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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

Market Update

Treasuries bounced off lows amid dip buying, after early slide on tax-plan-news speculation/digestion selling, also pre-auction shorts into 1pm ET. $34B 5Y auction and 11:30am ET 2Y FRN auction. Treasuries opened NY mildly weaker after drift off session high 7am ET after overnight 2way flows. All await Trump admin tax plan announcement; could include 10% repatriation tax on overseas earnings and 15% corporate tax rate. Tax plan announcement time eyed early afternoon. Canada Feb Retail sales -0.6% vs 0.0% expected. Ex autos -0.1% vs-0.3% expected. Ex autos and gas +0.5%. Mostly price effect as total sales volume -0.1%.  June Bund future slips back into negative territory following comments from US’s Mnuchin on tax reform. June Bund last 6 ticks lower at 160.92.

News headlines 

Dollar Climbs With Bonds as Trump Tax Plan in Play: Markets Wrap (Bloomberg) The dollar climbed with U.S. government bonds before President Donald Trump unveils his tax cut plan that could breathe new life into flagging reflation trades. The greenback wrested back some strength in early business hours on the continent, gaining against most group-of-10 currencies. Treasuries reversed a five-day losing streak, signaling not all investors are getting behind the risk rally.

Oil Trades Below $50 Amid Mixed Signals on U.S. Crude Stockpiles (Bloomberg) Oil traded below $50 a barrel in New York amid conflicting signs on whether U.S. crude stockpiles are retreating. Futures were little changed, having fallen to a three-week low on April 24. The industry-funded American Petroleum Institute was said to report U.S. crude supplies increased by 897,000 barrels last week. Meanwhile, a Bloomberg survey forecasts stockpiles probably fell by 1.75 million barrels before an Energy Information Administration report Wednesday.

Congress moves closer to deal to avert government shutdown (Reuters) The U.S. Congress was moving closer to crafting a deal to avoid shutting down at the stroke of midnight on Friday, but the details and even broad strokes of an agreement were still murky. Some lawmakers are optimistic they can hammer out a budget bill to take the government to the end of the current fiscal year on Sept. 30, while others see Congress putting a short-term spending resolution in place for a week, while talks continue.

Trump administration to brief full U.S. Congress on North Korea policy (Reuters) U.S. lawmakers want to leave briefings on North Korea on Wednesday with something many think has been absent in the Trump administration so far: a clear strategy for dealing with a major national security threat. As a standoff escalated over the reclusive Asian nation’s development of nuclear weapons and long-range ballistic missiles, President Donald Trump invited all 100 members of the Senate to attend the session with Secretary of State Rex Tillerson, Secretary of Defense Jim Mattis, Director of National Intelligence Dan Coats and Marine General Joseph Dunford, chairman of the Joint Chiefs of Staff.

Oil Seen Falling Below $40 a Barrel If OPEC Doesn’t Extend Cuts (Bloomberg) Crude will probably drop to less than $40 a barrel unless OPEC and allied producers extend their collective cuts in output beyond June, according to the Abu Dhabi Investment Authority’s head of research. The six-month cuts that took effect in January have set a floor for prices, but an increasing supply of U.S. shale oil together with record-high inventories are keeping the per-barrel price of crude from rising beyond the upper $50s, Christof Ruehl said Wednesday at a conference in Dubai.

U.S. commerce chief says Canada trade disputes show need to rework NAFTA (Reuters) U.S. Commerce Secretary Wilbur Ross said on Tuesday that trade disputes with Canada over lumber and dairy products illustrate a need to renegotiate the North American Free Trade Agreement.

Tim Hortons owner sees revenue rise, profit flat (TheGlobeAndMail) Restaurant Brands International Inc , the owner of Burger King and Tim Hortons, reported better-than-expected quarterly profit and revenue as the two chains opened more restaurants. Net restaurant growth at Burger King was 5.1 per cent, while it rose 4.6 per cent at Tim Hortons.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-12, S&P 500 futures are up 0.02% at 2385.5, Crude oil futures are down -1.01% at $49.06, Gold futures are down -0.12% at $1265.7, DXY is up 0.3% at 99.078, CAD/USD is up 0.04% at 0.7364.

