Commentaires matinaux

Market Update

US treasuries racing to new highs, yields another 3.5- 7.5bps lower with the 10Y 1.625% (-7.5bps), new three year low, on strong volume in TY futures (650k), strong buying in TYU in last hr. Chinese yuan weakening again above 7.0 after the PBOC raised the fixing rate for USDCNY, 10Y German bund moving to new low -0.60%, 2s30s bund curve narrowest since financial crisis – German Ind prod fell to the lowest level since 2009 y/y, expectations of ECB easing continue to build. In Canada, GOCs leading the US in the rally, Can/US 2-3bps tighter, weaker crude adding to the impetus to cover shorts in Can/US.

News headlines

U.S. Stock Futures Turn Lower as Bonds Advance: Markets Wrap (Bloomberg) U.S. equity-index futures reversed a gain and bonds rallied globally after a series of dovish central-bank surprises underscored growing concern over the outlook for growth.

Futures turn lower as investors flock to bonds, gold (Reuters) U.S. stocks futures turned lower on Wednesday after investors flocked to safe-haven gold and U.S. government bonds amid worries over the escalation in U.S.-China trade war denting global growth.

CANADA STOCKS-TSX futures rise on firmer gold prices (Reuters) Canada’s main stock index futures edged higher on Wednesday, supported by a climb in gold prices as cautious investors remained wary of riskier assets.

‘Scary’ German output figures propel recession fears (Reuters) German industrial output fell more than expected in June driven by weaker production of intermediate and capital goods, in a further sign that Europe’s biggest economy contracted in the second quarter as exporters get caught in trade disputes.

U.S. dollar: When will bulls turn to bears? (Reuters) Trump wants it to be cheaper. The IMF says it should be cheaper. Hedge funds think it has room to run. So what gives with the dollar?

Asian central banks flag growth concerns with surprising rate cuts (Reuters) Asia central banks signaled major concerns on Wednesday about the outlook for economic growth, stunning markets with a series of surprising interest rate cuts and pointing to policymakers’ dwindling ammunition to fight off a downturn.

U.S. labeling China a currency manipulator is groundless, China FX regulator (Reuters) The United States’ labeling of China as a currency manipulator has no grounds and does not accord with facts, China’s foreign exchange regulator said, the official Xinhua News Agency reported on Wednesday.

Market Overview: US 10yr note futures are up 0.506% at 130-14, S&P 500 futures are down -0.16% at 2871.5, Crude oil futures are down -0.73% at $53.24, Gold futures are up 1.64% at $1508.6, DXY is down -0.01% at 97.622, CAD/USD is up 0.19% at 0.7515.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.3%	2 Year	1.559%
5 Year	1.149%	5 Year	1.467%
10 Year	1.164%	10 Year	1.643%
30 Year	1.437%	30 Year	2.165%

US Economic Data

07:00 AM	MBA Mortgage Applications, Aug 2 Survey: — Actual: 5.30% Prior: -1.40%
03:00 PM	Consumer Credit, Jun  Survey: $16.100b  Prior: $17.086b

Canadian Economic Data

10:00 AM

Ivey Purchasing Managers Index SA, Jul  Survey: —  Prior: 52.4

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 lower, 10Y yields retracing ~4bps of yesterday’s massive 13bp rally on China trade friction (China declared a currency manipulator for the first time since 1994), 10Y 1.75% from low 1.67% overnite, focus  on US/China with PBOC saying the Yuan ‘wont keep falling’ , ex-official saying China could sell treasuries (MNI).  US equity futures higher (S&P +24), gold unch after two day,3.0% gain surpassing the highs of July 2016. GOCs in catchup mode after yesterday’s close , 10Y below 1.30% a two and a half year low, OIS pricing in 60% chance of a 25bp rate cut, 2s10s back to 9bps inverted  with the  CAD relatively stable 1.3225 despite weakness in crude/ commodities.  

News headlines

China says U.S. currency manipulator labeling could cause chaos in financial markets (Reuters) China’s central bank said on Tuesday that Washington’s decision to label Beijing as a currency manipulator would “severely damage international financial order and cause chaos in financial markets”.

