Canadians are taking on consumer debt in a healthy way – except in Alberta and other oil-dependent regions.

Quebec’s strategy on electric vehicles is too expensive, Ecofiscal says (TheGlobeAndMail) Quebec’s subsidy for consumer purchases of electric vehicles is an extremely expensive way of reducing greenhouse gas emissions, with the cost calculated at $395 per tonne of carbon dioxide eliminated, Ecofiscal Commission says in a report to be released on Thursday.

Overnight markets 

Overview: US 10yr note futures are down -0.111% at 126-13, S&P 500 futures are up 0.07% at 2431.5, Crude oil futures are down -0.98% at $45.27, Gold futures are down -0.62% at $1285.2, DXY is up 0.2% at 96.943, CAD/USD is down -0.01% at 0.7404.

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 lower, yields ~1bp higher , 10Y 2.154%, on avg. volume in TY futures (240k). European stocks are higher, S&P futures up 1.25, crude off 0.64% after API data  showed a rise in gas supplies and after yesterday’s sharp rally.  DOE crude inventories due at 10:00am. EGBs also lower, peripheral yields 2-3bps higher before ECB meeting tomorrow.  In FX, the euro is off 0.43% as the ECB is preparing to cut its outlook for inflation according to a BB story, thou it is still expected to change its forward guidance  in view of the improved eco outlook. GOCs slightly lower, 10Y 1.40%, provis opening unchanged.

News headlines 

Haven Flight Ebbs as ECB Spurs Stocks, Sinks Euro: Markets Wrap (Bloomberg) Markets appeared to shrug off the risks surrounding a series of key events this week, as the threat of a more-hawkish ECB receded and boosted stocks, while a troubled Spanish bank was rescued.

Oil dips on concerns about rising U.S. output, OPEC tensions (Reuters) Oil prices dipped on Wednesday on renewed concerns about the efficacy of OPEC-led production cuts due to rising tensions within the export group over Qatar and growing U.S. output.

Global growth headed for six-year high: OECD (Reuters) The global economy is on course this year for its fastest growth in six years as a rebound in trade helps offset a weaker outlook in the United States, the OECD forecast on Wednesday. The global economy is set to grow 3.5 percent this year before nudging up to 3.6 percent in 2018, the Paris-based Organisation for Economic Cooperation and Development said, updating its forecasts in its latest Economic Outlook.

Pound Is Seen Losing the Most If U.K. Vote Delivers No Winner (Bloomberg) The pound could plunge to as low as $1.20 on Friday, a level last seen in January, should the U.K. snap election lead to a hung parliament, according to a Bloomberg poll of analysts.

After oilsands divestments, Shell Canada refocuses on gas, chemicals and renewables (Bloomberg) Shell Canada Ltd. will soon announce a project to turn vegetable products into diesel fuel in Alberta, as part of the company’s transition to produce less oil and more energy from natural gas, renewables and chemicals.

Dollarama profit climbs 13.9 per cent (TheGlobeAndMail) Canadian dollar-store operator Dollarama Inc reported a 13.9 per cent increase in quarterly profit on Wednesday as customers on average spent more at its stores. The Montreal-based company’s net income rose to $94.7-million or 82 cents per share in the first quarter ended April 30, from $83.2-million or 68 cents per share, a year earlier.

Overnight markets 

Overview: US 10yr note futures are down 0% at 126-25, S&P 500 futures are up 0.03% at 2431.5, Crude oil futures are down -1.1% at $47.66, Gold futures are down -0.25% at $1294.3, DXY is up 0.2% at 96.825, CAD/USD is down -0.01% at 0.7433.

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