Comments

Market Update

Tsy yields higher ahead of June payrolls, 10Y 1.97% (+2bps), on avg volume in TY futures (335k). Core EGBs also lower, 10Y bund -0.39% vs -0.41% record intraday low yest. Main European data was German factory orders which declined 2.2% m/m vs -0.2% exp.  GOCs lower before June Cdn employment (10k exp vs 27.7k in May). Can/US spreads another 1-2bps wider yest, GOCs continuing their underperformance  in the face of divergent economic indicators.

News headlines

Stocks Slip Ahead of U.S. Jobs Data; Dollar Gains: Markets Wrap (Bloomberg) U.S. stock futures were lower along with Treasuries before the key U.S. jobs report. The dollar strengthened and crude oil fell.

TSX futures lower ahead of U.S. jobs data (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday ahead of the release of a crucial U.S. jobs report, which could offer some guidance on the U.S. Federal Reserve’s interest rate decision due later this month.

Oil Set for Weekly Decline as Economic Woes Eclipse OPEC Curbs (Bloomberg) Oil is set for the biggest weekly decline since May as global demand concerns outweighed an OPEC+ pact to extend supply curbs into 2020 and worries that a renewed confrontation with Iran may threaten supplies.

Sinking yields puts euro on track for biggest weekly drop in 3 weeks (Reuters) The euro fell a fifth of a percent against the dollar on Friday and is set for its biggest weekly drop in three weeks as a relentless slide in government bond yields forced investors to look for higher-yielding assets elsewhere.

Venezuela says U.S. sanctions hit debt refinancing, oil sales (Reuters) Venezuela charged on Friday that U.S.-led sanctions had stopped foreign debt refinancing, blocked vital food and medicine imports, and cost billions of dollars in lost oil assets.

UK economy shows slowdown signs as recruiters, shoppers turn wary (Reuters) British employers and shoppers are turning increasingly cautious, indicators showed on Friday, suggesting two of the drivers of the economy during the Brexit crisis are losing momentum.

World stocks cling to gains, bonds hover ahead of U.S. payrolls (Reuters) World stocks clung to their 17-month highs on Friday and bonds paused after this week’s rally ahead of U.S. jobs data, a gauge that could stoke or temper market expectations about aggressive policy easing by the Federal Reserve.

Market Overview: US 10yr note futures are down -0.134% at 128-03, S&P 500 futures are down -0.17% at 2995, Crude oil futures are down -0.8% at $56.88, Gold futures are down -0.5% at $1413.8, DXY is up 0.18% at 96.942, CAD/USD is up 0.1% at 0.7653.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.546%	2 Year	1.786%
5 Year	1.451%	5 Year	1.758%
10 Year	1.495%	10 Year	1.967%
30 Year	1.684%	30 Year	2.478%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Jun  Survey: 160k  Prior: 75k
	Change in Private Payrolls, Jun  Survey: 150k  Prior: 90k
	Change in Manufact. Payrolls, Jun  Survey: 3k  Prior: 3k
	Unemployment Rate, Jun  Survey: 3.60%  Prior: 3.60%
	Average Weekly Hours All Employees, Jun  Survey: 34.4  Prior: 34.4
	Labor Force Participation Rate, Jun  Survey: 62.80%  Prior: 62.80%
	Underemployment Rate, Jun  Survey: —  Prior: 7.10%

Canadian Economic Data

08:30 AM	Net Change in Employment, Jun  Survey: 9.9k  Prior: 27.7k
	Unemployment Rate, Jun  Survey: 5.50%  Prior: 5.40%
	Participation Rate, Jun  Survey: 65.70  Prior: 65.70
	Full Time Employment Change, Jun  Survey: —  Prior: 27.7
	Part Time Employment Change, Jun  Survey: —  Prior: 0.0
10:00 AM	Ivey Purchasing Managers Index SA, Jun  Survey: —  Prior: 55.9

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

GOC yields unch with the US closed for July 4th, light volume in CGBs (50% daily avg), prices pulling back as German bunds give back some gains after rallying hard, 10Y bund reaching -0.41% below the ECB deposit rate (-0.40%) for the first time.  Spain sold E3.5bln in 6, 10 & 30Y debt at all-time low yields, with all three auctions oversubscribed.  Nothing on the calendar in Canada today, June employment report tomorrow.

News headlines

Stocks Drift in Thin Holiday Trading; Dollar Dips: Markets Wrap (Bloomberg) European equities were little changed alongside U.S. stock futures following a mixed session in Asia as volumes remained light thanks to Thursday’s American holiday. Gold slipped but stayed above $1,400 and WTI futures fell.

TSX futures track global markets higher (Reuters) Futures for Canada’s main stock index were slightly higher, tracking the broader global rally after weak economic data in the United States boosted hopes of a rate cut by the Federal Reserve this month.

Oil falls as smaller U.S. stockpile drop adds to economic woes (BNN) Oil declined as a smaller-than-expected draw in U.S. inventories added bearish sentiment to a market already reeling from gloomy economic news.

U.S. slaps duties on steel from Asia in trade enforcement action (BNN) The U.S. moved to impose additional duties on steel coming from Asia, expanding a crackdown on what the Trump administration views as unfair trading practices by other countries.

Trump officials say U.S.-China trade talks to resume next week (Reuters) Top representatives of the United States and China are organizing a resumption of talks for next week to try to resolve a year-long trade war between the world’s two largest economies, Trump administration officials said on Wednesday.

