Commentaires

Market Update

US tsys moving lower despite a big miss on  Q1 GDP (0.7% vs 1% exp) thou GDP prices came in stronger 2.3% vs 2.0 exp) 10Y 2.327%% (+3bps). Core Euro bonds sharply lower with the 10Y bund 5bps higher @ 0.343% and the 10Y bund/tsy spd close to three month lows @ 195bps. Eurozone CPI rose 1.9% in  Apr vs 1.8% exp. The German 5s30s curve wider for seventh day, another 2bps steeper after the inflation data. Today is the month-end extension , the Euro Aggregate Tsy index extends 0.12yrs vs 0.03 avg. monthly. GOCs lower, spds 2bps tighter vs tsys after  Feb GDP missed est , unch vs 0.1% exp, 2.5% y/y vs 2.6% – but keep in mind this comes after three solid mnthly  increases.

News headlines 

U.S. first-quarter growth weakest in three years as consumer spending falters (Reuters) The U.S. economy grew at its weakest pace in three years in the first quarter as consumer spending barely increased and businesses invested less on inventories, in a potential setback to President Donald Trump’s promise to boost growth. Gross domestic product increased at a 0.7 percent annual rate also as the government cut back on defense spending, the Commerce Department said on Friday. That was the weakest performance since the first quarter of 2014.

UK GDP growth slower than expected as inflation bites (TheGuardian) The UK economy suffered a sharp slowdown in the opening months of this year, as the post-referendum rise in living costs took its toll on British households and hit consumer spending. GDP growth fell more than expected to 0.3% in the first quarter from 0.7% in the previous quarter, the Office for National Statistics said.

ECB nods to euro zone recovery but keeps money taps wide open (Reuters) The European Central Bank stuck to its ultra-easy policy stance on Thursday as inflation continues to undershoot its target but explicitly acknowledged the vigor of the euro zone economy, now on its best run since the global financial crisis.Despite calls from Germany, the euro zone’s economic powerhouse, for a gradual reduction of stimulus, the ECB even left the door open to further rates cuts or an increase in asset buys. But ECB President Mario Draghi noted that the euro zone’s economy had further improved and the risk of a new downturn had receded, a signal seen by many as foreshadowing a bolder change at the next meeting in June.

All for One: Emboldened EU United Against U.K. Over Brexit (Bloomberg) European Union leaders are set to declare that when it comes to Brexit, 27 of them will stand as one against the U.K. A Saturday summit in Brussels called solely to discuss Britain’s departure from the bloc will serve as a stage for the governments the U.K. is leaving behind to talk up unity and warn British officials against sowing division in the hope of securing a better exit deal.

Barclays Shares Fall After Surprise Drop in Trading Revenue (Bloomberg) Barclays Plc dropped the most in almost six months after posting a surprise drop in trading across debt and equity.The firm reported an unexpected decline in fixed-income trading revenue, contrasting with a 24 percent jump achieved by its five largest American counterparts and a smaller increase at Deutsche Bank AG, its biggest competitor in Europe. Income from equities trading also fell more than expected, while investment banking fees surged.

Cloud Produces Sunny Earnings at Amazon, Microsoft and Alphabet (NYTimes) The moneymaking machines at the core of Amazon, Microsoft and Alphabet, the parent company of Google, are notably different. But the respective kings of online retailing, software and internet search should all credit a relatively new line of business for lifting their financial results. In their quarterly earnings reports on Thursday, the three said cloud computing — through which they rent computing services and online access to software hosted in their data centers — was growing faster than their larger, older businesses.

Overnight markets 

Overview: US 10yr note futures are down -0.162% at 125-14, S&P 500 futures are up 0.03% at 2386.75, Crude oil futures are up 1.47% at $49.69, Gold futures are up 0.1% at $1267.2, DXY is down -0.13% at 98.946, CAD/USD is up 0.16% at 0.7323.

