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Market Update

Tsys lower in risk on trade, yields 3bps higher, EGBs lower after polls show Macron beat Le Pen in TV debate last night. Gilt yields sharply higher on firmer Feb inflation figures – UK CPI 2.3% vs 2.1% exp. above BOE’s 2.0% target for the first time since Nov 13.  Bunds weighed by French results, UK data, easing of French election risk has raised rate hike expectations along euribor strip. GOCs lower, spds 1-2bps wider vs tsys on better than exp Jan Retail Sales (2.2% vs 1.5% exp). Jan. GDP likely to be revised higher after better readings on manufacturing and now retail sales in the past week.  CAD sharply higher after the release, buoyed by residual weakness in USD from dovish fed last week. Provis unch, Alberta underperforming post budget. 407 Intl in the mkt with  $250mln June 1 33s (~16yrs)  at ~125.

News headlines 

Euro Climbs as France Concern Eases; Gold Retreats: Markets Wrap (Bloomberg) The euro rose to the strongest in more than a month after a French presidential debate eased concern about a populist win in the election. The dollar extended its decline as Fed officials weighed the pace of borrowing-cost hikes, and emerging-market stocks kept climbing.Europe’s common currency strengthened against most of its major peers after centrist Emmanuel Macron was widely judged to have come out on top in the televised contest. That helped send the greenback lower for a fifth day. Developing-nation equities extended a winning streak, with the MSCI Emerging Market Index advancing an eighth day. Gold fell for the first time in five days. Sterling surged after data showed U.K. inflation rose faster than expected.

U.K. Inflation Gains More Than Forecast, Breaching BOE Goal (Bloomberg) U.K. inflation accelerated more than economists forecast in February, breaking through the Bank of England’s target for the first time in more than three years. The 2.3 percent increase in the consumer prices index was the fastest since September 2013 and above the median prediction for 2.1 percent. The rate is up from just 0.3 percent a year ago, reflecting sterling’s 17 percent drop since the Brexit vote in June, as well as an increase in oil prices.

Oil prices rise on talk of OPEC cut extension, inventories in focus (Reuters) Oil prices rose on Tuesday, helped by expectations that an OPEC-led output cut would be extended beyond June but gains were pegged back by concerns about persistently high crude inventories. The Organization of the Petroleum Exporting Countries and some non-OPEC producers agreed to curb production from Jan. 1 by 1.8 million barrels per day (bpd) for six months to drain crude from record stockpiles. But inventories remain stubbornly large.

EU finance ministers worried about free trade after ‘surreal’ G20 (Reuters) European Union finance ministers expressed concern on Tuesday over the future of free trade after what one of them called a “surreal” meeting of finance chiefs of the world’s 20 biggest economies at the weekend. Breaking a decade-long tradition of endorsing open trade, G20 finance ministers and central bankers made only a token reference to trade in their communique, acquiescing to an increasingly protectionist United States after a two-day meeting in Germany failed to yield a compromise.

Bill Morneau says Ottawa will go light on the red ink in Wednesday’s budget (Financial Post) Canada’s Finance Minister is sticking by his pledge to lower the nation’s debt ratio, signalling the government won’t push much deeper into deficit when it delivers its budget this week. Bill Morneau said he remains committed to the notion a falling level of debt relative to the total size of the economy shows fiscal prudence. The country’s low growth, along with new spending on infrastructure and transfer payments, has forced the government to abandon other fiscal pledges.

TransCanada Corp. seeks natural gas pipeline approval linked to Petronas LNG project (Financial Post) Transcanada Corp has secured shippers’ commitment for a pipeline associated with Malaysian state-owned oil company Petronas’ pending Pacific NorthWest liquefied natural gas terminal in western Canada and will seek early construction, the company said on Monday. Government construction approval will allow the company to start building most of the North Montney Mainline before Petroliam Nasional Bhd, or Petronas, decides whether to commit to the project, TransCanada said in a statement.

Overnight markets 

Overview: US 10yr note futures are down -0.126% at 123-27, S&P 500 futures are up 0.19% at 2374.75, Crude oil futures are up 0.27% at $48.35, Gold futures are down -0.12% at $1232.5, DXY is down -0.55% at 99.859, CAD/USD is down -0.49% at 0.7526.

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 trading slightly lower, yields 0.5bps higher across the curve, US 10Y 2.50%. Low volume in Ty futures as Japan mkt closed for holiday. Volume picked up after 7:30 on news UK will trigger article 50/Brexit talks. The GBP slid on the news, UK gilts off the lows yet yields still ~1.5bps higher.  Very strong bid at the front end of the Spain & Italy curves on hopes ECB buying/TLTRO.  GOCs  lower, 1bp wider vs tsys, mkt awaits Wednesday’s budget announcement. Provis closed weaker Friday, spds ~1bp wider. Expectations are for Ont & Alberta 10Y this week.

