Comments

Market Update

US tsys sharply lower on heavy volume, ~600k TY futures, after first round of French election Macron lead US 10Y 2.307% (+6.2bps). Core EGBs lower on ‘risk on’, 10Y bunds 10 bps higher @ 0.343%. UK gilts are lagging the decline in bunds with the 10Y gilt still 5.5bps higher @ 1.10% – weakening in April UK CBI trends survey (business spending) to 4 from 8 (6 exp). French yields lower, curve steeper 2Y 10bps lower @ -0.43%, reinvestment flows also supportive -E17bln BTP & 22.7bln OAT redemption today. Over the next week, Eurozone redemptions total E38.2bln. GOCs  lower , outperforming tsys by 1-4bps across the curve as GOC curve  2bps steeper led by 10s above 1.50% ahead of 10Y auction this Wed. BOC reopens June 27 bond for $3bln with the 27/10Y roll 10/9.8 . Provis opening 1bp tighter, long  Onts trading up at 87, 26s @ 73.5, Alta rumoured for today. New Parkland 5 5/8 25 opened 100.50/101.25  on Friday.

News headlines

European Stocks Rally With CAC 40 After French Election Result (Bloomberg) France led gains in European equities as investors speculated that pro-growth centrist candidate Emmanuel Macron will win the country’s presidential election after he made it through to the second round. Boosted by gains in French banks, the CAC 40 Index surged 4.4 percent at 11 a.m. in Paris, poised for its best advance since June 2012, while Germany’s DAX Index rallied to a record. The Euro Stoxx 50 Index jumped 3.2 percent, while the broader Stoxx Europe 600 Index rose 2 percent, both heading for their highest levels since August 2015.

Oil recovers some ground, rise in U.S. drilling caps gains (Reuters) Oil prices recovered some lost ground on Monday after big losses last week, driven by expectations that OPEC will extend output cuts till the end of 2017, although a rise in U.S. drilling capped gains. Brent crude futures LCOc1 rose 38 cents by 1148 GMT to $52.34 per barrel. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 added 41 cents to reach $50.03 a barrel.

OPEC panel recommends six-month extension of oil output cuts: source (Reuters) An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June, a source familiar with the matter said, in an effort to clear a glut of crude that has weighed on prices.

China Stocks Sink Most in Four Months Amid Leverage Crackdown (Bloomberg) A selloff in Chinese stocks deepened, with the benchmark gauge slumping the most in four months, amid concern authorities will step up measures to crack down on leveraged trading.

China clamps down on excess steel as Japan decries Trump ‘protectionism’ (Reuters) Twenty-nine Chinese steel firms have had their licenses revoked as Beijing kept up its campaign to tackle overcapacity in the sector and days after U.S. President Donald Trump said he would open a probe into cheap steel exports from China and elsewhere. Analysts say the revocations were unlikely to be a direct response to Trump’s plan, but rather a part of China’s reform measures aimed at reducing surplus steel capacity that many estimate at around 300 million tonnes, about three times Japan’s annual output.

Trump’s Wall Demands May Decide Whether 100th Day Is a Shutdown (Bloomberg) Nobody in Washington is saying they want a U.S. government shutdown when funding runs out at week’s end, but one person ultimately may get to decide: President Donald Trump. Trump’s biggest demand is a Democratic deal-breaker: money for his long-promised border wall with Mexico. Democrats hope he’ll blink to avoid an embarrassing milestone for a new president trying to prove he can govern. A partial shutdown would start on Saturday, Trump’s 100th day in office.

Overnight markets 

Overview: US 10yr note futures are down -0.421% at 125-17, S&P 500 futures are up 1.09% at 2373, Crude oil futures are up 0.34% at $49.79, Gold futures are down -1.36% at $1271.6, DXY is down -0.91% at 99.065, CAD/USD is down -0.39% at 0.7437.

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 open weaker, 10Y 2.30% , narrow overnite range on decent volume(320k TY futures), S&P futures off 0.16%, crude +0.43% 53.63 on API data which showed crude supplies fell another 1.3mln bbs last week. German bunds mixed, longs outperforming as EGB curves flatten driven by muted inflation pressures, falling breakevens.  Italian debt wider, bund-BTP 10Y spd at new highs 210 bps after weak auctions ( 2030 BTP b/c 1.39 vs 1.6). GOCs slightly higher led by 10s – 2s10s flattest since mid Nov before BOC decision/MPR alter this morn. No change in rates exp but mkt positioned for shift to neutral based on uptick in rate hike expectations priced in before y/e.

 News headlines 

WTO: Global trade seen growing 2.4% in 2017, but uncertainty weighs. ( TheGlobeandMail) The World Trade Organization says world trade will grow 2.4% in 2017, but that ‘deep uncertainty” coming mostly from the political front, will reign.

China March producer inflation cools, consumer inflation below forecast. (Reuters) Consumer prices in China rose 0.9% year-over-year in March, missing the 1% gain that economists were anticipating. Food prices climbed 4.4% versus a year ago while non-food inflation fell by 2.3%, data from the National Bureau of Statistics showed.

UK wage growth slows as higher inflation starts to bite (BBC) Average weekly earnings, excluding bonuses, rose 2.2% in the three months to February, the lowest number since the immediate aftermath of the referendum last June, according to data released by the Office for National Statistics.

