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Market Update

Tsys higher again this morning on risk-off, volume in TY futures ~3x avg, 750k , US 10Y below 2.20% for the first time in a month, Dow futs -European stocks lower-  stoxx -1.0% led by banks -2%. Brazil real fell 5.3% at the open, Brazil stk futures down 10% while the govt has canceled its planned . Core European bonds higher, peripherals outperforming  – 10Y Port/Bund 280 bps new low,  10Y bund 2.10% (-3.4bps), 10Y bund/tsy spd 187 bps also close to recent tights.  Gilts higher, third day in a row despite higher than exp UK inflation and today’s strong Apr retail sales, 10Y gilt 1.034% one month low.  GOCs higher led by longs 2s/30s 2bps flatter, 10Y 1.434%. Provis spds wider 1-3bps yest, this morn another 0.5bps wider.

News headlines 

Global Stocks Plunge After U.S. Rout as Bonds Gain: Markets Wrap (Bloomberg) European and Asian equity markets slumped in the wake of the worst day in eight months for U.S. stocks as the political crisis engulfing U.S. President Donald Trump’s administration drove investors to the safety of bonds. Shares across Europe extended declines following new revelations about undisclosed contacts between Trump’s campaign and the Kremlin. The Justice Department Wednesday appointed a special counsel to probe Russia’s role in the 2016 election, deepening a crisis fueled by reports Trump asked FBI Director James Comey in February to halt an investigation before firing him last week.

Australia’s jobs growth tops forecasts in April (FinancialTimes) The Australian dollar jumped back into positive territory after data showed employment rose more than expected in April and the jobless rate fell to its equal-lowest level this year. That is despite concerns in recent months about the health of the labour market, particularly stagnant wage growth.

Canadian provincial borrowers receive friendly welcome in Britain (FinancialPost) Britain in May is great for a sports fan, for garden enthusiasts and for theatre goers — though speaking personally, July is even better. Canadian borrowers have found attractions in other areas and through those efforts have located a group of willing fixed-income investors interested in buying well-rated paper.

Japan economic growth picks up speed (MarketWatch) Japan’s economy picked up speed in the first three months of 2017, extending its most recent stretch of growth under Prime Minister Shinzo Abe to five quarters, the longest expansion in Japan since 2006. Stronger global demand, especially for tech-related items, and an improvement in household spending helped gross domestic product beat forecasts and rise 2.2% on an annualized basis from the previous three months, according to preliminary figures released Thursday.

Wal-Mart’s comparable sales beat estimates (TheGlobeAndMail) Wal-Mart Stores Inc reported higher-than-expected quarterly comparable sales on Thursday, helped by greater traffic at Wal-Mart and Sam’s Club stores and a rise in online sales. Sales at U.S. stores open at least a year rose 1.4 per cent in the first quarter, excluding fuel. Analysts polled by research firm Consesus Metrix had forecast a rise of 1.3 per cent

Google shifts mobile focus to apps and digital assistant (Reuters) Mobile phone apps took center stage at Google’s annual developer conference on Wednesday as the search giant announced new features for its digital assistant and its popular photo app while devoting little time to the Android mobile operating system.

Overnight markets 

Overview: US 10yr note futures are up 0.037% at 126-15, S&P 500 futures are down -0.37% at 2348.75, Crude oil futures are down -1.24% at $48.46, Gold futures are down -0.06% at $1258, DXY is up 0.14% at 97.713, CAD/USD is up 0.16% at 0.734.

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 higher on heavy volume in TY1 futres (>500k vs 260k), bid again on political news after NYT story on Trump/Comey meeting, US 10Y 2.292 (-3.3bps), curve 1bp flatter with longs lagging by 0.5bp. Dow futures off 93pts, USD index lower for a fifth day, crude slightly higher  49.00.    GOCs higher in line with tsys in line with tsys, BOC auctions $1.2bln Dec 48s at noon with 10s/30s 1bp steeper as 10s lead this FTQ rally, 48/45 roll unch -3.1/-3.3. CMB 10Y issue  2.35/27 in the area 48.5 , now 48.5/48 unch. Provis starting weaker, spds 1bp wider, Ont 27s 77.5/76.5. Daimler Canada in the mkt with 3Y @ ~82bps.

News headlines

US STOCKS-Futures slide as concerns over Trump spook investors (Reuters) U.S. stock index futures tumbled on Wednesday amid fears that a fresh controversy around President Donald Trump could derail his ambitious pro-growth agenda.

Oil turns positive as market awaits EIA data (Reuters) Oil prices strengthened on Wednesday ahead of U.S. crude inventory data that could give investors a clue as to whether an OPEC-led output cut is making progress in reducing the persistent global supply overhang.

UK faces pay squeeze as unemployment rate sinks to 42-year low (TheGuardian) UK pay growth lagged inflation for the first time in two-and-a-half years in early 2017, underscoring the growing Brexit squeeze facing many households. Excluding bonuses, earnings rose by 2.1% year on year, the weakest increase since July of last year and below economists’ expectations for a 2.2% rise.

Sterling blips back above $1.2950 after labour data (Reuters) Sterling rose back to the top of the past month’s range against the dollar on Wednesday, bouncing to $1.2952 after an initial dip following wage and jobs numbers that offered mixed messages about Britain’s economic prospects. Against the euro the pound was also 0.2 percent higher on the day, recovering from its weakest levels in five weeks to trade at 85.71 pence per euro.