Futures rebound after Wall Street’s worst day of 2019 (Reuters) U.S. stock index futures signaled a bounce on Tuesday, as China stepped in to steady the yuan and investors sought beaten-down stocks, a day after Wall Street’s main indexes racked up their steepest one-day percentage fall of the year.

U.S. Expands Sanctions Against Venezuela Into an Embargo (WSJ) New measures mark a significant escalation of pressure against the regime of President Nicolás Maduro and countries including Russia and China that continue to support him. The Trump administration imposed a total economic embargo against the government of Venezuela, a significant escalation of pressure against the regime of President Nicolás Maduro and countries including Russia and China that continue to support him, a senior administration official said.

The United States and China may be headed for a currency war (CNN) China may have just fired the opening shot of a currency war with the United States. For the first time in more than a decade, Beijing let the yuan weaken past the symbolically important level of 7 to the dollar on Monday. The Chinese central bank said the move mostly reflected market concern about « trade protectionism and new tariffs on China. » President Donald Trump escalated the trade war last week by announcing that the United States would tax just about every Chinese export starting in September.

NEB gives green light for Trans Mountain expansion construction to begin (BNN) The National Energy Board says Trans Mountain can begin construction at three major facility sites, providing approvals the company said it needed to meet its deadline for shovels to get in the ground. BNN Bloomberg’s Tara Weber has the details.

Toronto home sales rise 24.3% in July; prices rise amid tighter supply (BNNBloomberg) The Greater Toronto Area’s home price index was up 4.4 per cent last month as the supply of properties for sale tightened and the number of sales jumped 24.3 per cent from July last year, the Toronto Real Estate Board reports. The overall average selling price for properties in the Greater Toronto Area was up 3.2 per cent year-over-year to $806,755, TREB said in a monthly report issued Tuesday. The number of properties sold increased to 8,595 from 6,916, with sales of all four categories of housing up by double digits.

Fitch analysts don’t see grounds for panic over Canadian debt (BNNBloomberg) An Aug. 2 report on asset-backed securities from Fitch Ratings, which analyzes credit card payments, indicates consumers are coping with record debt levels and concluded the “stable performance” should continue. Though charge-offs, or receivables that have been written off as noncollectable, hit a two-year high in May, the year-to-date average is little changed from 2018. Meanwhile, delinquencies of more than 60 days actually declined in the second quarter, and the monthly payment rate increased

Former Fed chiefs unite in call on Trump to end Powell threats (BNNBloomberg) Four former Federal Reserve chiefs made a joint plea for the central bank to be able to operate without political pressures or the threat of removal of its leaders, responding to President Donald Trump’s persistent attacks on current Chairman Jerome Powell.

Global stocks rebound after China calms currency markets (CNN) Stocks in Asia clawed back some of their losses and US stock futures rebounded on Tuesday after China took steps to shore up the falling yuan. Major Asian markets still ended Tuesday in the red: Hong Kong’s Hang Seng Index (HSI) finished down 0.7%, while Japan’s Nikkei closed 0.7% lower. China’s Shanghai Composite Index (SHCOMP) lost 1.6%. South Korea’s Kospi (KOSPI) fell 1.5%. Taiwan’s Taiex settled lower by 0.3%. But they recovered significantly from earlier in the day, when all of those indexes fell by more than 2%.

Market Overview: US 10yr note futures are down -0.132% at 129-22, S&P 500 futures are up 0.98% at 2857.75, Crude oil futures are up 0.71% at $55.08, Gold futures are up 0.05% at $1477.2, DXY is up 0.11% at 97.634, CAD/USD is up 0.13% at 0.7562.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.388%	2 Year	1.599%
5 Year	1.265%	5 Year	1.554%
10 Year	1.292%	10 Year	1.75%
30 Year	1.544%	30 Year	2.297%

US Economic Data

10:00 AM

JOLTS Job Openings June Survey: 7326 Prior: 7323

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Aug 2  Prior: 58.2

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 continuing higher after Trump’s new round of China tariffs, and China’s pledge to retaliate, the US 10Y 1.86% (-3.5bps), lowest since Nov 2016.  Long term bunds at new low yields with the 10Y bund -0.50% and the 30Y at zero for the first time.  July Non farm payrolls expected at 165k vs 224k with the unemployment rate forecast to fall further to 3.6%, a new low. GOCs lagging tsys  by 5-7bps since yesterday’s rally, 10Y 1.39%. Trade data for June expected to show reversal to a $300mln deficit from the $760mln surplus recorded in May. CAD weaker for a 3rd day, 1.3245 in the wake of broad based strength in the USD, weakness in commodities, thou crude has rebounded somewhat from yesterday’s huge losses.