News headlines 

Oil Weighs on Europe Stocks as Dollar Pares Drop: Markets Wrap (Bloomberg) Weaker oil prices helped drag European shares lower while a gauge of the U.S. dollar flirted with its longest losing streak since Donald Trump won the election. The yield on 10-year U.S. Treasuries steadied after Friday’s decline to the lowest in two weeks.

U.K. to Trigger Brexit on March 29, May’s Spokesman Says (Bloomberg) The U.K. will officially begin divorce proceedings with the European Union on March 29, Prime Minister Theresa May’s spokesman said, ending months of media speculation over the precise date.

China prepares to counter any U.S. trade penalties: sources (Reuters) China’s government has been seeking advice from its think-tanks and policy advisers on how to counter potential trade penalties from U.S. President Donald Trump, getting ready for the worst, even as they hope for business-like negotiations.

G20 ministers give Mnuchin space to define Trump trade agenda (Reuters) Wary of their first official encounter with U.S. President Donald Trump’s blustery trade agenda, the world’s top finance officials were relieved to find new Treasury Secretary Steven Mnuchin polite and business-like over the weekend.

Trump’s ‘America first’ agenda raises the spectre of inflation (TheGlobeAndMail) U.S. President Donald Trump has promised to put American workers first. But he could end up hurting American consumers in the process. Mr. Trump’s proposals on trade, taxes and infrastructure risk hitting Americans in the pocketbook though higher prices, say investors and economists. And that may set off a struggle with the Federal Reserve over the future of the U.S. economy.

Canada’s oilpatch is on the prowl for deals again after the long, dark years of the oil rout (Financial Post) Dealmakers in the oilpatch are preparing for more mergers and acquisitions this year, as embattled oil and gas producers emerge from a prolonged commodity price rout, start selling more assets and rejig their portfolios.

Overnight markets 

Overview: US 10yr note futures are up 0.013% at 123-25, S&P 500 futures are down -0.19% at 2370.75, Crude oil futures are down -1.85% at $47.88, Gold futures are up 0.13% at $1231.8, DXY is down -0.01% at 100.29, CAD/USD is up 0.11% at 0.7481.

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 prices open NY mixed after overnight range then creep higher in price since about six am ET, then recent profit-taking; cash 10Y note is at 2.530%, vs. recent low yield notched at 2.517%. More Tsys pressure rate-hike rhetoric from ECB’s Nowotny. Mix of supply-tied hedging and position squaring ahead into wknd saw rates inch slowly off lows. US swaps now steady to marginally mixed; after overnight light 2Y, 5Y paying, likely supply tied; also fast money 5/5Y receiving and deal-tied long end receiving. Asian equity markets saw little in the way of firm direction as markets took a breather after recent key risk events. OPEC may extend oil-supply cuts if stockpiles stay above the five-year average, Saudi Energy Minister Khalid Al-Falih told Bloomberg TV this morning. U.S. Treasury Secretary Steven Mnuchin and his German counterpart Wolfgang Schaeuble, Mnuchin heads to the Black Forest town of Baden-Baden for the G-20 finance ministers’ meeting. President Donald Trump also meets with Chancellor Angela Merkel in Washington today.

News headlines

Emerging Stocks Shine Even as Global Rally Eases: Markets Wrap (Bloomberg) Emerging markets headed toward the best week in eight months even as the global equities rally spurred by the Federal Reserve’s outlook lost momentum. The dollar was poised for its biggest weekly loss since February.

Oil Set for Weekly Gain as Saudis Say Willing to Extend Curbs (Bloomberg) Oil headed for a weekly increase as U.S. stockpiles retreated from record levels while Saudi Arabia said it’s prepared to continue production curbs in the second half of the year. Futures were little changed in New York, up 0.9 percent for the week. U.S. inventories last week fell for the first time this year, according to Energy Information Administration data on Wednesday.

G20 finance heads to repeat FX assurances, no deal yet on rejecting protectionism (Reuters) The world’s financial leaders will renounce competitive devaluations and warn against exchange rate volatility, but they have not yet found a common stance on trade and protectionism, a draft statement of their meeting in Germany showed on Friday.

Carney Warns of Balkanization Risk in Global Financial Markets (Bloomberg) Mark Carney, head of the Financial Stability Board, warned against giving in to “reform fatigue” a decade after the financial crisis, and called on the Group of 20 nations to strengthen regulatory cooperation.

Germany, U.S. risk worsening trade ties: business chamber (Reuters) Germany and the United States must work hard to prevent a deterioration of trade relations between the two countries, the head of the American Chamber of Commerce in Germany said on Friday.

Alberta digs deeper into deficit with budget that bets on oil rebound, pipelines (TheGlobeAndMail) The Alberta government expects to more than double its debt over the next three years and run deficits for six years, all while counting on rising oil prices and unbuilt pipelines to rescue the province’s finances.

Overnight markets

Overview: US 10yr note futures are down 0% at 123-19, S&P 500 futures are up 0.08% at 2381, Crude oil futures are up 0.45% at $48.97, Gold futures are up 0.2% at $1229.5, DXY is down -0.02% at 100.34, CAD/USD is up 0.03% at 0.7506.

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