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Market Update

Tsys weaker, prices moving lower after stronger ADP (253k vs 180k exp) yields 2bps higher across the curve, 10Y 2.218% . Core Euro bonds lower, gilt yields 2bps higher in 10s  2s unch. Once again gilt underperformance attributed to latest polls showing dwindling lead for conservatives, this time from YouGov. GOCs lower in line with tsys, provis 0.5bps tighter after closing unch yest.

News headlines 

Stocks in Upbeat Mood as Oil Rises, Havens Slip: Markets Wrap (Bloomberg) European stocks were poised to snap a five-day losing streak amid a broad-based rally. The pound declined as better-than-expected manufacturing data failed to offset political risk before the impending election, and crude bounced.

China’s Caixin PMI Dips Below 50 for First Time in 11 Months (Bloomberg) A private gauge of Chinese manufacturing fell back into contractionary territory in May, adding to recent evidence that the economy’s strong start to 2017 is leveling off. Caixin Media and Markit Economics manufacturing purchasing managers’ index fell to 49.6 from 50.3 in April, the lowest reading since June 2016 and below the 50.1 median estimate

Oil Trades Near Two-Week Low Before U.S. Crude Inventory Data (Bloomberg) Oil traded near the lowest level in two weeks as traders waited to see if U.S. government data would confirm industry reports of another drop in crude stockpiles. Futures were little changed in New York, paring an earlier advance of as much as 1.6 percent. U.S. inventories fell by 8.67 million barrels last week, the American Petroleum Institute was said to report. Government data Thursday is forecast to show a slide of 3 million barrels, the eighth straight drop. Output from Libya, exempt from OPEC’s deal to reduce supply, rose to the highest since October 2014 as production from its biggest field increased.

Reuters poll: Conservative win would give UK strongest hand in Brexit talks – analysts (Reuters) A Conservative victory in June 8’s election would give Britain the strongest hand in EU divorce talks and lift sterling, economists polled by Reuters said, although nearly as many felt a coalition government would secure the best Brexit deal. Britons voted nearly a year ago to leave the European Union and Prime Minister Theresa May triggered Article 50 in March, starting a two-year countdown. After earlier saying she would not do so, May then called a snap national election to try to cement her position.

IMF warns of ‘significant’ risks from Canada’s housing market (TheGlobeAndMail) The International Monetary Fund is urging Canada to take further action in order to address rising household debt levels and the risks of a sharp correction in the housing market.

Trump to announce decision on global climate deal on Thursday (Reuters) President Donald Trump said he would announce on Thursday his decision whether to keep the United States in a global pact to fight climate change, as a source close to the matter said he was preparing to pull out of the Paris accord.

Overnight markets 

Overview: US 10yr note futures are down -0.186% at 126-02, S&P 500 futures are up 0.13% at 2414.25, Crude oil futures are up 0.21% at $48.42, Gold futures are down -0.74% at $1266, DXY is up 0.32% at 97.23, CAD/USD is down 0% at 0.7407.

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 higher out the curve, short end outperforming, 10Y 2.222 (+1.4%). Narrow range overnite on low volume in TY futures.  Core Euro bonds lower, 10Y bund 0.295% despite weaker core eurozone inflation fell (0.9% in May from 1.2%) & decline in German retail sales (-0.2% in April vs +0.3% exp), Euro stocks are higher for 2nd day, crude off 2% before inventory data this morn. GOCs lower after Q1 GDP rose 3.7% vs 4.2%, 0.5% m/m in March vs 0.2% exp.RRB auction today at noon – $700mln new 0.50% Dec 1 2050s with the WI roll 2.5/1.8, implied yield ~0.47%. Breakevens have declined ~12bps since the last RRB auction on Feb 8th which came at 0.578% and a sub avg b/c of 2.244x.  Provis opening unch after yest 1-1.5bps widening on supply – York issuing $$150mln 10Y @ 93.5 (Ont + 17) and Alberta $700mln new Dec 48s @ 98 (11 over ont).

News headlines 

Election Jitters Hit Pound; Oil Drops Before Data: Markets Wrap (Bloomberg) The British pound was the stand-out amid muted moves in many markets, weakening on the prospect of a hung parliament in next week’s U.K. election and handing a boost to stocks. Crude fell a second day before the release of supply data.

Oil at three-week low as rising output risks OPEC-led deal (Reuters) Oil fell to a three-week low on Wednesday on news that Libyan output was recovering from a technical issue at an oilfield, fuelling concerns that OPEC-led output cuts on reducing global inventories were being undermined by producers outside the deal.

