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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

Market Update

US tsys higher, yields 1-3 bps lower, curve flatter led by the 7Y, 10Y 2.234 (-2.1bps), little reaction to upward revision to Q1 GDP, weaker durable goods. TY volume high on continued Jun-Sep rolls, prices rising in Europe as equities weakened thru the session led by energy & fin’l with crude off another 1.0% after yest 4.8% drop on skepticism over the latest OPEC extension of prod cuts. EGBs well bid, the 10Y bund 3.5bps lower @ 0.323%, gilts lagging 10Y 1.016% (-2bps) – no econ news, risk off tone in mkts  Trump warning on North Korea at G7, lower crude… GOCs higher in line with tsys, curve 2bps flatter led by 10s on strong bid in CGBs, provis ended wider yest, PQ 48 deal @ 84 well received, 86/84 this morning.

News headlines 

European Stocks Falter on Oil Slump; Pound Slides: Markets Wrap (Bloomberg) A slump in crude weighed on energy shares as global equity markets headed for a lower finish to the week. The British pound slid. Stocks from Tokyo to Europe fell, dragged down by oil producers. Crude headed for a weekly loss after falling the most in three weeks on Thursday as OPEC’s move to prolong supply cuts for nine months disappointed investors hoping for more.

Oil edges up after dip on disappointing OPEC meeting outcome (Reuters) Oil prices edged back up on Friday after a 5 percent fall in the previous session on disappointment that an OPEC-led decision to extend current production curbs did not go deeper. At Thursday’s meeting in Vienna the Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) of output until the end of the first quarter of 2018. The initial agreement would have expired next month.

Corbyn Ties Terror to Foreign Wars as Labour Gets U.K. Poll Lift (Bloomberg) Jeremy Corbyn linked U.K. military action abroad to terrorism at home and criticized Prime Minister Theresa May’s government for squeezing police and prison budgets as election campaigning resumed four days after a suicide bomber killed 22 people in Manchester.

Higher Energy Costs Nudge Japanese Inflation Up to 0.3% in April (Bloomberg) Japan’s core consumer inflation gauge rose for a fourth month in April, the longest run of gains since mid-2015, but it’s far below target and weak underlying price pressures point to limited gains ahead.

Toronto area home sales sink after cooling measures (TheGlobeAndMail) House sales fell 26 per cent in the Toronto region in the month following the Ontario government’s introduction of a foreign-buyer’s tax as many potential purchasers stepped back and waited to assess the market impact. In the 30 days after the province announced the immediate introduction of a 15-per-cent foreign-buyer’s tax on April 20, the number of houses sold in the Greater Toronto Area fell 26 per cent compared with the same period last year, according to data compiled by Toronto realtor John Pasalis, president of Realosophy Realty Inc.

RBC says there’s no systemic risk from Home Capital as the bank, CIBC and TD all beat market forecasts (FinancialPost) Concerns about the state of the mortgage market can’t seem to stop Canada’s big banks. On Thursday, Royal Bank of Canada, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank all posted stronger-than-expected quarterly results, with earnings per share growth in the 10 to 12 per cent range.

Overnight markets 

Overview: US 10yr note futures are up 0.124% at 126-11, S&P 500 futures are down -0.13% at 2410.25, Crude oil futures are down -0.31% at $48.75, Gold futures are up 0.82% at $1270.1, DXY is up 0.14% at 97.387, CAD/USD is down -0.24% at 0.7433.

US Economic Data

Canadian Economic Data

There is no major economic news 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 slightly higher on heavy volume in tsy futures, 628k TY1 contracts by 8:00 more than double the avg. Equities firmer, crude down 1.6% @ 50.53 after reaching a five week high 52.00 earlier in the session. EGBs outperforming, gilt/bund yields 3-4bps lower as DAX futures fell sharply at the outset of trading, and surprise downward revision to UK Q1 GDP. GOCs higher in line with tsys, curve slightly flatter after a big flattening move post FOMC minutes yest led bythe long end 2s30s ~5bps flatter vs unch in the US. Provis widened slightly yest despite a solid Ont 48 reopening, of which 400mln was carve out. BMO 10NC5 NVCC new issue yest, @ 156 clsoed 1bp wider, likely more bank supply coming as has been light so far.

News headlines 

World stocks hit record after Fed minutes, oil up as OPEC meets (Reuters) World stocks hit record highs on Thursday and the dollar dipped after the U.S. Federal Reserve signaled caution in raising interest rates, while oil prices rose in anticipation of top producers agreeing to extend output cuts for up to a year.

OPEC to Extend Oil Cuts for Nine Months to End Global Glut (Bloomberg) OPEC extended oil production cuts for nine more months after last year’s landmark agreement failed to eliminate the global oversupply or achieve a sustained price recovery. Members of the organization agreed to prolong their accord through March, said two delegates familiar with the decision, asking not to be identified before an official announcement is made. Ministers are scheduled to discuss the extension with non-member producers later on Thursday.

Toronto Homeowners Are Suddenly in a Rush to Sell (Bloomberg) Toronto’s hot housing market has entered a new phase: jittery. After a double whammy of government intervention and the near-collapse of Home Capital Group Inc., sellers are rushing to list their homes to avoid missing out on the recent price gains. The new dynamic has buyers rethinking purchases and sellers asking why they aren’t attracting the bidding wars their neighbors saw just a few weeks ago in Canada’s largest city.

CIBC profit climbs to $1.05-billion, revenue rises (TheGlobeAndMail) CIBC had $1.05-billion of net income in its second quarter, up 11 per cent from a year ago when it reported $941-million of net income. The earnings amounted to $2.59 per share, compared with $2.35 during the second quarter of 2016.

TD profit grows 22 per cent to $2.5-billion (TheGlobeAndMail) TD Bank had $2.5-billion of net income during the second quarter, up 22 per cent from a year ago. The earnings amounted to $1.31 per share. That compared with $1.07 per share or $2.05-billion of net income during the same period last year.

Royal Bank of Canada boosts profit by 9 per cent to $2.8 billion (FinancialPost) Royal Bank of Canada reported an 11 per cent increase in second quarter earnings, beating market forecasts, helped by a strong performance in its capital markets and wealth management businesses.

Overnight markets 

Overview: US 10yr note futures are up 0.062% at 126-05, S&P 500 futures are up 0.25% at 2408, Crude oil futures are down -1.17% at $50.76, Gold futures are up 0.14% at $1258.2, DXY is down -0.02% at 97.221, CAD/USD is up 0.27% at 0.7439.

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