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US tsys are sharply higher on weaker European/Asian stocks, S&P futures are -15pts, lower crude, US 10Y 1.723 (-4bps). Japanese yen rose to a 17 month high while the Nikkei fell 2.5% – the sixth straight decline.  Core Euro bonds also sharply higher led by 10Y UK gilts, yields at one month lows with the 10Y bund yield below 0.10% for the first time since April 2015.  Bunds well bid after weak Feb factory orders, Eurozone service PMI. The latest JPM Tsy Client Survey showed the most net longs since Nov 1st at 23%. GOCs higher led by the 10Y  which is 4bps better on the curve in a directional move with 10Y yields. Provis opening wider, Ont 46 108/07 (106.5),Ont 26 96/95 (94.5), QC 48s 110/109.5.

News headlines

• Yen Rises With Bunds as Economic Concerns Mount; Stocks Decline (Bloomberg) The yen jumped to a 17-month high and government bonds climbed as increasing concern that global economic growth is faltering stoked demand for haven assets. Stocks fell around the world, along with emerging-market currencies. Japan’s yen rose against all 16 of its major peers, while yields on 10-year German bonds dropped to the lowest in a year. All 30 stocks in Germany’s DAX Index fell after an unexpected drop in factory orders
• Norway Frees Wealth Fund to Add $17 Billion in Real Estate (Bloomberg) Norway proposed letting its sovereign wealth fund raise real estate holdings by about $17 billion, while rejecting a call to expand into infrastructure projects. The upper limit on real estate investments for the $850 billion fund, the world’s biggest, should be raised to 7 percent from 5 percent, the Finance Ministry said on Tuesday. The real estate assets will also be separated from the overall portfolio and “be included in the existing framework for deviations,” according to the ministry.
• Euro Area Growth Stays ‘Sluggish’ as Markit Index Revised Lower (Bloomberg) The euro-area economy grew slower than initially anticipated at the end of the first quarter, according to Markit Economics, which revised down a key index of activity. Markit said its composite Purchasing Managers Index rose to 53.1 in March from 53 in February. While that’s above the 50 level that divides expansion from contraction, it’s below the initial reading of 53.7 published March 22.
• Fed’s Evans says market more pessimistic on U.S. rate hikes (Reuters) Financial markets are more pessimistic than the U.S. central bank in their pricing of U.S. interest rate hikes, Chicago Fed President Charles Evans said on Tuesday. “Market expectations are pricing in a 20 percent likelihood of things deteriorating from here,” said Evans during an investor conference in the Asian financial hub, citing recent surveys. “I don’t have that outlook. In general, financial market expectations are more pessimistic than ours.”
• Saudi Arabia to sign $21.5 billion energy, development deals with Egypt: sources (Reuters) Saudi Arabia is expected to sign a $20 billion deal to finance Egypt’s petroleum needs for the next five years and a $1.5 billion deal to develop its Sinai region, two Egyptian government sources told Reuters on Tuesday. The agreements are tabled to be signed on Thursday during a visit to Cairo by Saudi Arabia’s King Salman, a rare foreign trip.
• IMF chief ramps up call for global action as growth risks increase (Reuters) The global economy’s already modest prospects will decline further unless authorities take stronger action to boost growth, the head of the IMF warned on Tuesday, saying the Fund would cut its headline forecasts next week. Christine Lagarde said China’s shift to an economic model based more on domestic demand, stubbornly low commodity prices and tighter funding conditions in some countries had all clouded the outlook.
• Oil Holds Near Month-Low as U.S. Supplies Seen Expanding Glut (Bloomberg) Oil held near the lowest in a month before U.S. government data forecast to show an increase in crude stockpiles to the highest level in more than eight decades. Futures fell as much as 1.3 percent in New York after dropping 6.9 percent in the previous two sessions. Inventories in the U.S., the world’s biggest oil user, climbed by 2.85 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday. That will be an eighth weekly advance.
• Hong Kong shares fall despite mainland gains, energy stocks tumble (Reuters) Hong Kong’s main stock index posted its biggest loss in nearly six weeks on Tuesday, touching a one-month low, as the energy sector tumbled against a backdrop of slumping crude oil prices and mixed messages on the outlook for U.S. monetary policy. The Hang Seng Index had its worst day since Feb. 25, dropping 1.6 percent to 20,177.00. The China Enterprises Index lost 1.9 percent, to 8,679.04 points.
• CMHC pushing for comprehensive national strategy this year to ‘reduce housing need’ (Financial Post) Canada’s housing agency will begin a push for a national housing strategy to support affordable housing. “This year, CMHC will work with other federal colleagues to undertake broad-based consultations on a national housing strategy,” Evan Siddall, chief executive officer of Canada Mortgage & Housing Corp., the country’s national housing agency, said in the text of a speech in Whitehorse, Yukon
• Air Canada will firm up Bombardier Inc CSeries order within ‘weeks,’ CEO says (Financial Post) Air Canada will firm up its CSeries order within “weeks,” but some level of government funding will still be necessary to help Bombardier Inc. succeed, the airline’s chief executive said Monday. “It’s coming together pretty quickly now,” Air Canada CEO Calin Rovinescu told reporters when asked how soon the airline will turn its letter of intent into a firm order.

Overnight markets 

• Overview: US 10yr note futures are up 0.3353% at 130-29, S&P 500 futures are down -0.84% at 2040.25, Crude oil futures are down -0.81% at $35.41, Gold futures are up 1.53% at $1237.9, DXY is up 0.19% at 94.694.