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 moving to the lows of the o/n session, US 10Y 2.313% (+1bp). ECB left rates unch as exp, Draghi press conference coming up. German bunds slightly higher, 10Y bund spiked to day high after the decision, no reaction in tsys, as a result the 10Y tsy/bund spd is -197,~2bps off the recent narrows in the wake of steady bund underperformance. Draghi expected to acknowledge improved growth prospects (2017 GDP  has been revised steadily upwards since last Aug and is now at 1.6%), and given the improvement in broad Eurozone indicators Draghi may drop the reference to downside risks. GOCs lower, underperforming tsys slightly, new 10Y benchmark June 27s as of today, new 10Y roll 9.7/9.6 which is 0.2bps tighter than at auction yst. Provis traded well to yest for the most part,  despite the rally in GOCs, spds back to recent tights, Ont 27s @73.5, longs @85. Quebec issued E2.25bln in 10Y bonds yest @ MS +14. CMBs lagging as has been the patternin provi rallies, attributed in part to upcoming 5Y supply.

News headlines

Dollar Pares Decline After Nafta Anxiety Defused: Markets Wrap (Bloomberg) The dollar recovered early losses after U.S. President Donald Trump ruled out a withdrawal from Nafta. European stocks fell as investors absorbed a string of news from corporate earnings to central bank decisions and plans to overhaul U.S. taxes. The Mexican peso and Canadian dollar jumped, reversing earlier declines, as the White House said it won’t immediately terminate participation in the North American Free Trade Agreement. U.S. stock futures signaled a higher opening while European shares retreated from a six-day rally.

Trump Rules Out Swift Nafta Exit in Favor of Renegotiation (Bloomberg) President Donald Trump won’t immediately terminate U.S. participation in the North American Free Trade Agreement, the White House said, after he spoke with the leaders of Mexico and Canada about ways to renegotiate the accord. “Both conversations were pleasant and productive. President Trump agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the White House said in a statement late Wednesday. Mexico’s peso and Canada’s dollar jumped after the White House’s announcement.

Oil prices fall on oversupply (Reuters) Oil prices fell on Thursday, weighed down by oversupply, but losses were limited by expectations that major exporters would agree to extend production cuts to try to rebalance the market. Benchmark Brent crude was down 60 cents at $51.22 a barrel by 0915 GMT, almost 10 percent below this month’s peak. U.S. light crude was down 55 cents at $49.07.

Le Pen, Macron spar as French presidential race narrows slightly (Reuters) Far-right French presidential candidate Marine Le Pen took a fishing-boat ride on Thursday as two polls suggested the underdog had made a more impressive start to the last lap of campaigning than the favourite, centrist Emmanuel Macron. Since last Sunday’s opening ballot sent them into a two-way runoff on May 7, the battle has intensified, notably on the public relations front, between two candidates who both say their adversary will ruin the country.

BOJ most upbeat on economy in nine years, but warns stimulus exit distant (Reuters) The Bank of Japan offered its most optimistic assessment of the economy in nine years at its policy meeting on Thursday and described recent weakness in inflation as temporary, signaling confidence a sustained recovery will help achieve its ambitious price target. The BOJ kept its policy unchanged, as expected, but Governor Haruhiko Kuroda conceded that public perceptions of future price rises remained subdued, suggesting the central bank will significantly lag its U.S. and European peers in exiting its massive stimulus program.

Greece will need debt relief: Eurogroup head Dijsselbloem (Reuters) Greece will need debt relief for its public finances and economic future to become sustainable, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Thursday, promising a deal between Athens and its lenders in May. His remarks are a departure from the line taken by euro zone finance ministers until now, that debt relief would be discussed, but only once the latest bailout ends and only if it turns out to be necessary

 Overnight markets 

Overview: US 10yr note futures are down -0.025% at 125-17, S&P 500 futures are up 0.09% at 2384.5, Crude oil futures are down -1.87% at $48.69, Gold futures are up 0.12% at $1265.7, DXY is down -0.18% at 98.862, CAD/USD is down -0.16% at 0.7355.

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