Euro-Area Inflation Slows More Than Forecast Before ECB Meeting (Bloomberg) Euro-area inflation slowed more than economists forecast, giving ammunition for European Central Bank policy makers who say it’s too early to commit to an exit from monetary stimulus.

British PM May could lose majority in June 8 election: YouGov projection (Reuters) Prime Minister Theresa May could lose control of parliament in Britain’s June 8 election, according to a projection by polling company YouGov, raising the prospect of political deadlock just as formal Brexit talks begin.

National Bank hikes dividend as quarterly profit rebounds (TheGlobeAndMail) Profit at National Bank of Canada rebounded strongly in the second quarter of 2017 after the company took a big hit in the same period last year. Canada’s sixth biggest bank by assets posted net income of $484-million for the quarter that ended on April 30, compared to $210-million a year earlier.

Why this bond fund manager is girding for inflation in the U.S., but not in Canada (FinancialPost) The U.S. economy may be in a cyclical upturn that leads to higher inflation and rising interest rates, but its real long-term growth prospects appear stuck at about two per cent. In a world where interest rates generally track real growth, that’s making it difficult for fixed-income managers to find attractive total returns in the bond market.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 126-05, S&P 500 futures are up 0.21% at 2415.75, Crude oil futures are down -2.24% at $48.55, Gold futures are up 0.25% at $1268.9, DXY is down -0.12% at 97.163, CAD/USD is down -0.11% at 0.7438.

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 unch, giving up earlier gains on upward revision in March Person spending, PCE deflator, US10Y 2.243%. Heavy volume in TY futures o/n, mostly finishing off the Jun-Sep roll. USD weaker vs yen but higher vs euro. Core Euro bonds lower, UK gilt curve steeper, German bund yields 1-2bps higher.  The latest poll showed continued tightening in the upcoming UK election. ECB Draghi said there’s little urgency to unwind the ECB balance sheet, and extraordinary accommodation is still necessary. GOCs relatively quiet yest, thou with definite bid tone as bunds rallied on Draghi. GOCs lower after Cdn IPPI, raw material data came in stronger for Apri. Provis starting unch, BC/Ont wider after agreement between Greens and NDP.

News headlines 

Europe Risks Weigh on Stocks; Crude, Gold Retreat: Markets Wrap (Bloomberg) European stocks fell and the euro struggled against the dollar as investors were reminded of a few of the challenges still faced by the world’s biggest single market. Oil joined a wider selloff in commodities.

Oil slips on oversupply worries despite OPEC deal (Reuters) Oil prices fell on Tuesday, pressured by concerns that production cuts by the world’s big exporters may not be enough to drain a global glut that has depressed the market for almost three years. Benchmark Brent crude LCOc1 was down 45 cents a barrel at $51.84 by 1000 GMT (6 a.m. ET), having gained 14 cents on Monday. U.S. light crude CLc1 was 25 cents lower at $49.55.

Canada-EU Trade Deal Is a Model in Automation Era, Trudeau Says (Bloomberg) The Canada-EU trade agreement is “a blueprint for future ambitious trade deals’’ in an age of automation where job security is threatened, Prime Minister Justin Trudeau says. Trudeau, in a speech to lawmakers and business figures in Rome, lauded the pact as a model in an era of protectionism. The speech comes as Trudeau faces a lengthy trade battle with Donald Trump over lumber, airplanes, steel, aluminum and the North American Free Trade Agreement.

Euro-Area Confidence Unexpectedly Slips From Decade High (Bloomberg) Euro-area economic confidence fell for the first time this year and consumers’ outlook for inflation weakened, pointing to subdued price pressures. The European Commission’s index of executive and consumer sentiment fell to 109.2 in May from a revised 109.7 in April. While that fell short of economists’ expectations, the gauge remains close to the highest level in a decade. Another measure showed 12-month price expectations declined for a second month.

French consumer confidence rises to approach 10-year high in May (Reuters) French consumer confidence rose slightly more than expected in May to reach a near 10-year high, data released on Tuesday from the official INSEE statistics agency showed. INSEE said that its monthly consumer confidence index rose to 102 from 100 in May, hitting the highest level since August 2007 and surpassing economists’ average forecast for a reading of 101. FRCONC=ECI

French first-quarter growth revised up to 0.4 percent (Reuters) The French economy grew 0.4 percent in the first quarter from the previous three months, the INSEE national statistics agency said on Tuesday, revising the figure up from a preliminary estimate of 0.3 percent.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 126-09, S&P 500 futures are down -0.17% at 2409.75, Crude oil futures are down -0.76% at $49.42, Gold futures are down -0.68% at $1262.7, DXY is up 0.06% at 97.502, CAD/USD is up 0.24% at 0.7415.

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