US Economic Data 

• Markit US Services PMI will be released at 9:45 AM
• Markit US Composite PMI will be released at 9:45 AM
• Non-Manufacturing ISM composite will be released at 10:00 AM

 Canadian Economic Data 

• There is no major economic data 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

US tsys trading lower on relatively heavy volume in TY1 futs (378k) after stronger payrolls with European equities lower, the Nikkei down 3.5% and the USD index lower for a fifth day. Tsys fell ealier with the 10Y reaching above 1.8% but later bounced on weak Tankan survey – the Japanese manufacturing fell to the lwest levels since June 2013 adding pressure for further BOJ stimulus. GOCs recovering in post payroll bounce, with the long end of the GOC curve well bid on lower oil prices.

News headlines

• Stocks Start Quarter in Doldrums as Oil Falls; Bonds Pare Drop (Bloomberg) Global stocks fell the most in more than three weeks as a new quarter got under way, with Japanese equities leading losses and the yen strengthening. Treasuries pared declines before U.S. payrolls data. Europe’s equity benchmark was set to erase all of its gains for March in a single day, and Japan’s Topix had its worst day in seven weeks after the Tankan business survey slumped. Crude oil slid after Saudi Arabia’s deputy crown prince said the kingdom will only freeze its oil output if Iran and other major producers do so. Copper rose after a gauge of Chinese manufacturing unexpectedly expanded, while shares in Shanghai were little changed.
• China Factory Gauge Unexpectedly Jumps as Stimulus Kicks In (Bloomberg) China’s official factory gauge showed improving conditions for the first time in eight months, suggesting the government’s fiscal and monetary stimulus is kicking in. The manufacturing purchasing managers index rose to 50.2 in March, compared with a median estimate of 49.4 in a Bloomberg News survey of economists. The measure matches its highest level since November 2014. The non-manufacturing PMI rose to 53.8 from 52.7 in February. Metals rose after the report.
• Japanese gloom ensures slow start to quarter for world stocks (Reuters) Gloomy Japanese manufacturing data on Friday ensured a downbeat start to the second quarter, driving stocks and oil lower and supporting safe-haven assets like gold and the Japanese yen. Still bruised from a turbulent first quarter, investors took their cue from the Japanese data rather than more encouraging figures from China’s manufacturers, before the pivotal U.S. payrolls report later in the day. Japan’s Nikkei .N225 sank 3.5 percent in its steepest daily fall since mid-February, dragging down shares across Asia. That set the bearish tone for Europe, where the main indices were all down more than 1 percent in early trading.
• Saudi Arabia Will Only Freeze Oil Production If Iran Joins (Bloomberg) Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market. The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.
• Prices Sag in Warning to ECB Even as Manufacturing Picks Up (Bloomberg) Prices for factory goods in the euro area dropped the most since 2009 in March, in a sign that weak inflationary pressures may be cutting into companies’ ability to charge more even as manufacturing expands. Markit Economics said its Purchasing Managers Index, which gauges manufacturing activity and comes alongside the price figures, increased to 51.6 from 51.2 in February. That keeps it just above the 50 level that separates expansion from contraction. While the reading is higher than the initial estimate of 51.4, it still caps the weakest quarter in a year.
• South Korea exports tumble for 15th straight month (Market Watch) South Korea’s exports fell in March for the 15th consecutive month due to sluggish global demand, but the decline was smaller for the second month in a row, according to the Ministry of Trade, Industries and Energy. Exports dropped 8.2% from a year earlier to $42.98 billion in March, following the previous month’s 12.2% drop, showed preliminary data released Friday by the ministry. The March reading beat market expectations for a 9.9% decline.
• Japan big manufacturers’ mood down in Q1 – BOJ tankan (Reuters) Confidence at big Japanese manufacturers worsened in the three months to March and is seen falling further ahead, a closely watched central bank survey showed on Friday. The headline index for big manufacturers’ sentiment stood at plus 6 in March, down from plus 12 seen three months ago, the Bank of Japan’s quarterly “tankan” survey showed. That compared with the median estimate of plus 8 in a Reuters poll of economists.
• BlackBerry Ltd loss smaller than expected, but revenue falls short (Financial Post) BlackBerry Ltd. on Friday reported a fiscal fourth-quarter loss of $238 million, after reporting a profit in the same period a year earlier. The Waterloo, Ontario-based company said it had a loss of 45 cents per share. Losses, adjusted for non-recurring costs and amortization costs, came to 3 cents per share. The results topped Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for a loss of 10 cents per share.
• Bombardier receives order for 20 business jets (Reuters) Canadian planemaker Bombardier Inc , which is seeking government aid to help finance its CSeries passenger jet program, said it received a firm order for 20 Challenger 350 aircraft. The company said on Friday the order was valued at about $534 million based on the list price, but did not disclose the name of the buyer, citing competitive reasons. (Reporting by Amrutha Gayathri in Bengaluru; Editing by Saumyadeb Chakrabarty)
• Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince (Bloomberg) Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets. Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate. The initial public offering could happen as soon as next year, with the country currently planning to sell less than 5 percent.

 Overnight markets 

• Overview: US 10yr note futures are up 0.024% at 130-14, S&P 500 futures are down -0.69% at 2037.25, Crude oil futures are down -3.16% at $37.13, Gold futures are down -1.31% at $1219.4, DXY is up 0.11% at 94.69.

US Economic Data 

• Change in Nonfarm Payrolls was 215k, stronger than expected and down from prior month
• Change in Manufacturing Payrolls was -29k weaker than expected and down from prior month
• Unemployment Rate was 5%, weaker than expected and up from prior month
• Markit US Manufacturing PMI will be released at 9:45 AM
• ISM Manufacturing will be released at 10:00 AM
• ISM Prices Paid will be released at 10:00 AM
• Construction spending MoM change will be released at 10:00 AM
• University of Michigan Sentiment will be released at 10:00 AM 

Canadian Economic Data

• RBC Canadian Manufacturing PMI will be released at 9:30 AM

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