U.K. Trade Strategy Needs Radical Rethink for Post-Brexit Deals (Bloomberg) The U.K. must “radically” overhaul its approach to trade policy if it is to land post-Brexit deals with other countries, the Institute for Government said. After decades of access to the European Union’s single market, the U.K. is facing a renegotiation of its trading relationship with the bloc and the need to strike deals with the rest of the world on its own. Those tasks will require improvements across the British government in order to be done well, IFG said in a report.

Home Capital’s Perilous Turnaround Will Only Get Harder (Bloomberg) Home Capital Group Inc. is fighting to find the funds it needs to survive as deposits rush out the door. Then comes the hard part. The Toronto-based bank has lost more than C$3.5 billion ($2.6 billion) of deposits since the end of March, hurt by Ontario’s securities regulator saying last month that Home Capital had failed to promptly disclose possible fraud among some mortgage applications around two years ago.

Overnight markets 

Overview: US 10yr note futures are up 0.386% at 126-01, S&P 500 futures are down -0.65% at 2381.5, Crude oil futures are up 0.33% at $48.82, Gold futures are up 1.07% at $1249.6, DXY is down -0.24% at 97.874, CAD/USD is up 0.14% at 0.7339.

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 rising off the lows after disappointing Apr Housing Starts (-2.6% vs 3.7% exp) rallying o/n on risk-off bid related to latest Trump news on Russia, US 10Y fell to 2.32% before the pullback in Europe, now 2.36% (+1bp). The USD index lower for a third day, crude extending gains up another 0.68% @49.18. EGBs lower, bund curve 1.5bps steeper, supply a factor with France OAT 30Y syndication & UK 40Y gilt. In Canada, GOCs slightly lower, curve unch – GOC 10s30s @65.6bps  continuing steepening trend before tomorrow’s 30Y reopening – $1.2bln Dec 48s, long rolls close to recent wides, the 48/45 -3.2bps, 45/41 2bps.  Provis trading up in longs, Ont 48/27 curve unch @ 10.2. In corps  after the successful Pepsico 7Y two weeks back and AB Inbev maple last week, UPS (A1/A+) priced a $750mm  7Y @ 87 (C24 +86.7) which broke 3bps tighter . Transcanada trust issued CAD $1.5bln (upsized from $1.25bln) in 60YNC10 @ 4.65%.  Recall that back in Feb TRP issued a similar structure in USD @ T10 + 293bps or 5.3%. This bond is currently trading 240/230 which comes back to CAD @ GOCs + 272 or 4.31% – so 4.65% looked to be fairly generous concession.

 News headlines 

Euro Soars Amid Trump Concerns; Oil Extends Gain: Markets Wrap (Bloomberg) The dollar weakened for a fifth day and the euro surged to the highest since November after a report U.S. President Donald Trump revealed classified information to Russia’s top diplomat. Crude extended gains as confidence grew that output cuts will be extended. The dollar fell against most of its major peers after the Washington Post reported the president last week shared closely-held intelligence with Russia’s foreign minister and ambassador.

Oil Jumps as Saudis, Russia Favor Extending Output Deal to 2018 (Bloomberg) Futures closed at their highest in more than two weeks. While output curbs that started Jan. 1 are working, global inventories aren’t yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said Monday in Beijing alongside his Russian counterpart, Alexander Novak. The ministers agreed the deal should be extended through the first quarter of 2018 at the same volume of reductions, they said.

Europe car sales drop 6.8 percent in April on VW, British slump: ACEA (Reuters) European car sales fell 6.8 percent in April due to a fall in demand for Volkswagen-branded (VOWG_p.DE) cars, fewer trading days during Easter, and thanks to a double-digit sales drop in Britain, industry figures published on Tuesday showed.

Japan’s Abe reaffirms conviction that TPP benefits Asia-Pacific (Reuters) Japanese Prime Minister Shinzo Abe’s conviction that a Trans-Pacific Partnership (TPP) pact will help bring prosperity to the Asia-Pacific region is unaltered, he said on Tuesday. After U.S. President Donald Trump pulled out of the 12-nation pact, Japan has been exploring options to revive the pact without the United States, hoping it can eventually convince Trump to reconsider.

Canadian small business lending little changed in March: PayNet (Reuters) Lending to small Canadian businesses was little changed in March compared to the month before, though borrowing by medium-sized companies jumped as they benefited from a recovery in the energy sector, data showed on Tuesday. The PayNet Small Business Lending index inched up to 118.0 in March from 117.9 in February, while the index for medium businesses rose to 243.1 from 232.6.

Ford to cut North America, Asia salaried workers by 10%, source says (FinancialPost) Ford Motor Co plans to shrink its salaried workforce in North America and Asia by about 10 per cent as it works to boost profits and its sliding stock price, a source familiar with the plan told Reuters on Monday. A person briefed on the plan said Ford plans to offer generous early retirement incentives to reduce its salaried headcount by Oct. 1, but does not plan cuts to its hourly workforce or its production.

Overnight markets 

Overview: US 10yr note futures are down -0.012% at 125-14, S&P 500 futures are up 0.18% at 2402.75, Crude oil futures are up 0.84% at $49.26, Gold futures are up 0.44% at $1235.4, DXY is down -0.57% at 98.347, CAD/USD is down -0.19% at 0.7349.

US Economic Data

Canadian Economic Data 

There is no economic news release 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