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Market Update

US tsys higher, moving higher with core Euro bonds on Brexit news and Reuters story that the ECB is wary of making a policy change before June. Tsys underperforming EGBs in the rally, US 10Y below 2.40 (2.396 -2bps),  10Y bund ~5bps lower @ 0.337%, 10Y tsy/bund spd widening to 2 week high 205bps. Gilt were actually lower early on yet surged into NY open as mkt turned attention to PM May Article 50 trigger. The US auctions $13bln 2Y FRNs at 11:30 & $28bln in 7Y notes at 1:00, with Fed speakers Evans, Rosengren and Williams. GOCs higher led by 10Y with longs lagging once again, 10s30s at 1mnth highs 69.5, 2Y auction today – $3.9bln reopened Feb 19s with the 2Y roll 2.6/2.1. Provis unch after widening 0.5bps yest despite firmer credit, Ont 27s 77/76, long Alberta 46 still expected. City of Toronto issued $300mln in June 46s at 119 or Onts +31 . National Bank new 5.25Y (June 22) dep note yest – $750mm @ 83.2 which broke 3bps tighter. Quebec budget – no impact on spds, balance budget (3rd in a row) and borrowing to be cut in half for FY 2017/18.

News headlines 

Pound Choppy on Brexit Day; European Stocks Drift: Markets Wrap (Bloomberg) European stocks and U.S. share futures struggled for direction as a bounce on optimism over the American economy faded and President Donald Trump battled to revive his legislative agenda. The pound reversed losses as the U.K. started its exit from the EU.

Dollar climbs on Fed talk, sterling pressured by Brexit launch (Reuters) The dollar pulled away from 4-1/2-month lows on Wednesday after solid data backed expectations for more U.S. interest rate hikes this year, while sterling dipped as Britain moved to launch its exit from the European Union.

Oil Gains as Libyan Crude Drop Offsets What OPEC Curbs Couldn’t (Bloomberg) Oil rose after a pipeline halt reduced output in OPEC member Libya, countering concerns that a U.S. surplus shows little sign of diminishing. Libya’s output was said to fall to about 500,000 barrels a day after a pipeline carrying crude from the Sharara field — its biggest — stopped operating.

Huge range of sterling forecasts clouds horizon for Brexit talks (Reuters) While banks warn Britain’s European Union divorce could drive the pound below $1.20, their option traders have cut the cost of insuring against further falls in the two years it has left inside the bloc.

Quebec Cuts Personal, Business Taxes After Balancing Budget (Bloomberg) Quebec will balance its budget for the third straight year, giving Finance Minister Carlos Leitao more room to lower taxes for workers and businesses while increasing spending on transit and health care.

EU vetos Deutsche Boerse-London Stock Exchange merger deal (Reuters) An attempted merger between the German and British stock exchanges was struck down by European regulators on Wednesday, formally ending a deal that unraveled in the wake of Britain’s vote to leave the European Union.

Overnight markets 

Overview: US 10yr note futures are up 0.113% at 124-16, S&P 500 futures are up 0.05% at 2352.75, Crude oil futures are up 0.43% at $48.58, Gold futures are down -0.28% at $1255.3, DXY is up 0.33% at 100.04, CAD/USD is down -0.07% at 0.7477.

US Economic Data

Canadian Economic Data

There is no major economic  news 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

Market Update

Tsys higher, 10Y 2.37 (-1bp), curve 0.5bps flatter, narrow range on avg volume in TY futures (230k) and before Case Shiller & Cons Confidence as well as $34bln 5Y auction at 1:00ET. Core Euro bonds mixed – UK gilts lower & steeper wit the 5Y outperforming on solid auction of reopened June 2022 Gilt. Bunds higher, 10Y 0.388% (-1.7bps) with the 2Y lagging after weak 2Y Schatz auction. Rally in Italian debt  led by the 10Y with yields at three week low on reduction of hedges related to Eurozone political risk. GOCs higher, outperforming tsys by ~1bp out to 10 yrs and the 10Y below key 1.60% resis , 1.58% (-2.5bps). BOC Poloz speaking at 10:00 on economic history & Quebec budget at 4:00pm.

News headlines 

Stocks, Crude Advance as Calm Returns; Rand Slumps: Markets Wrap (Bloomberg) Stocks climbed and the dollar steadied as the selloff stemming from U.S. policy uncertainty abated. The rand tumbled on the prospect of South Africa’s President Jacob Zuma firing his finance minister.

British bonds buoyed by Brexit risks, but prone to inflation burn (Reuters) Fast-rising inflation and growing talk of tighter monetary policy from the Bank of England may spell the end of a winning streak for British gilts, among the best performers in major government bond markets this year.

Iranian oil minister says global oil cuts deal likely to be extended (Reuters) Iranian Oil Minister Bijan Zanganeh told reporters on Tuesday that a global oil cuts deal is likely to be extended, but that time is needed to discuss the subject thoroughly first.