Poloz Faces Core Inflation Conundrum as Standing Pat Gets Harder (Bloomberg) The Bank of Canada will almost certainly keep its benchmark interest rate unchanged at 0.5 percent in its decision Wednesday, but with recent data suggesting the economy is on fire, explaining why is getting trickier. Analysts expect policy makers will highlight the softness in underlying price pressures as evidence of the kind of lingering slack that would justify the current degree of monetary accommodation. Be warned: in the past, they’ve shown a willingness to look through these numbers before moving on rates.

Oil Set for Longest Gain Since 2012 as Saudis Seen Extending Cut (Bloomberg) A barrel of West Texas Intermediate for May delivery was trading at $53.69 as of 5:23 a.m Eastern Time, the highest level in over a month. This marks seven straight days of rising prices. Saudi Arabia, the world’s biggest producer, pared its oil output last month to its lowest level since January and is likely to support extending OPEC production cuts into the second half of the year, according to a person familiar with the kingdom’s internal discussions. WTI call options volumes have been rising, signalling that traders see more to come in this rally.

How the Currency Market Learned to Get Over Its ‘Yuan’ Big Fear (Bloomberg) 2017 is shaping up to be a period of detente between the yuan and dollar underscored by the recent meet-and-greet between the countries’ two leaders. Measures of implied and realized volatility between the U.S. dollar and offshore Chinese yuan have retreated over the past year as China’s policy makers sought to stem capital outflows and prioritized financial stability. Combined with a recovery in commodity prices and a Trump administration that has so far failed to follow through on some of its aggressive policy proposals toward China or its promised fiscal stimulus, and the stage was set for stability.

U.S. Unlikely to Tag China Currency Manipulator, Schwarzman Says (Bloomberg) A top outside adviser to President Donald Trump said the U.S. probably won’t name China a currency manipulator in a report due this month, a move that would break a key campaign promise and another sign of capitulation on the administration’s tough trade talk.

Overnight markets 

Overview: US 10yr note futures are up 0.075% at 125-19, S&P 500 futures are down -0.19% at 2346.5, Crude oil futures are up 0.45% at $53.64, Gold futures are up 0.22% at $1277, DXY is down 0% at 100.71, CAD/USD is down -0.05% at 0.7509.

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 open higher, yields 2-3bps lower, US10Y 2.345 (-2bps). Tsys rose after Fed Yellen comments at Univ of Michigan Q&A, then pulled back in Europe with EGBs. France once again the focus, yields under pressure particularly at the short end, 2Y OAT yields are 4.5bps higher on election jitters, as polls show far left candidate Melenchon on the rise. UK gilts lower, curve flatter after UK inflation data even as it was in line with exp (2.3%).  GOCs higher, lagging the rise in tsys by a full 2bps, 10Y 1.59%.  provis opening unch, interest in long rols – Ont 48/46 & QC 48/45s. Mani budget today.

News headlines 

Gold Gains With Treasuries and Yen on Haven Demand: Markets Wrap (Bloomberg) Gold and Treasuries strengthened with the Japanese yen on lingering investor caution about global security risks and the path of U.S. interest rates. Crude ended this year’s best run.

Euro zone Feb industry output falls, largely due to energy (Reuters) Euro zone industrial output declined in February, against market expectations of a slight increase, largely due a sharp drop of energy production, dampening prospects for robust economic growth after bullish sentiment indicators.

Oil eases from five-week top, rising U.S. production weighs (Reuters) Crude oil eased from a five-week high on Tuesday as rising U.S. shale oil production offset concerns over geopolitical tensions in the Middle East and output cuts being made to support prices. The international benchmark for oil prices, Brent crude futures LCOc1, were down 20 cents, or 0.36 percent, from its previous close at $55.78 per barrel at 0702 GMT. Earlier, Brent had climbed to its highest since March 7 at $56.16 a barrel.

Poloz Faces Core Inflation Conundrum as Standing Pat Gets Harder (Bloomberg) The Bank of Canada will almost certainly keep its benchmark interest rate unchanged at 0.5 percent in its decision Wednesday, but with recent data suggesting the economy is on fire, explaining why is getting trickier.

Leftist Melenchon surges as French election candidates bicker (Reuters) A new poll on Tuesday showed far-left wildcard Jean-Luc Melenchon nipping at the heels of the frontrunners in France’s presidential race, building on his recent surge as sniping between the top contenders gathered pace.

Chinese cities restrict home sales by buyers to fight speculation (Reuters) At least twelve major Chinese cities are requiring newly bought homes to be held for at least two to three years before they can be sold, the first time ever that cities in the country are taking such measures and suggesting intensified government efforts to cool the red-hot property market.

Toshiba Warns of Its Ability to Continue as Going Concern (Bloomberg) Toshiba Corp., the 142-year-old conglomerate, warned on Tuesday it may not be able to continue as a going concern as it grapples with billions of dollars in losses from its Westinghouse Electric nuclear business.

Overnight markets 

Overview: US 10yr note futures are up 0.188% at 125-05, S&P 500 futures are down -0.05% at 2351.25, Crude oil futures are down -0.04% at $53.06, Gold futures are up 0.62% at $1261.7, DXY is down -0.18% at 100.84, CAD/USD is down -0.04% at 0.7507.

US Economic Data

Canadian Economic Data

There is  no major economic news 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