Commentaires

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

Market Update

Tsys opening unch, curve slightly flatter, 2Y +0.5bps 1.29%, 10Y unch 2.382, light volume in TY futures. S&P futures up 0.1%,crude extending gains +1.2% @52.88 on Libyan oil field outage and Russia signalling an extension of OPEC production cuts.  Euro near one month low, German bunds higher & steeper, 10Y 0.223%. Bund-OAT spd 3.6bps wider at 70bps.  Weakness in France & periphery on polls showing rise of left wing candidate Melenchon.  The US auctions $24bln in 3Y notes this aft followed by $20bln in 10Y notes tomorrow and $12bln 30Y bonds Wednesday as Thursday is half day before full day close Friday. In Canada, GOCs are unch. Friday saw GOCs lag the pullback in tsys as US 10s went from 2.27% pre non farms to 2.38% with GOCs actually narrowe in the short end despite strong Cdn employment. BOC decision & MPRthis Wednesday –   Poloz likely to remain cautious and focus on ongoing risks including non energy exports, household debt.. Provis opening unch after finishing Friday 1-1.5bps tighter, long Ontario deal rumoured.

News headlines 

Dollar Enjoys Support From Dudley Comments Before Yellen Q&A (Bloomberg) A post-U.S. payrolls rebound in the dollar and Treasury yields kept driving thin markets on Monday before a speech by Federal Reserve Chair Janet Yellen that follows hawkish comments from Fed Vice-Chairman William Dudley. Yellen will speak at the University of Michigan Ford School of Public Policy and will take questions from the audience and Twitter. Investors will look for further forward guidance after Dudley downplayed the length of any pause in short-term rate normalization after the Fed starts shrinking its balance sheet. The Bloomberg Dollar Spot Index rose a third day, up as much as 0.2 percent amid modest flows, according to foreign-exchange traders across Europe.

A Foreign Threat to U.S. Treasuries That Dwarfs Fed’s Debt Hoard (Bloomberg) These days, it seems like everyone in the bond market is obsessed over what will happen when the Federal Reserve starts whittling down its mammoth, crisis-era investments in U.S. government bonds. Yet lost in the hullabaloo is one little-noticed fact: there’s an even bigger debt pile that could draw buyers away from Treasuries at just the wrong time.

French Election Becomes a Four-Way Race as Melenchon Surges (Bloomberg) France’s presidential election is becoming a four-way contest as far-left candidate Jean-Luc Melenchon surges to catch Republican Francois Fillon, stoking uncertainty over the outcome less than two weeks before voting begins.

Bank of England Pressed Banks to Lower Libor Rates, BBC Says (Bloomberg) The Bank of England repeatedly pressured commercial banks to lower their settings for the benchmark London interbank offered rate during the 2008 financial crisis, according to the BBC. The report cited a secret recording in which a senior manager at a large U.K. bank instructed a Libor submitter to lower his rates.

Oil rises after U.S. missile strike in Syria, ends week 3 per cent up (TheGlobeandMail) Oil prices rose on Friday, trading near a one-month high and closing the week up 3 per cent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region.

Barclays C.E.O. Investigated Over Treatment of Whistle-Blower (NYTimes) The British authorities are investigating Barclays and its chief executive, James E. Staley, after he admitted to trying to learn the identity of a whistle-blower last year, the bank said on Monday. The investigation adds to the public relations troubles of the bank, whose reputation has been hit hard in Britain in recent years by revelations of employee misconduct dating from the financial crisis and earlier.

Mondelez Lays Groundwork to Replace Its Chief Executive, Irene Rosenfeld (Fortune) Mondelez International is preparing to look for a successor to Chief Executive Officer Irene Rosenfeld as the snack maker faces shareholder pressure and a broad shift to healthier eating hab its , the Wall Street Journal reported, citing sources.

Taper Tranquility Not Tantrum Greets Fed Bond-Reduction Plan (Bloomberg) News about the U.S. central bank’s strategy to start reducing its bond holdings, which began taking shape over the past week, has actually led to easier financial conditions via lower interest rates. That contrasts with the surge in Treasury yields that occurred during the so-called “taper tantrum” of 2013, when then-Fed Chairman Ben Bernanke hinted the central bank would reduce its purchases of Treasuries and mortgage-backed securities that were designed to bring down long-term interest rates.

Overnight markets 

Overview: US 10yr note futures are down -0.038% at 124-25, S&P 500 futures are up 0.06% at 2353.75, Crude oil futures are up 1.11% at $52.82, Gold futures are down -0.6% at $1249.8, DXY is up 0.05% at 101.23, CAD/USD is down -0.27% at 0.748.

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