Canada, Bakken Light Oil Jump as Supply Cut Meets Demand Surge (Bloomberg) Light crude surged in Canada and the northern U.S. after an oil-sands upgrader shut for maintenance because of a fire and Energy Transfer Partners LP said it was preparing to place the Dakota Access pipeline into service.

Poll shows Macron win in French election in shadow of ‘Penelopegate’ (Reuters) Centrist Emmanuel Macron would trounce far-right leader Marine Le Pen in France’s presidential election if, as seems increasingly likely, the two face off in the second and final round of the contest on May 7, a poll showed on Tuesday.

Former CEO Pearson sues Valeant over withheld shares (TheGlobeAndMail) Valeant Pharmaceuticals International Inc.’s former chief executive officer accused the drug maker of failing to deliver 3 million shares promised him as part of an exit package. Ex-CEO Michael Pearson stepped down in May after Valeant’s shares plummeted and it became the subject of U.S. Justice Department and congressional investigations. In his lawsuit filed Monday, he claimed the company promised him 580,676 restricted shares and 2.46 million performance shares.

Best Canada Bond Fund Awaits Trump-Driven Junk Opportunities (Bloomberg) Can Donald Trump deliver? That’s the question Canada’s best-performing bond fund this year is asking as it seeks to extend its advantage in a low-yield world. The Renaissance Corporate Bond Fund, managed by Canadian Imperial Bank of Commerce’s CIBC Asset Management unit, has returned 2.1 percent year to date, the best result for the first quarter among 36 funds focused on Canadian bonds, according to data compiled by Bloomberg. The average return is 1.1 percent. The C$1.2 billion ($900 million) Renaissance fund has a one-year total return of 7.1 percent, compared with a 2.3 percent average return for the group.

Overnight markets 

Overview: US 10yr note futures are up 0.063% at 124-24, S&P 500 futures are down -0.15% at 2335, Crude oil futures are up 1.17% at $48.29, Gold futures are up 0.11% at $1260.2, DXY is up 0.04% at 99.202, CAD/USD is up 0.09% at 0.7469.

US Economic Data

Canadian Economic Data

There is no major economic  news 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

Market Update

Tsys sharply higher, yields 5-6bps lower, US 10Y 2.355 (-5.7bps), follow thru bid from Friday’s healthcare defeat  amid doubts Trump will be able to implement his pro growth agenda. US stock futures lower, DXY index -0.67%, crude below $50 on .  Core Euro bonds higher, yields 2-3bps lower in UK & Germany  – German IFO strong pointing to upside risk in Q2 Eurozone GDP. No data in US & Cda, more Fed speakers as well as $26bln 2Y auction. GOCs higher, outperforming tsys by 0.5bps with the 10Y 1.58% (-5.7bps). Provis ended 1bp wider on Friday on no supply, starting the day unch.

News headlines 

U.S. stock futures hit six-week low on failed healthcare bill (Reuters) U.S. stock index futures hit six-week lows on Monday after President Donald Trump failed to push through his healthcare bill, raising concerns about his ability to deliver on his economic agenda. A Congress controlled by Trump’s Republican party on Friday pulled a bill to overhaul the Affordable Care Act or Obamacare, in a stunning setback for the President’s first major legislative move since taking office.

Dollar hits lowest since November as Trump trade deflates (Reuters) The dollar slid to a four-month low against a basket of currencies on Monday as investors weighed the prospects of a U.S. fiscal spending boost under President Donald Trump after his failure to push through a key healthcare reform bill.

Russia Needs Data on Oil Supply, Markets to Decide on More Cuts (Bloomberg) Russia isn’t ready to support a possible extension of oil-supply cuts into the second half of the year, even as more crude producers acknowledge they will probably need to do so to achieve their goals of balancing the market and firming up prices.

On the up: German business morale brightest in nearly six years (Reuters) German business morale hit its highest level in nearly six years in March, suggesting company executives in Europe’s largest economy are brushing off concerns about the threat of rising protectionism and Germany’s own election issues.

Trump and Trudeau’s Infrastructure Seen Too Tiny for Big Funds (Bloomberg) U.S. and Canadian plans to spend more than $1.1 trillion on infrastructure are unlikely to be lucrative enough to attract big global investors, according to one of the world’s biggest funds in the sector.

Dominion Diamond to explore strategic options, including sale (TheGlobeandMail) Canadian diamond miner Dominion Diamond Corp., which is being pursued by Washington Cos and Stornoway Diamond Corp, said it would explore strategic alternatives, including a sale.

Overnight markets 

Overview: US 10yr note futures are up 0.213% at 124-26, S&P 500 futures are down -0.9% at 2323.75, Crude oil futures are down -0.98% at $47.5, Gold futures are up 0.74% at $1261, DXY is down -0.69% at 98.939, CAD/USD is down -0.2% at 0.749.

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