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Market Update

US tsys moving  sharply higher, yields 2-4 bps lower with the US 10Y @ 2.40% (-4.6bps) and the curve 2bps flatter., brisk buying starting in Asia according to MNI,  heavy volume in TY futures (485k ).   Core Euro bonds also higher, flatter, peripherals wider on fears of a Le Pen victory in the French election. GOCs higher, underperforming the rally in the US across the curve. The Cdn bond market closes early in front of the holiday Monday. Provis softer in risk off environment, supply unlikely given early close.

News headlines 

Stocks Decline With Commodities as Pound Slumps: Markets Wrap (Bloomberg) European stocks dropped for a second day as commodity producers tracked declines in oil and metal prices, while the pound weakened after a report showed U.K. retail sales fell in January. French bonds retreated and the euro weakened after two left-wing presidential hopefuls discussed a potential single candidacy that would bring about a showdown with Marine le Pen’s anti-euro National Front. A gauge of commodities headed for the lowest close in more than a week, dragged down by industrial metals which were hurt by signs of tightening liquidity in top consumer China. The pound headed for the lowest level in a month.

Oil prices slip as high stocks overshadow OPEC cuts (Reuters) Oil slipped on Friday, pressured by growing global stocks, while expectations that an oil output cut by producers might eventually balance the market helped to underpin prices. Brent crude futures were trading at $55.57 per barrel at 0945 GMT, 8 cents below their last close. U.S. West Texas Intermediate (WTI) crude futures were down 4 cents at $53.32 per barrel.

Likely sixth loss in eight weeks weakens faith in dollar rally (Reuters) The dollar was stuck near a one-week low against a basket of currencies on Friday after upbeat economic data failed to lift Treasury yields, with concerns about policy under president Donald Trump quelling hopes of a new rally in the currency.

Carney, Wrong on Brexit, May Have Called Consumer Collapse Right (Bloomberg) The U.K. consumer finally appears to be cracking — potentially taking Britain’s economic strength with it. Retail sales unexpectedly fell for a third month in January, calling into question the key component of the economy’s recent momentum. The decline left both the three-month and annual rates of growth at the slowest in more than three years.

Air Canada posts bigger quarterly loss as fuel costs rise (GlobeAndMail) Air Canada reported a bigger quarterly loss as the airline cut fares to fill seats in long-haul leisure markets. Load factor, which measures how effectively the airline filled seats, fell to 79.9 per cent in the fourth quarter ended Dec. 31 from 81.1 per cent a year earlier.

Enbridge to invest $1.7-billion in German utility’s North Sea wind farm (GlobeAndMail) Canadian energy infrastructure group Enbridge Inc has bought a 49.9 per cent stake in EnBW’s 1.8 billion euro ($1.9-billion) North Sea offshore park Hohe See, EnBW said on Friday.

Overnight markets 

Overview: US 10yr note futures are up 0.3013% at 124-27, S&P 500 futures are down -0.25% at 2339.75, Crude oil futures are down -0.56% at $53.06, Gold futures are up 0.21% at $1244.2, DXY is up 0.17% at 100.61, CAD/USD is up 0.16% at 0.7639.

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 trading higher, yields 1-2 bps lower with longs lagging on the curve & the US 10Y 2.474 (-2bps). Prices off the highs after Feb Phili Fed surged to 43 vs 18 exp., thou Housing Starts were weaker -2.6% vs unch exp. European govt bonds higher, big rally in peripherals led by Spain &Portugal after ECB said in its minutes that ‘limited deviations from capital key were possible and inevitable’. Fed Fischer said the central bank is close to achieving its dual goals repeating Yellen’s view. FRBNY Pres Dudley said removal of accommodation is warranted if the economy evolves as anticipated. GOCs higher in line with tsys, 10Y 1.761%. 5Y benchmark has switched to the March 22s trading 1.194% with the roll (M22/S21) continuing to come in now 4.9 bid from 5.2 at auction yest.  As we noted the 5Y auction was very well received despite a the roll being a full bp flatter on the week. We would highlight the attractiveness of the June 22/5Y roll  which has barely budged at ~5.4bps. Provis opening unch after closing 0.5bps tighter yest  with 10Y Ontario back to the tights of Dec @ 76.5. Expect supply today, Alberta in the mkt with a new 11/15/21 GBP benchmark. CMB 10Y & 5Y FRN yest unch from new issue levels, WI 27 47.5/46.5., CMB 3/15/22 FRN CDOR + 14.5 mid. Enercare (DBRS:BBB) priced $275mm in 5Ys @ 215 OTC (214.8 vs 0.5 3/22) & $225mm 7Ys @ 245 (253 vs 1.5 6/23) – both upsized and a the tighter end of guidance. Both tranches ~15 bps tighter on the break. Enercare’s recent acquisition of Service Experts in the US broadened its reach, and at the same time the firm has increased its focus on the more lucrative rental mkt which has a 2.5x long term EBITDA impact vs outright water heater sales.  Ford Cda (BBB/BBB) issued $750mm 5s @ 147.9 which came in 5bps on the break. This morning Brookfield Infrastructure Partners (S&P BBB+) in the mkt with a 7Y @ 185 +/-5 bps. We had the BIP curve at ~6bps/yr which would value new 7Y closer to 175. So this looks like a decent NIC.

