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Market Update

Tsys higher at upper end of o/n range on above avg volume in TY futures , US 10Y 2.38 (-1bp) – ‘risk off’ bid on reports of explosion in St Petersburg and before key ISM Man data at 10:00am and March FOMC minutes Wednesday and March Employment Friday. Latest CFTC COT report for March 28th showed large specs extending shorts in the short end – record short Eurodollars , yet paring back on shorts in 2s, 10s and longs. In the long end specs cur net shorts in the 30Y bond by 30k contracts to -20k. Core Euro bonds higher – bull steepener in Germany/flattener in UK.  Strong bid in German , Italy & Spain short end as the new quarter sees long vol trades being unwound and before ECB meeting on Thursday. Gilts higher on weaker UK PMI, 10Y gilt at one month low 1.10%. GOCs are slightly higher in line with tsys, before Markit Man Survey for March and BOC Business Outlook Survey for Q1.  The Q4 survey saw showed strong increases in all three key measures of hiring, sales and investment intentions with both future sales and investment intentions at 2 yr highs. Provis – little changed on the week,  Ont 26/48 roll steeper as buyign led by 10s last week. PQ 10Y 76.5/ from 77 at n.i. last Thurs.

News headlines 

Europe Stocks Rise Fifth Day, Pound Falls on Data: Markets Wrap (Bloomberg) European shares advanced for a fifth day and the pound retreated at the start of a busy week that includes a meeting between Xi Jinping and Donald Trump and culminates in the monthly U.S. jobs report.

Euro-Area Unemployment Declines to Lowest Level in Eight Years (Bloomberg) Euro-area unemployment fell to the lowest level in almost eight years in February, in a sign that the region’s economy is strengthening. Joblessness decreased to 9.5 percent, the European Union’s statistics office in Luxembourg said on Monday. That’s the lowest since May 2009 and matches the median estimate of economists in a Bloomberg survey.

Sterling slips after UK manufacturing loses momentum (Reuters) Sterling slipped on Monday after data showed British manufacturing lost momentum last month, the latest sign the economy may be running out of steam after its surprising resilience in the wake of last year’s Brexit vote.

Japan business mood brightens as recovery broadens: BOJ tankan (Reuters) Japanese big manufacturers’ business confidence improved for a second straight quarter to hit a one-and-a-half year high in March, a closely watched central bank survey showed, a sign the benefits of an export-driven economic recovery were broadening.

Canadian Stocks Need Oil’s Secret Sauce to Revive Former Glory (Bloomberg) Canadian stocks ranked 21st among the world’s developed markets in the first quarter, an ignominious performance that investors don’t expect to improve much for the rest of the year — unless oil bolts higher again. Strategists and portfolio managers are betting the S&P/TSX Composite Index will only rise about 3.3 percent to 16,066 by the end of 2017 from Friday’s close, according to the average of eight forecasts compiled by Bloomberg News. The full-year forecast gain of 5 percent contrasts with the benchmark’s 18 percent return in 2016.

OPEC’s Barkindo Sees Progress in Oil Cuts as Stockpiles Drop (Bloomberg) Crude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to OPEC’s Secretary-General Mohammad Barkindo.

Overnight markets 

Overview: US 10yr note futures are up 0.151% at 124-24, S&P 500 futures are up 0.02% at 2359.75, Crude oil futures are up 0.2% at $50.7, Gold futures are down -0.18% at $1248.9, DXY is up 0.19% at 100.54, CAD/USD is up 0.27% at 0.7489.

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 moving lower on higher core PCE which rose to the Fed’s target 1.8% from 1.7% for the first time since 2012, US 10Y 2.42%. Core Euro bonds mixed –  UK gilt curve 1bp flatter as UK gilts have 0.29yr month end extension based on BB data, compared to 0.07yrs for tsys. German bunds recovering from earlier losses , German unemployment fell to a new all time low of 5.7% in March as the no. of unemployed fell by 30k vs 10k exp. Euro zone inflation fell to 1.5% in Jan from 1.8%, 0.7% for the core . ECB Coeure said the balance of risks has shifted to neutral and that inflation remains subdued. GOCs lower, underperforming tsys after Cdn Jan GDP surprised to the upside in Jan, rising 0.6% vs 0.3% exp 2.3% y/y vs 1.9%- quite strong thou ‘whisper’ no. was already higher given the run of solid Jan data.

News headlines 

Global Stocks Drop on Final Day of Stellar Quarter: Markets Wrap (Bloomberg) Global stocks were poised to end a blockbuster quarter with a whimper, with investors seeing little reason to take shares higher amid political and economic uncertainty in the coming quarter. The rand tumbled after South Africa’s finance minister was fired.

Euro-Area Inflation Slows More Than Predicted on Oil, Food (Bloomberg) Inflation in the euro area slowed for the first time in nearly a year this month, which may reinforce the view among some European Central Bank policy makers that it’s too soon to start unwinding unconventional stimulus.

Japan output jump, low jobless rate yet to spark inflation (Reuters) Japanese factory output rose at the fastest pace in eight months and the jobless rate hit a two-decade low in February, a sign a rebound in overseas demand continued to brighten prospects for the country’s export-reliant economy. But household spending remained soft and consumer inflation was flat when stripping away the effect of rising energy costs, underscoring the challenges the Bank of Japan faces in generating sustained price rises backed by steady wage growth.

