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Market Update

US tsys firmer, yields 1-2 bps lower led by the 7Y , longs lagging. Tsy sec Mnuchin interviewd on CNBC said tax reform is a priority, yet wont impact economy until next yr. Mnuchin also daid it ‘makes sense’ to look at issuing a 50 year tsy bond. US tsy auctions @ $28bln 7Y bonds with the WI ~2.22%, 6bps richer than the prior auction. French bonds are outperforming, yields 4-6bps lower related to yest news of coalition between centrist politician Bayrou and Macron. Atlanta Fed Lockhar saying 2-3 rate hikes is appropriate for this yr.  Fed funf futures mkts are pricing in 36% odds of a rate hike in March vs 32% at the start fo the month. The odds of two hikes before y/e has barely risen despite the hawkish fed rhetoric of late, currently standing at ~25%. GOCs higher, curve 2bps flatter led by 10s, the 10Y ~4bps lower @ 1.68% . Provi spds well bid this morning, Ontarios trading up in 10s & longs , Ont 26s @ 75 – 3bps tighter on the week after Q3 update expecting a $1.9bln deficit for theis FY vs over $4.0bln initially projected, the lowest since the 2008 econ crisis.

News headlines 

Investors Weighing Earnings, Fed Hit Pause Button: Markets Wrap (Bloomberg) Markets largely entered a holding pattern Thursday, with global equities mixed and the dollar edging higher as investors digested a fresh batch of European corporate earnings, the latest twists in the French election and minutes from the Federal Reserve. Oil climbed.

French Bonds Rally After Macron Boosts Presidential Campaign (Bloomberg) French government bonds led gains in Europe after independent candidate Emmanuel Macron agreed to an alliance with his centrist rival Francois Bayrou, boosting his bid to become president.

UK economy picks up in late 2016 but signs of Brexit hit appear (Reuters) Britain’s economy sped up at the end of 2016, data showed, but over the whole year it was weaker than previously thought and there were signs that the Brexit vote will increasingly act as a brake on growth in 2017.

Tax, Borrow or Wait? Something’s Got to Give in Trudeau’s Budget (Bloomberg) Justin Trudeau’s embrace of deficits won him accolades from global investors and policy makers, but not a full year into his first budget and Canada has run out of fiscal runway.

Exxon revises down oil and gas reserves by 3.3 billion barrels (Reuters) U.S. oil major Exxon Mobil Corp has revised down its proved crude reserves by 3.3 billion barrels of oil equivalent as a result of low oil prices throughout 2016, a company filing showed on Wednesday.

CIBC kicks off big bank results with profit boost, dividend hike (TheGlobeAndMail) Canadian Imperial Bank of Commerce reported higher profit of $1.4-billion for its fiscal first quarter, boosted in part by the sale of real estate properties. Adjusted to exclude certain items, CIBC’s profit was up 13 per cent to nearly $1.2-billion, or $2.89 per share, ahead of analysts’ expectations of $2.57 a share.

Overnight markets 

Overview: US 10yr note futures are up 0.2% at 125-01, S&P 500 futures are up 0.17% at 2365, Crude oil futures are up 2.05% at $54.69, Gold futures are up 1.26% at $1248.8, DXY is down -0.17% at 101.05, CAD/USD is down -0.55% at 0.7638.

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 firmer, curve flatter with the long end outperforming, yields 1-2bps lower, with the 10Y 2.411 (-1.8bps).  Heavy volume in TY futures (508K) with a slight fade in Asia and rally in Europe  on safe haven buying related to French election and weaker Q4 UK GDP (2..0% y/y vs 2.2% exp). French risk sent 2Y German yields to new record lows at -0.915%,  the France 5Y hit 0.20% before reversing 7bps to 0.13% on new poll which showed Le Pen losing ground. The US auctions $34bln in 5Y notes at 1:00Pm with the 2Y FRN sale at 11:30. GOCs gaining ground after very disappointing retail sales for Dec -0.5% vs 0.0% exp with ex-autos weaker as well -0.3% vs 0.5% exp. Provis well bid after better Ontario deficit numbers released yest, Ontarios trading up late yest afternoon.

News headlines 

Euro Slips, Bonds Gain as Investors Turn Cautious: Markets Wrap (Bloomberg) The euro extended declines and bonds rose as European political risk ensured an ongoing demand for havens. The dollar edged higher before the release of Fed minutes.

Oil Slips From One-Week High as Focus Returns to OPEC Cuts (Bloomberg) Oil fell from the highest price in more than a week amid speculation about the effectiveness of OPEC’s supply curbs and forecasts for another expansion in U.S. crude stockpiles. Futures dropped 0.6 percent in London, ending three days of gains.