News headlines 

World stocks ride to record high, dollar retreats (Reuters) World stocks hit an all time high on Thursday as the latest round of robust global data matched hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus. MSCI’s All Country World index, which spans 46 countries, notched the milestone as Wall Street hit its latest record and Asia and Europe consolidated the roughly 10 percent gains both have made since mid-December.

Oil rises after news OPEC could extend output cuts (Reuters) Oil prices rose on Thursday after OPEC sources said the group could extend its oil supply-reduction pact with non-members and might even apply deeper cuts if global crude inventories failed to drop to a targeted level.

BOJ’s Kuroda warns low rates may sow seeds of new financial crisis (Reuters) Bank of Japan Governor Haruhiko Kuroda said low profitability at financial institutions could sow the seeds of a new financial crisis, offering his strongest warning to date of the demerits of aggressive monetary easing pursued by major central banks.

Aussie Unemployment Rate Falls Despite Full-Time Jobs Plunge (Bloomberg) Australia’s labor market is sending mixed signals following lackluster hiring last year, when full-time jobs virtually stagnated as gains were primarily part-time. The unemployment rate held below 6 percent partly due to discouraged job-seekers giving up the hunt, underscoring spare capacity in the labor market.

Canada, United States will focus on bilateral NAFTA negotiations (TheGlobeandMail) Canada and the United States will focus on bilateral negotiations as part of President Donald Trump’s pledge to tweak the North American free-trade deal that governs Canadian commerce, leaving Mexico essentially to fend for itself.

Trudeau Says EU Must Spread Trade’s Benefits or Risk Its Decline (Bloomberg) The trade pact between Canada and the European Union approved this week could be one of the world’s last multilateral trade deals unless policy makers share the benefits more widely, Canadian Prime Minister Justin Trudeau told European lawmakers.

Bombardier revenue misses on weak demand for trains, business jets (Reuters) Canadian plane and train maker Bombardier Inc (BBDb.TO) reported lower-than-expected revenue, hurt by weak demand in its rail and business aircraft units. The company said revenue in the business aircraft division, which makes the Learjet, Global and Challenger business jets, fell 20.9 percent to $1.65 billion in the fourth quarter.

Overnight markets 

Overview: US 10yr note futures are up 0.1134% at 124-4, S&P 500 futures are down -0.16% at 2346.75, Crude oil futures are up 0.53% at $53.39, Gold futures are up 0.5% at $1239.3, DXY is down -0.45% at 100.72, CAD/USD is down -0.31% at 0.7667.

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

US tsys opening weaker,US 10Y above 2.50% with prices accelerating downwards after 8:30 data : CPI came in double exp , the largest m/m increase since Feb 2013 at 0.6% vs 0.3% exp. Empire also much stronger 18.7 vs 7.0  – prices paid rose to 37.8 the highest since May 2012. Retail Sales 0.4% vs 0.1% – broad based advance as ex-auto sales were up 0.8% vs 0.4%. EGBs lower, gilts outperforming as UK labor data mixed with Jan weekly earnings dropping to 2.6% from 2.8% but employment coming in 37k vs 22k exp. UK infl linkers underperforming after weak 10Y IL gilt reopening drew lower bid-cover 1.88 vs 2.09 prev. GOCs lower , spds ~1bp tighter vs tsys  , Manufacturing Sales rose 2.3% in Dec vs 0.3% exp the largest gain since March 2015 – another strong month esp with Nov revised higher to 2.3% vs 1.5%. Provis trading up this morning after closing 1.5bps tighter yest. CMB 10Y & 5Y FRN this morning, 10Y WI 47.5 bid.

News headlines 

World stocks head towards record high on Yellen, U.S. outlook (Reuters) World stocks rose to a whisker off all-time highs on Wednesday and the dollar rose for the 11th straight day following Federal Reserve Chair Janet Yellen’s flagging of a possible interest rate rise next month.

Milestones on the oil market’s road to rebalancing (Reuters) Crude oil stockpiles are expected to empty significantly during the third quarter as continued production restraint from OPEC interacts with the seasonal increase in consumption. OPEC and non-OPEC countries are committed to reducing production by an average of nearly 1.8 million barrels per day in the first six months of 2017, with an option to extend cuts for a further six months.

EU-Canada Trade Agreement Wins European Parliament Green Light (Bloomberg) The European Parliament approved a landmark free-trade agreement with Canada, shoring up Europe’s market-opening clout in the face of a populist surge across the continent and U.S. President Donald Trump’s protectionist tilt.

UK wage growth slows in late 2016, employment picks up (Reuters) British workers saw their pay grow more slowly than expected at the end of last year, official data showed on Wednesday, ahead of a likely squeeze on their living standards from higher inflation in 2017.

China Mulls Resuming Coal Output Curbs for Six Months (Bloomberg) China, the world’s biggest producer and consumer of coal, is considering reinstating output restrictions to avoid the return of a glut after easing limits during winter. Shares in the country’s coal miners jumped along with futures prices.

Air Canada’s Plan of Attack Flies Over America (Bloomberg) When it comes to maintaining domestic air superiority, U.S. carriers have been shaking their fists at Persian Gulf airlines that have rapidly increased their American presence. Yet there’s another threat that may be growing in their own backyard—or more precisely, just north of it.

Overnight markets 

Overview: US 10yr note futures are down -0.3396% at 123-26, S&P 500 futures are down -0.21% at 2332, Crude oil futures are down -0.53% at $52.92, Gold futures are down -0.61% at $1217.9, DXY is up 0.48% at 101.74, CAD/USD is up 0.31% at 0.7626.

 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