Commentaires matinaux

Market Update

US tsys slightly lower on avg volume in TY futures (345k), 10Y 1.50% (+1.5bps). ‘Risk on’ trade as China announced China will not retaliate against the latest round of US tariffs, S&P futures +28, Chinese yuan stronger (+0.3%) . Highlights include US GDP , PCE and a $32bln 7Y auction at 1:00PM. GOCs lower, data calendar bare until tomorrow Q2 GDP. Major curve segments at new narrows, i.e. 2s10s -21bps which looks relatively rich vs 2s10s US curve at -3bps. Next week’s BOC meeting expected to see a shift to a dovish outlook on trade concerns, so  putting on a Can/US trade in the short end makes sense after several weeks of no communication from the BOC, Can/US 2Y at -17bps is 20bps cheaper just since the start of the month.

News headlines

U.S. Stock Futures Advance on China Trade Optimism: Markets Wrap (Bloomberg) U.S. equity futures climbed with European stocks while Asian shares pared declines after China indicated it wouldn’t immediately retaliate against the latest American tariff increase. Treasuries edged down, while a dollar gauge held near a nine-month high.

Oil Rises as China Stokes Optimism on Potential Trade-War Easing (Bloomberg) Oil rose, erasing earlier losses, as investors weighed a sizable drop in U.S. crude inventories amid China’s latest indication that it won’t escalate the ongoing trade war with the U.S.

TSX futures rise on higher U.S. crude prices (Reuters) Futures for Canada’s main stock index edged up on Thursday, supported by higher U.S. crude prices amid positive comments from China on its trade war with the United States.

China indicates it won’t retaliate against newest U.S. tariffs (BNN) China indicated that it wouldn’t immediately retaliate against the latest U.S. tariff increase announced by President Donald Trump last week, emphasizing the need to discuss ways to deescalate the trade war between the world’s two largest economies.

China hopes U.S. will create conditions necessary for September trade talks (Reuters) China and the United States are discussing the next round of face-to-face trade talks scheduled in September, but hopes for progress hinge on whether Washington can create favorable conditions, China’s commerce ministry said on Thursday.

Explainer: Can political unrest in Hong Kong break its currency peg? (Reuters) Three months of anti-government protests have thrown Hong Kong into its deepest crisis in decades, pounding the financial hub’s economy and stock market and adding to its Sino-U.S. trade war woes.

Europe cheers Italy pact, bond bulls pause for breath (Reuters) Signs that Italy’s latest political drama was over and hopeful noises from Beijing in the trade war pushed Europe’s share markets higher on Thursday and paused the relentless steamrollering of global bond yields.

Merkel and Putin agree need to speed gas talks (Reuters) Chancellor Angela Merkel agreed in a phone call with Russian President Vladimir Putin on Thursday on the need to speed up talks on future gas transit agreements, the German government said.

German inflation slows, jobless edges up as economy splutters (Reuters) German inflation likely slowed in August from the prior month, state data indicated on Thursday, sliding further below the European Central Bank’s target ahead of its Sept. 12 policy meeting at which fresh stimulus is expected.

Market Overview: US 10yr note futures are down -0.155% at 131-05, S&P 500 futures are up 0.94% at 2917, Crude oil futures are up 0.74% at $56.19, Gold futures are down -0.11% at $1547.4, DXY is up 0.08% at 98.287, CAD/USD is down -0.19% at 0.7529.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.345%	2 Year	1.52%
5 Year	1.178%	5 Year	1.387%
10 Year	1.129%	10 Year	1.491%
30 Year	1.372%	30 Year	1.97%

US Economic Data

08:30 AM	GDP Annualized QoQ, 2Q S  Survey: 2.00%  Prior: 2.10%
	Personal Consumption, 2Q S  Survey: 4.30%  Prior: 4.30%
	GDP Price Index, 2Q S  Survey: 2.40%  Prior: 2.40%
	Core PCE QoQ, 2Q S  Survey: 1.80%  Prior: 1.80%
	Wholesale Inventories MoM, Jul P  Survey: 0.20%  Prior: 0.00%
	Initial Jobless Claims, Aug 24  Survey: 214k  Prior: 209k
	Continuing Claims, Aug 17  Survey: 1686k  Prior: 1674k
09:45 AM	Bloomberg Consumer Comfort, Aug 25  Survey: —  Prior: 61.5
10:00 AM	Pending Home Sales MoM, Jul  Survey: 0.00%  Prior: 2.80%
	Pending Home Sales NSA YoY, Jul  Survey: 1.80%  Prior: -0.60%