China says existing U.S. tariffs must be removed for a trade deal (Reuters) Existing U.S. tariffs will have to be removed if there is to be a trade deal between Beijing and Washington, China’s commerce ministry said on Thursday.

Collapsing bond yields push world stocks to new highs (Reuters) Government bonds held near multi-year lows on Thursday on bets the U.S. Federal Reserve would cut interest rates this month and that other major central banks would embrace looser monetary policy, pushing world stocks to new 18-month highs.

South Korea says may retaliate against Japan high-tech export curbs (Reuters) South Korea said on Thursday it may retaliate against Japan’s latest export limits on high-tech materials, as a row over forced wartime labor threatened to disrupt global supplies of memory chips and smartphones.

Market Overview: US 10yr note futures are up 0.073% at 128-11, S&P 500 futures are up 0.02% at 3000.75, Crude oil futures are down -0.49% at $57.06, Gold futures are down -0.28% at $1416.9, DXY is down -0.04% at 96.731, CAD/USD is up 0.07% at 0.7653.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.495%	2 Year	1.76%
5 Year	1.404%	5 Year	1.734%
10 Year	1.454%	10 Year	1.95%
30 Year	1.652%	30 Year	2.467%

US Economic Data

There is no US economic data for today.

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 higher, thou prices have pulled back since early European trading , TY futures at the lows of the session despite weaker June ADP (102k vs 140k) and ahead of early close, the 10Y reached a low 1.935%, now 1.95% . Global bonds continuing to rally , core EGB curves flattening. Gilt yields 2-4bps lower after weaker than expected UK services PMI. Yesterday’s appointment of Christine Lagarde as ECB head was seen as dovish by mkts according to MNI. GOCs lagging the rally in tsys, spreads another 2-3bps wider yesterday. Today the BOC auctions $4.0bln reopened 1.5% Sep 24s with the Sep 24/Mar 24 roll now -0.1bps.

News headlines

U.S. Yields Hit Lowest Since 2016 as Stocks Rise: Markets Wrap (Bloomberg) Bonds extended gains globally ahead of the U.S. holiday as investors weighed the prospect of more dovish appointees to two of the world’s major central banks. Stocks in Europe rose with U.S. equity futures, while those in Asia were mostly lower.

TSX set to open higher as oil prices rebound (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Wednesday, as oil prices rebounded after a steep fall in the previous session.

Oil Edges Higher as Inventory Drop Helps to Ease Post-OPEC Gloom (Bloomberg) Oil gained after suffering its worst reaction to an OPEC meeting in more than four years.

No technocrat, Lagarde brings listening, diplomacy to ECB table (Reuters) Christine Lagarde will raise the profile of the European Central Bank, making it a more politically-savvy institution that takes its message directly to the people. However policy innovation, the trademark of her predecessor, may be relegated.

Euro zone June business growth slow as factories still faltering (Reuters) Euro zone business activity picked up slightly last month but remained weak as a modest but broad-based upturn in the services industry offset a continued deep downturn in factory output, a survey showed.

U.S. 10-year yields hold near lowest since Nov 2016 (Reuters) The yields on U.S. 10-year Treasury notes hovered above their lowest level since November 2016 on Wednesday in advance of a report on private U.S. employment from payroll processor ADP, which analysts forecast a rebound in company hiring in June.

Trump picks two Fed nominees likely to support easier policy (BNN) After a yearlong assault on the Federal Reserve and its chairman, President Donald Trump has tapped two wildly different economists to the central bank’s board who seemingly have one important thing in common.

Market Overview: US 10yr note futures are up 0.11% at 128-09, S&P 500 futures are up 0.2% at 2985.5, Crude oil futures are up 0.84% at $56.72, Gold futures are up 1.01% at $1422.2, DXY is down -0.01% at 96.717, CAD/USD is down -0.05% at 0.7634.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.472%	2 Year	1.748%
5 Year	1.396%	5 Year	1.727%
10 Year	1.45%	10 Year	1.952%
30 Year	1.661%	30 Year	2.484%

US Economic Data

07:00 AM	MBA Mortgage Applications, Jun 28  Survey: —  Actual: -0.10% Prior: 1.30%
08:15 AM	ADP Employment Change, Jun  Survey: 140k Actual: 102k  Prior: 27k
	Trade Balance, May  Survey: -$54.0b  Prior: -$50.8b
	Initial Jobless Claims, Jun 29  Survey: 223k  Prior: 227k
	Continuing Claims, Jun 22  Survey: 1675k  Prior: 1688k
09:45 AM	Bloomberg Consumer Comfort, Jun 30 Survey: —  Prior: 63.6
	Markit US Services PMI, Jun F  Survey: 50.7  Prior: 50.7
	Markit US Composite PMI, Jun F  Survey: —  Prior: 50.6
10:00 AM	Factory Orders, May  Survey: -0.60%  Prior: -0.80%
	Durable Goods Orders, May F  Survey: -1.30%  Prior: -1.30%
	Durables Ex Transportation, May F  Survey: —  Prior: 0.30%
	Cap Goods Ship Nondef Ex Air, May F  Survey: —  Prior: 0.70%
	Cap Goods Orders Nondef Ex Air, May F  Survey: —  Prior: 0.40%
	ISM Non-Manufacturing Index, Jun  Survey: 56.0  Prior: 56.9

Canadian Economic Data

08:30 AM

Int’l Merchandise Trade, May  Survey: -1.70b  Prior: -0.97b

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