China’s factory activity hits 5-year high in March (Market Watch) An official gauge of Chinese factory activity hit a near five-year high in March as government stimulus spending and rising prices for factory goods bolstered the world’s second-largest economy. China’s official manufacturing purchasing managers’ index edged up to 51.8 in March from 51.6 in February, the National Bureau of Statistics said Friday. The March reading, slightly above a median forecast of 51.7 from a Wall Street Journal poll of by 12 economists, has remained above the 50 mark separating expansion from contraction for eight straight months.

EU offers Brexit trade talks, sets tough transition terms (Reuters) The European Union offered Britain talks this year on a future free trade pact but made clear in negotiating guidelines issued on Friday that London must first agree to EU demands on the terms of Brexit. Those include paying tens of billions of euros and giving residence rights to some 3 million EU citizens in Britain, the proposed negotiating objectives distributed by EU summit chair Donald Tusk to Britain’s 27 EU partners showed.

Credit Suisse Raided, Client Assets Seized in Tax Evasion Probe (Bloomberg) Credit Suisse Group AG, some of its employees and hundreds account holders are the subjects of a major tax evasion and money laundering probe that spans five countries. Investigators in the Netherlands arrested two individuals on Thursday, seizing a gold bar, paintings, jewelry and bank account information. They allegedly concealed millions of euros from authorities by placing them in Swiss bank accounts, the Fiscal Information and Investigation Service said in a statement Friday. Criminal investigations are also underway in Australia, Germany, the U.K. and France.

BCE, Rogers racing to new frontier in high-speed Internet (TheGlobeAndMail)  In their continuing fight for the home, BCE Inc. and Rogers Communications Inc. are racing to roll out faster networks while they capitalize on different strengths to win television and Internet customers. In separate announcements this week, the rivals underscored investments they’re making to support download speeds of one gigabit per second – the new frontier in high-speed Internet, crucial for the growing number of connected devices, data-hungry applications and advanced television platforms.

Overnight markets 

Overview: US 10yr note futures are down -0.038% at 124-10, S&P 500 futures are down -0.14% at 2361.25, Crude oil futures are down -0.2% at $50.25, Gold futures are down -0.42% at $1242.7, DXY is up 0.06% at 100.47, CAD/USD is down -0.31% at 0.7518.

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 moving lower after Q4 GDP revised higher, core PCE higher 1.3% vs 1.2%, after narrow range overnite on muted volume in TY1 futures (235k), US 10Y 2.39% (+2bps). Core Euro bonds higher, the 10Y bund yield lower for a fifth day @ 0.323% three week low on divergent monetary policy after yest Reuters story saying ECB is reluctant to change its policy message while Fed Rosengren & Williams yest seemed to leave the door open for more than three rate hikes this year if warranted. German March CPI also supportive – 0.2% vs 0.4% with the  y/y slowing to 1.5% from 2.2% in Feb vindicating cautious ECB outlook for removing accommodation. GOCs lower after 8:30 data , provis unch – Alberta longs yest @ 99 sold out quick as crude rallied, 98/97 bid this morn (Ont + 11).

News headlines 

U.S. stock futures slightly lower ahead of Fed speakers, GDP data (Reuters) U.S. stock index futures were slightly lower on Thursday as investors awaited key economic data, including a final reading on fourth-quarter GDP numbers, and speeches by a host of Federal Reserve officials.

First German inflation data presses euro lower (Reuters) A swing in sentiment against the euro dominated major currency markets for a second day on Thursday, weak initial readings of German regional inflation prodding the single currency back to nine-day lows against the dollar.

Oil steady on Libya disruptions, bloated U.S. stockpiles (Reuters) Oil prices slipped on Thursday after two days of increases as bloated U.S. inventories limited the impact of supply disruptions in Libya and lower output from other OPEC exporters. Brent crude oil LCOc1 was down 30 cents at $52.12 a barrel by 0945 GMT (5:45 a.m. ET). U.S. crude oil CLc1 was 10 cents lower at $49.41.

Cenovus to Double Size With $13.3 Billion Buy of Conoco Assets (Bloomberg) Cenovus Energy Inc. will double its reserves and production by buying Canadian holdings from ConocoPhillips for C$17.7 billion ($13.3 billion), the latest sale of energy assets in that country by international companies stung by falling oil prices.

Brexit Trigger Spells Trouble for U.K.’s Sweet Economic Run (Bloomberg) The U.K. economy’s sweet spot is about to be challenged. Prime Minister Theresa May kickstarted the formal withdrawal from the European Union on Wednesday, leaving businesses and investors facing the realities of Brexit and changes to everything from regulation to the movement of workers and goods.

Dollarama profit beats estimates as customers spend more (TheGlobeAndMail) Canadian discount retailer Dollarama Inc. reported a higher-than-expected quarterly profit on Thursday as customers spent more in its stores. The Montreal-based company said the rise in sales was aided by a 7.8 per cent increase in the average checkout bill. Dollarama also said it opened 26 new stores in the fourth quarter.

Overnight markets 

Overview: US 10yr note futures are down -0.013% at 124-18, S&P 500 futures are down -0.05% at 2355.75, Crude oil futures are up 0.83% at $49.92, Gold futures are down -0.58% at $1249.5, DXY is up 0.2% at 100.2, CAD/USD is down -0.11% at 0.7512.

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