News headlines

Stocks Slump, Bonds Rally as Trade Tensions Rise: Markets Wrap (Bloomberg) Stocks slumped and bonds rallied in the wake of President Donald Trump’s move to escalate the trade war, with China pledging “countermeasures” if the U.S. steps up tariffs on its goods.

TSX futures set to open lower on fresh Trump tariff threat (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday after U.S. President Donald Trump rattled global markets with fresh tariff threats on China.

Oil Set for Weekly Loss After Biggest Slump in 4 Years on Tariff (Bloomberg) Oil is set for a weekly loss after the steepest one-day drop in more than four years as U.S. President Donald Trump abruptly escalated the trade war with China, deepening concerns over slowing growth.

China pledges countermeasures as Trump escalates trade war again (BNN) Beijing pledged to respond if the U.S. insists on adding extra tariffs to the remainder of Chinese imports, after President Donald Trump’s abrupt escalation of the trade war.

U.S. pulls out of Soviet-era nuclear missile pact with Russia (Reuters) The United States formally withdrew from a landmark nuclear missile pact with Russia on Friday after determining that Moscow was in violation of the treaty, something the Kremlin has repeatedly denied.

Fed, trade confusion upending Wall Street investment playbooks (Reuters) As Federal Reserve Chair Jerome Powell on Wednesday described why the central bank’s interest rate cut should not be seen as the start of a lengthy easing cycle, the U.S. stock market was losing value at a rate of over $25 billion a minute.

U.S. employment growth seen slowing in July; wage gains steady (Reuters) U.S. job growth likely slowed in July after outsized gains in the prior month, with wages probably maintaining their moderate pace of increase, which could boost market expectations for another interest rate cut from the Federal Reserve next month.

Entire German govt bond yield curve turns negative for first time (Reuters) The 30-year German government bond yield turned negative for the first time ever on Friday, leaving the euro zone member’s entire yield curve in negative territory as investors scrambled for safer assets.

Market Overview: US 10yr note futures are up 0.182% at 128-30, S&P 500 futures are down -0.36% at 2941.5, Crude oil futures are up 2.56% at $55.33, Gold futures are up 1.22% at $1449.9, DXY is down -0.18% at 98.196, CAD/USD is up 0.07% at 0.7564.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.466%	2 Year	1.71%
5 Year	1.358%	5 Year	1.657%
10 Year	1.385%	10 Year	1.855%
30 Year	1.615%	30 Year	2.395%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Jul  Survey: 165k  Prior: 224k
	Change in Private Payrolls, Jul  Survey: 165k  Prior: 191k
	Change in Manufact. Payrolls, Jul  Survey: 5k  Prior: 17k
	Unemployment Rate, Jul  Survey: 3.60%  Prior: 3.70%
	Average Hourly Earnings MoM, Jul  Survey: 0.20%  Prior: 0.20%
	Average Hourly Earnings YoY, Jul  Survey: 3.10%  Prior: 3.10%
	Trade Balance, Jun  Survey: -$54.6b  Prior: -$55.5b
10:00 AM	Factory Orders, Jun  Survey: 0.70%  Prior: -0.70%
	Durable Goods Orders, Jun F  Survey: —  Prior: 2.00%
	Durables Ex Transportation, Jun F  Survey: —  Prior: 1.20%
	Cap Goods Orders Nondef Ex Air, Jun F  Survey: —  Prior: 1.90%
	Cap Goods Ship Nondef Ex Air, Jun F  Survey: —  Prior: 0.60%
	U. of Mich. Sentiment, Jul F  Survey: 98.5  Prior: 98.4

Canadian Economic Data

08:30 AM

Int’l Merchandise Trade, Jun  Survey: -0.30b  Prior: 0.76b

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