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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

Market Update

Tsys higher after both core Apr CPI and retail sales missed to the downside, US 10Y 2.36.  Tsys rose overnite with EGBs.  German bunds spiked in early trading on muted volumes as yesterday’s 165.98 high was breached, but prices have almost completely retraced the move higher.  Italy outperforming other peripherals as early election looks less likely. GOCs higher , lagging the advance in tsys by ~1bp, Provis slightly wider.

News headlines 

Commodity Rout Shows Signs of Easing as Gold Rises: Markets Wrap (Bloomberg) Gold climbed a second day amid a rebound for metal prices that helped ease a commodity rout even as oil remained depressed. Bonds extended gains. The Bloomberg Commodity Index rose for a third day, recovering from a 16-month low on May 9. European stocks struggled for direction following the biggest drop in three weeks Thursday as investors assessed global earnings and the appetite of U.S. consumers to keep spending. The Bloomberg Dollar Spot Index headed for its best week of the month as bets stack up on a Federal Reserve interest-rate increase next month.

China’s April loans growth highlights debt challenge (Reuters) China’s banks unexpectedly extended more credit in April than in the previous month, though household loans fell in a sign authorities are walking a tight rope as they try to tamp down debt risks without throttling the economy.

Dollar Heads for Best Week This Year Before CPI, Retail Sales (Bloomberg) The dollar headed for its best week this year before reports forecast to show inflation and retail sales both increased last month, backing the case for the Federal Reserve to keep raising interest rates.

Home Capital says uncertainty over funding capabilities putting its future in doubt (FinancialPost) Alternative mortgage lender Home Capital Group Inc. said Thursday discussions with potential investors on the sale of certain loan portfolios are on the table to shore up its liquidity, but uncertainty around its future funding abilities casts “significant doubt on the Company’s ability to continue as a going concern.”

Magna pivots auto-parts production for the cars of the future (TheGlobeAndMail) Two key trends that are transforming the auto industry – electrification and full, self-driving technology – will not be evident in a majority of vehicles until well after 2025, but Magna International Inc. is positioning itself to be a crucial supplier of parts for what it calls the vehicle of the future.

Amaya beats profit estimates as it adds more customers (TheGlobeAndMail) Canada’s Amaya Inc , the owner of online gambling sites PokerStars and Full Tilt, reported a better-than-expected quarterly profit as it added more customers. Amaya said the number of its active customers rose 5 per cent to about 2.7 million in the first quarter ended March 31.

Overnight markets 

Overview: US 10yr note futures are up 0.325% at 125-11, S&P 500 futures are down -0.01% at 2390.75, Crude oil futures are up 0.36% at $48, Gold futures are up 0.56% at $1231, DXY is down -0.29% at 99.337, CAD/USD is down -0.11% at 0.7309.

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

US tsys giving up slight gains on much firmer Apr core PPI – 0.7% vs 0.2% exp , while claims fell to 236k vs 245k and cont claims at a new low 1918k -US 10Y unch @ 2.403%. EGBs lower after US data after rising on dovish BOE Carney testimony. Carney said the global outlook has improved while UK wages remain subdued, gilt curve ~1bp steeper. The US auctions $15bln in 30Y bonds at 1:00ET – yesterday’s $23bln 10Y auction was weak tailing 1.8bps with a below avg b/c.  GOCs higher, outperforming tsys  ~2bps thru the curve. Moody’s downgrade of the big six banks has undercut the CAD which is lower by 72pps despite ~4.0% gain in crude since yest.  Provis opening 0.5 – 1bp wider after closing 0.5bps tighter yest – Ont 27s 77/76 (75), Ont 48s 87.5/87 (86). QC/Ont 10Y roll tighter – 0.3/0.1, QC 27s 77/76. Quebec reopened their Oct 2024 FRN yest @ CDOR +39, the province has now funded ~2/3 of its 2018 FY borrowing program. Ontario is in the USD mkt with a new 5Y as MS +29bps, book said to be $2.5bln.

News headlines 

Europe Stocks Slip as Oil Leads Commodity Rebound: Markets Wrap (Bloomberg) European stocks drifted lower for the first time in three days as gains for mining and energy shares struggled to offset a broader mood of caution. Gold was poised to snap its six-day losing streak amid a wider commodity bounce.

Bombardier’s Pierre Beaudoin stepping down from executive role (TheGlobeAndMail) Pierre Beaudoin is stepping down as Bombardier Inc.’s executive chairman amid a mounting controversy over executive pay at the Canadian plane and train maker. Mr. Beaudoin will become non-executive chairman, the company said Thursday in advance of its annual meeting, after a revolt by several Canadian institutional investors. The move will be effective as of the end of June; Mr. Beaudoin will still chair the board, but will no longer have any management role at Bombardier, a company spokesman said.

Greece says bailout review conclusion will help outperform EU’s 2017 growth forecast (Reuters) The conclusion of Greece’s second bailout review will help the country outperform the EU Commission’s revised forecast for 2.1 percent growth this year, the country’s government spokesman said on Thursday. After six months of talks and disagreements, Greece reached a deal with its international lenders last week on the reforms it needs to implement in the coming years, paving the way for the conclusion of a crucial bailout review and the disbursement of vital fresh loans.

Fed’s Dudley says to normalize balance sheet in ‘very careful way’ (Reuters) New York Federal Reserve President William Dudley said on Thursday the U.S. central bank will normalize its balance sheet in a “very careful way”, while leaving “sufficient” excess reserves in the financial system. Dudley, in a speech in Mumbai, also told the audience not to expect any “dramatic change” in monetary policy in the United States.

Moody’s downgrades credit ratings of Canada’s Big Six banks (FinancialPost) Moody’s Investors Service downgraded the credit ratings of the Big Six banks late Wednesday reflecting “expectation of a more challenging operating environment for banks in Canada for the remainder of 2017 and beyond, that could lead to a deterioration in the banks’ asset quality, and increase their sensitivity to external shocks.”

Home Capital’s high-interest accounts balance expected to fall to C$128 million (Reuters) Canada’s biggest non-bank lender Home Capital Group Inc (HCG.TO) said on Thursday its high-interest savings deposits were expected to have fallen to about C$128 million ($93 million)following the completion of Wednesday’s settlements. Deposits were expected to have fallen to about C$134 million following completion of Tuesday’s settlements.

Overnight markets 

Overview: US 10yr note futures are down -0.025% at 124-25, S&P 500 futures are down -0.19% at 2390.75, Crude oil futures are up 1.08% at $47.84, Gold futures are up 0.11% at $1220.3, DXY is up 0.11% at 99.781, CAD/USD is up 0.49% at 0.7287.

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