Canadian Economic Data

08:30 AM

Current Account Balance, 2Q  Survey: -$9.75b  Prior: -$17.35b

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys higher, yields 1-4bps lower led by the long end, 2s10s 5bps inverted, 10Y 1.45%, 30Y 1.904% a record low, reflecting strong demand during the Asian session (MNI). In Europe, UK gilts leading core Europe higher after PM Johnson suspended parliament. Italian 10Y record low yield, 1.01% on talks to form a coalition govt resume, possibly avoiding snap election. German 10Y auction posted record low yield -0.7%. In Canada, quiet on the data front until Friday’s Q2 GDP. The BOC auctions $3bln in reopened Nov 21s at noon with the Nov 21/Aug 21 (2Y) roll -1.8/-2.0bps.  Nov 21s have narrowed ~-0.6bps vs 2s since the last 2Y auction August 7th, while the current 2Y roll (Aug 21/May 21) has widened (disinverted) 0.5bps to -3.5bps.  The divergence can be explained by the 5bp flattening in 2s5s to -17bps inverted consistent with relentless flattening seen in global bonds driven by trade concerns. 

News headlines

Stocks Decline, Bonds Rise as Trade Feud Lingers: Markets Wrap (Bloomberg) U.S. index futures slipped with stocks in Europe Wednesday as investors awaited new developments in the increasingly unpredictable Sino-American trade war. Treasuries and the dollar were steady.

Global stocks under pressure as bond markets ring recession alarms (Reuters) World stocks slipped on Wednesday as a deepening inversion of the U.S. bond yield curve a day earlier reignited worries over the possibility of recession, sending investors towards perceived safe-haven assets from the Japanese yen to gold.

TSX futures slightly higher as oil prices rise (Reuters) Futures for Canada’s main stock index inched higher on Wednesday as oil prices rose after industry data showed a fall in stockpiles of U.S. crude.

Oil Rises After Report Shows Steep Decline in U.S. Inventories (Bloomberg) Oil rose for a second day after an industry report showed a bigger-than-expected drop in American crude inventories, allaying concerns that the market is poised to tip back into oversupply.

U.S. yield curve inverts further, 30-year yields hit new record low (Reuters) A key part of the U.S. yield curve, a closely-followed recession indicator, inverted further on Wednesday while 30-year Treasury yields fell to a few record low on growing concern about the fallout from a bitter global trade conflict.

‘No need’ for Bank of Canada to cut rates, National Bank says (BNN) With one week to go until the Bank of Canada’s next interest rate decision, National Bank of Canada has emerged as an outlier amid a growing number of voices predicting that the central bank will cut rates this fall amid mounting global trade tension.

Alberta deficit shrinks 30% after election delayed city grants (BNN) Alberta’s new United Conservative government is painting a gloomy picture of the province’s finances as it prepares to release its first budget in the coming months.

South Korea summons Japan ambassador as export trade curbs take effect (Reuters) South Korea summoned Japan’s ambassador to protest against a decision to remove Seoul’s fast-track export status, which took effect on Wednesday amid a deepening political and economic feud.

EU-Mercosur trade deal could be ready by late 2020 in best case: EU official (Reuters) The European Union should be able to conclude a free-trade agreement with the Mercosur bloc of South American countries by late 2020 in an optimistic scenario, a senior EU trade official said, adding that much would ride on Brazil’s attitude.