China home price growth cools for 4th straight month as government curbs bite (Reuters) China’s home price growth slowed for the fourth straight month as demand cooled further in its biggest cities, a welcome sign for policymakers as they seek to defuse bubbles in the world’s second-largest economy amid an explosive growth in debt.

Eurozone finally escapes deflation in January (Market Watch) For the first time in almost four years, none of the eurozone’s 19 members was in deflation during January, an encouragement to the European Central Bank in its long struggle to lift inflation to its target and keep it there.

German Ifo Sentiment Rises as Bundesbank Sees Growth Pickup (Bloomberg) German business confidence unexpectedly improved, underpinning the Bundesbank’s prediction that economic growth strengthened at the start of the year. The Munich-based Ifo institute’s business climate index rose to 111 in February from a revised 109.9 in January. That compares with a median estimate of 109.6 in a Bloomberg survey of economists.

Sterling hits two-month high versus euro ahead of GDP breakdown (Reuters) Sterling gained another 0.4 percent against the euro in early trade in London on Wednesday, extending a run to two-month highs in the previous session driven by French political nerves.

Bell-MTS approval could influence potential Quebecor-Shaw spectrum deal, analysts say (Financial Post) An apparent easing in the federal government’s policy aimed at encouraging four national wireless careers raises the question of whether Quebecor Inc. will sell its non-core spectrum to Shaw Communications or wait for a better offer from the Big Three.

Overnight markets 

Overview: US 10yr note futures are up 0.1879% at 124-30, S&P 500 futures are down -0.11% at 2357.5, Crude oil futures are down -0.64% at $53.98, Gold futures are up 0.1% at $1240.1, DXY is up 0.21% at 101.58, CAD/USD is up 0.42% at 0.7577.

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 lower, prices at overnite lows on heavy volume in TY futures(488k), Us 10Y 2.456(+4.,1bps). Fed Harker saying would not rule out March rate hike if PCE warranted it in interview with MNI. Core Euro bonds sharply lower, yields 2-3bps higher after strong EU PMI . French yields another 3-7bps higher led by the 5-8 yr sector as Len Pen continues to gain in the polls. GOCs lower , curve 2bps steeper as 10s underperform,  GOC 10Y 1.75 (+4.4bps). Provis unch from Friday when spreads closed ~1bp wider, 10Y Ont @78 bps. Corps well bid, new issues from last week (BIP, Ford, Enercare) all significantly tighter. We continue to see good demand for ‘high beta’ product  – reits, BBB energy (CNQ, Veresen).

News headlines

Stock futures hit record highs amid retail earnings (Reuters) U.S. stock index futures rose to record intraday highs on Tuesday as oil prices surged and investors assessed earnings from top U.S. retailers.

OPEC aims for higher compliance, sees 2017 stock fall (Reuters) OPEC countries are aiming to boost compliance with agreed oil output curbs further from January’s high levels in a bid to clear a supply glut that has weighed on prices, the group’s secretary general said on Tuesday.

Euro-Area Economic Recovery Broadens as France Outpaces Germany (Bloomberg) The euro area’s unexpectedly upbeat economic data on Tuesday might have come with more than one positive message. A gauge for economic activity rose to the highest level in almost six years in February, following previous signals that the region’s frail recovery is finally taking shape. National gauges showed France outpacing Germany for the first time since 2012 — a development that could signal growth in the 19-nation region is becoming more broad-based.

Sterling subdued ahead of Bank of England team’s testimony (Reuters) Sterling fell against the dollar but made ground versus the euro on Tuesday, before Bank of England Governor Mark Carney and a number of his chief lieutenants testify in Britain’s parliament.

Japan February flash manufacturing PMI shows expansion at three-year high (Reuters) Japanese manufacturing activity expanded in February at the fastest pace in almost three years, a preliminary survey showed on Tuesday, a sign that domestic and overseas demand is improving. The Markit/Nikkei Flash Japan Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 53.5 in February from a final 52.7 in January.

Big Six banks’ earnings results to get a lift from hot markets (TheGlobeAndMail) The Big Six begin reporting their fiscal first-quarter earnings this week, launching into 2017 with a decidedly more hopeful outlook. At this time last year, oil prices had plunged to rock-bottom levels near $30 (U.S.) a barrel, leaving portfolios of energy-related loans mired in uncertainty. And that was before Britain decided to leave the European Union and U.S. voters placed Donald Trump in the White House.

Overnight markets 

Overview: US 10yr note futures are down -0.1879% at 124-15, S&P 500 futures are up 0.21% at 2353, Crude oil futures are up 1.87% at $54.4, Gold futures are down -0.82% at $1229, DXY is up 0.57% at 101.53, CAD/USD is up 0.32% at 0.7606.

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