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 open lower for a second day as risk-on tone prevails for a second day, US 10Y 2.304 (+3bps), moderate volume in TY futures (340k). European stocks higher, Stoxx 50 +0.25% after yesterday’s 4.0% increase, S&P futures +5, crude unch 49.25. Trump said to back off on border wall funding to avoid govt shutdown. UK gilts lower weighed by risk on sentiment even as public borrowing is set to decline for 2017-18 to GBP114.2bln from 115.1bln while the deficit for this FY fell to 2.6% of GDP from 3.8% (71.1b vs 72.5b exp). Bunds lower, 10Y +4.4bps @ 0.37% curve bear steepening – Germany issued E3.22bln of 2Y bonds @ -0.69% which was technically uncovered while a 10Y & long deal from EFSF (European Financial Stability Facility) pressured long end of the bund curve . Big move in CAD -USDCAD shot higher 92bps @ 1.3594 after 20% tariffs announced on Cdn lumber, GOCs lower underperforming tsys out the curve.  BC/Ontario rollswider, long roll -5/-6 , 0.5bps wider on lumber news.

News headlines 

Return of Risk Spurs Stocks as Europe Bonds Falter: Markets Wrap (Bloomberg) Markets are holding onto their appetite for riskier assets, with stocks in Europe hovering near a 20-month high and emerging markets extending this year’s outperformance. The yen fell with Treasuries and gold as haven demand ebbed for a second day.

Oil edges up, breaking six-day stretch of losses (Reuters) Oil rose on Tuesday, breaking a six-day streak of price falls, but with doubt swirling over OPEC’s ability to force global crude inventories to drop, sentiment has turned more bearish. Brent crude LCOc1 was up 8 cents at $51.68 a barrel by 0940 GMT, while U.S. crude futures CLc1 were up 10 cents at $49.33 a barrel.

Greece, lenders seek deal as bailout talks resume in Athens (Reuters) Greece and its foreign creditors resume talks on Tuesday on reforms prescribed under the international bailout and further debt relief, aiming to reach a comprehensive deal before a meeting of euro zone finance ministers on May 22.

U.S., North Korea Flex Military Muscles as Tensions Simmer (Bloomberg) The U.S. and North Korea both showed off their military prowess on Tuesday as nations in the region stepped up diplomatic talks to defuse a brewing crisis over Kim Jong Un’s nuclear program.

Canada vows to fight ‘unfair and punitive duty’ as Trump slaps tariff on softwood lumber (FinancialPost) The U.S. Commerce Department has imposed import duties ranging from 3 per cent to 24 per cent on shipments from Canadian softwood lumber producers. While the U.S. has slapped tariffs on Canadian lumber before, the measures taken Tuesday are unusually harsh because they come with a finding of “critical circumstances.”

CN posts jump in profit as railway moves record volumes (TheGlobeAndMail) Canadian National Railway Co. rode a wave of new shipping contracts and record volumes to a 12-per-cent jump in first-quarter profit. CN late Monday posted net profit of $884-million and diluted earnings per share of $1.16 in the first three months of the year. Revenue rose by 8 per cent to $3.2-billion, compared with the same period a year earlier. Analysts expected per-share profit of $1.15 (both adjusted and net) and revenue of $3.2-billion, according to Bloomberg.

Teck Resources profit misses estimates as costs rise (TheGlobeAndMail) Canada’s Teck Resources Ltd , North America’s largest producer of steel making coal, reported lower-than-expected profit due to higher costs, lower production and sales volumes. Unit production costs in the first quarter rose by $13 to $56 per tonne from a year ago. First-quarter coal production was 6.1 million tonnes, 8 per cent lower than last year, the company said on Tuesday.

Overnight markets 

Overview: US 10yr note futures are down -0.224% at 125-17, S&P 500 futures are up 0.34% at 2378, Crude oil futures are down -0.47% at $49, Gold futures are down -0.66% at $1269.1, DXY is down -0.09% at 99.005, CAD/USD is up 0.75% at 0.7352.

US Economic Data

Canadian Economic Data 

There is no major economic data release 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