Market Overview: US 10yr note futures are up 0.203% at 131-13, S&P 500 futures are down -0.26% at 2858, Crude oil futures are up 1.4% at $55.7, Gold futures are up 0.25% at $1555.7, DXY is up 0.13% at 98.13, CAD/USD is up 0.21% at 0.7512.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.328%	2 Year	1.498%
5 Year	1.16%	5 Year	1.363%
10 Year	1.11%	10 Year	1.449%
30 Year	1.369%	30 Year	1.909%

US Economic Data

07:00 AM

MBA Mortgage Applications, Aug 23  Survey: — Actual: -6.20% Prior: -0.90%

Canadian Economic Data

There is no Canadian 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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys well bid, off the highs of the session on heavy volume (>1mln TY1) with the 10Y 1.51(-2.5bps), S&P futures +5, crude +1.0%.  Treasury auctions resume this week with $40bln 2Y today, followed by $41bln 5Y Wed & $32bln 7Y Thurs. WI 2Y 1.52%, lowest auction yield since Sep 2017 and 30bps below last month’s level. Core Euro bonds wider vs tsys, German bund curve 2bps flatter led by longs – 2Y German Schatz auction saw weak demand (E3.95bln sold vs E5bln target).  GOCs lagging tsys by 2-3bps, 10Y Can/US -31bps narrowest since Oct 2017.

News headlines

U.S. Stock Futures Edge Higher; Treasuries Advance: Markets Wrap (Bloomberg) U.S. equity futures nudged higher and Europe stocks climbed as investors picked through the ever-changing narrative on China trade. Treasuries advanced while the dollar dipped.

Canadian stock futures little changed over U.S.-China trade deal uncertainty (Reuters) Futures for Canada’s main stock index were little changed on Tuesday, as uncertainty over the U.S.-China trade dispute kept investors on edge and drove inflows into safer assets.

Oil Advances Amid Mixed Signals on U.S.-China Trade Dispute (Bloomberg) Oil rose after four days of losses as President Donald Trump gave mixed signals on resolving the trade dispute between the U.S. and China.

Canadian regulator summons RBC, TD Bank over malpractice charges (Reuters) The Ontario Securities Commission has issued a notice of hearing to Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO) to settle charges of forex trading malpractices, the Canadian regulator said on Monday.

China says it hopes U.S. can create conditions for trade talks (Reuters) China’s foreign ministry reiterated on Tuesday that it had not heard of any recent telephone call between the United States and China on trade, and said it hopes Washington can stop its wrong actions and create conditions for talks.

New projects for battery material nickel need a price spur (Reuters) Rapidly rising use of nickel in the batteries that power electric vehicles over coming years means higher prices are needed to incentivize the development of new projects to boost supplies of the metal.

Three U.S. bond kings wield same strategy, get same result: lag their peers (Reuters) Three names dominate the U.S. world of bond investing – Jeffrey Gundlach, Dan Ivascyn and Scott Minerd. But funds run by these star investors are lagging their respective benchmarks this year.

Market Overview: US 10yr note futures are up 0.203% at 131-02, S&P 500 futures are up 0.12% at 2886.75, Crude oil futures are up 1.23% at $54.3, Gold futures are up 0.29% at $1541.6, DXY is down -0.18% at 97.909, CAD/USD is down -0.16% at 0.7557.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.387%	2 Year	1.526%
5 Year	1.232%	5 Year	1.397%
10 Year	1.203%	10 Year	1.505%
30 Year	1.456%	30 Year	1.993%

US Economic Data

09:00 AM	House Price Purchase Index QoQ, 2Q  Survey: 0.30%  Prior: 1.10%
	FHFA House Price Index MoM, Jun  Survey: 0.20%  Prior: 0.10%
	S&P CoreLogic CS 20-City MoM SA, Jun  Survey: 0.10%  Prior: 0.14%
	S&P CoreLogic CS 20-City YoY NSA, Jun  Survey: 2.30%  Prior: 2.39%
	S&P CoreLogic CS 20-City NSA Index, Jun  Survey: 218.02  Prior: 216.94
	S&P CoreLogic CS US HPI YoY NSA, Jun  Survey: 3.30%  Prior: 3.43%
	S&P CoreLogic CS US HPI NSA Index, Jun  Survey: —  Prior: 209.66
10:00 AM	Richmond Fed Manufact. Index, Aug  Survey: -4  Prior: -12
	Conf. Board Consumer Confidence, Aug  Survey: 129.0  Prior: 135.7

Canadian Economic Data

There is no Canadian 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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230