Commentaires

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

Market Update

Tsys slightly lower on avg vol in TY1 futs, 10Y 2.333 (+0.7bps), curve steeper with longs underperforming – little reaction to weaker May Empire Man (-1 vs 7.5). Early risk off bid on North Korea missile launch faded, crude sharply higher as OPEC looks to extend prod cuts. EGBs lower, gilt/bund yields 2-3bps higher, bund/tsy 10Y spread at new lows. Expectations for a new 30Y OAT issue to be launched sometime in the near future (MNI) weighing on long end of EGB curves. GOCs lower, underperforming tsys by 1bp in 5s, 10s. CAD rallying along with crude @ 1.3612 . Provis under pressure after spds widened 2-3bps last week, 10s30s Ont ~0.5bps wider. Moodys downgrade of the banks last week put pressure on spds, moreso on lower rated sub debt NVCC.

News headlines 

Oil Jumps With Commodity Currencies on Output Deal: Markets Wrap (Bloomberg) Crude rallied on the prospect a deal to cut global supply will be extended, leading a broader advance across commodities and spurring the currencies of major exporters. Miners and energy shares gained in Europe as most other stocks fell.

China’s economy loses momentum as policymakers clamp down on debt risks (Reuters) China’s growth took a step back in April after a surprisingly strong start to the year, as factory output to investment to retail sales all tapered off as authorities clamped down on debt risks in an effort to stave off a potentially damaging hit to the economy.

UK employers plan smallest pay rises since 2013: survey (Reuters) British employers plan to increase pay at the weakest rate since 2013, a survey showed on Monday, offering poor prospects for British households already strained by higher inflation since last year’s Brexit vote.

Home Capital’s Unique Troubles Are Contained, BOC’s Poloz Says (Bloomberg) Bank of Canada Governor Stephen Poloz said Home Capital Group Inc.’s troubles are unique to the mortgage lender and that he sees no evidence they’re spreading to other parts of the country’s financial system.

China central bank’s net FX sales fall to nearly two-year low in April (Reuters) Net foreign exchange sales by China’s central bank fell to the lowest in nearly two years in April as capital outflows eased in the face of strict regulatory curbs and a pause in the dollar’s rally.

Toronto’s Rent Control Risks Stoking the Red-Hot Housing Market (Bloomberg) Toronto’s trying to make it more affordable to rent in one of the world’s hottest housing markets. New measures may have the opposite effect. Ontario’s government is set to impose the most sweeping rent controls in a quarter century, linking annual increases to inflation, with a cap of 2.5 percent, on all buildings as it tries to keep costs under control. The measure, meant to protect tenants from price gouging, could end up making it more — not less — expensive to rent in North America’s fourth biggest city.

Bell targets cord-cutters with new ‘Alt TV’ service (TheGlobeAndMail) This may be the new golden age of television, but the number of Canadians actually subscribing to TV services has been steadily declining. BCE Inc. is trying to push back on that trend with a cheaper, app-based service that offers live television without the frills of a traditional set-top box experience.

Overnight markets 

Overview: US 10yr note futures are up 0.012% at 125-16, S&P 500 futures are up 0.16% at 2392.5, Crude oil futures are up 3.49% at $49.51, Gold futures are up 0.6% at $1235.1, DXY is down -0.42% at 98.831, CAD/USD is down -0.79% at 0.7352.

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