Commentaires

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

Market Update

Core Euro bonds unch, volume in German bund futures way below avg with the US on holiday. Italian debt under pressure, curve ~5bps steeper 10Y yield 10bps higher @ 2.18% after former PM Renzi said Italy could stage early elections, also tomorrow brings both 5 & 10Y supply. The GBP  reversed one third of Friday’s 1.0% plunge after polls showed tighter race, with May’s conservatives barely 5pts ahead of labor.  SF Pres Williams , in a BB interview, said three hikes this year while the balance sheet unwind could begin later this yr. The latest CFTC COT report showed specs adding to longs/reducing shorts across the curve. In 10s specs are the longest since Dec 2007 @ 362k after adding 123k exposure. GOCs unch , Q1 GDP on Wed, consensus is for a 4.2% rise after Q4 2.6% – OIS mkts have increased odds of a rate hike before year end after the BOC acknowledged stronger growth yet the Bank would like to see a shift away from housing towards consumption & bus investment.

News headlines 

Stocks Meander, Pound Rises in Holiday-Hit Trading: Markets Wrap (Bloomberg) Global stocks were mixed and the dollar edged lower as the latest comments from a Fed official offered little to excite traders amid thin trading. The British pound advanced after a selloff.

Oil slips as more U.S. drilling outweighs OPEC-led cuts (Reuters) Oil prices slipped on Monday as further increases in U.S. drilling activity undercut an OPEC-led push to tighten supply. Trading was subdued due to public holidays in China, the United States and Britain, but concerns lingered over whether OPEC action would be enough to stem the tide of oversupply.

Sterling steadies after opinion poll pummeling (Reuters) Britain’s pound was the only substantive mover among major currencies on Monday, recovering some ground after weekend polls showed Prime Minister Theresa May is set to win next week’s elections even if the scale of victory is in question.

Why the Bank of Canada needs to prepare Canadians for rate hikes (GlobeAndMail) We have been stuck in a low-interest period for almost a decade now, and with that apparent inertia comes the challenge of knowing when to start reversing course. Last Wednesday’s interest rate announcement and press release by the Bank of Canada were slightly more hawkish (or slightly less dovish) in tone than its previous announcement, but it gave no explicit hints that rate increases are on the immediate horizon. However, stronger economic data that support the bank’s own internal forecasts suggest they should be. At a minimum, communication with the public should start to prepare the market for such increases.

Back-to-work bill in Quebec construction strike expected today (GlobeAndMail) The Quebec government is expected to bring in back-to-work legislation today to put an end to a strike by tens of thousands of construction workers. Premier Philippe Couillard said last week that he would set the wheels in motion to legislate an end to the strike if the picket lines didn’t come down by today.

Face it, Canada—you’re a real estate addict, and no one wants a cure (GlobeAndMail) Why, Canada! It’s great to see you, old friend. Here, take the comfortable seat by the window. You’re probably wondering why I’m here in your living room, so let me blurt it out. This is an intervention. And, yes, it’s about this housing habit of yours.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 126-06, S&P 500 futures are up 0.11% at 2416.5, Crude oil futures are down -0.12% at $49.74, Gold futures are down -0.13% at $1269.8, DXY is down -0.1% at 97.345, CAD/USD is up 0.05% at 0.7433.

US Economic Data

There is no major economic news for today.

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