Commentaires matinaux

A bit of risk-off overnight has given a bit of a lift to Tsys, but overall, markets look flat Tuesday ahead of a full slate of Fed speakers. U.S. sanctions placed Monday on Iran’s Ayatollah Khamenei and Tehran’s declaration that the ‘diplomatic path is shut’ subdued risk appetite. But Tsys ultimately came off intraday highs as European trading picked up, Sep 10-Yr futures (TY) last up 2.5/32 at 128-0.5 (L: 127-28.5 / H: 128-06). The 2-Yr yield is down 0.5bps at 1.7277%, 5-Yr is down 0.7bps at 1.7408%, 10-Yr is down 0.7bps at 2.0073%, and 30-Yr is down 1.1bps at 2.5335%. Equity futures are a little lower (S&P off 0.1%), DXY up 0.1%. Fedspeak in spades today: Williams at 8h45, Bostic at noon, Powell at 13h00, Barkin at 15h30, and Bullard at 18h30. Data includes Conf. Board cons. confidence and new home sales 10h00.

News headlines

Stocks Slip on Geopolitical Tensions; Gold Climbs: Markets Wrap (Bloomberg) U.S. equity futures edged lower alongside European and Asian stocks on Tuesday as geopolitical tensions simmered in the build up to this week’s G-20 meeting. Gold and the yen rose as investors sought safer assets.

Futures lower on Iran tensions, trade worries (Reuters) U.S. stock futures were pulled lower by Iran tensions and trade worries on Tuesday, with investors focusing on Federal Reserve officials for more clarity on interest rates.

TSX futures down as oil prices dip (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Tuesday, hit by falling oil prices.

Oil Steadies as Iran Tensions Mingle With Economic Concerns (Bloomberg) Oil steadied after rallying almost 8% in three days as investors weighed the risks of a supply disruption in the Middle East against concerns over the global economy and demand.

Trump agriculture secretary: U.S. farmers ‘casualties’ of trade war – CNN (Reuters) U.S. Agriculture Secretary Sonny Perdue acknowledged that American farmers are being hurt by President Donald Trump’s trade war with China, according to an interview broadcast on Tuesday.

China May rare earth magnet exports to U.S. jump amid threat of restrictions (Reuters) China’s exports of rare earth magnets to the United States rose more than 20% in May from the previous month to their highest since at least 2016, data released by the General Administration of Customs showed on Tuesday, as Beijing considers restricting shipments as part of a long-running trade row.

Euro zone bank profitability may weaken on slowdown: ECB (Reuters) Profitability across the euro zone bank sector is low and weakening growth could further dampen the sector’s prospects, European Central Bank Vice President Luis de Guindos said on Tuesday.

Market Overview: US 10yr note futures are up 0.024% at 127-31, S&P 500 futures are down -0.1% at 2949, Crude oil futures are down -0.35% at $57.7, Gold futures are up 0.79% at $1429.4, DXY is up 0.08% at 96.055, CAD/USD is down 0% at 0.7587.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.407%	2 Year	1.74%
5 Year	1.35%	5 Year	1.746%
10 Year	1.463%	10 Year	2.009%
30 Year	1.712%	30 Year	2.537%

US Economic Data

09:00 AM	FHFA House Price Index MoM, Apr  Survey: 0.20%  Prior: 0.10%
	S&P CoreLogic CS 20-City YoY NSA, Apr  Survey: 2.50%  Prior: 2.68%
	S&P CoreLogic CS 20-City NSA Index, Apr  Survey: 215.61  Prior: 214.09
10:00 AM	Richmond Fed Manufact. Index, Jun  Survey: 2  Prior: 5
	New Home Sales, May  Survey: 684k  Prior: 673k
	New Home Sales MoM, May  Survey: 1.60%  Prior: -6.90%
	Conf. Board Consumer Confidence, Jun  Survey: 131.0  Prior: 134.1

Canadian Economic Data

08:30 AM

Wholesale Trade Sales MoM, Apr  Survey: 0.20%  Prior: 1.40%

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  slightly higher, 10Y off the lows back above 2.0% (Thurs 1.97% 2.5 yr low), decent volume in TY futures (455k), tsys revered course after Trump called for air strikes. Fed Claria this morning on BB basically echoed Powell- Fed will act if appropriate.  Core Euro bonds lower on stronger PMI data. French PMI came in better than exp (52 vs 50.8), 10Y bund ~3bps higher -0.30% , Eurozone PMI fell to the lowest in five and a half years in June.  In Canada, GOCs are lower before  April Retail Sales , a 0.2% reading expected after March’s huge 1.1% (1.7% ex-auto) gain.

News headlines

TSX futures drop on U.S.-Iran tensions (Reuters) Futures pointed to a lower opening for Canada’s main stock index on Friday, tracking declines in global equities as rising tensions between the United States and Iran kept investors on edge.

Dashboard of a downturn: global recession signals (Reuters) As the U.S.-China trade war erodes confidence and central banks prepare to unleash another wave of stimulus, investors are checking which advance warning indicators might be forecasting a global economic recession.

Clarida: Outlook is for continued U.S. expansion, but Fed prepared to act (Reuters) Federal Reserve Vice Chairman Richard Clarida said the Fed expects the U.S. economic expansion to continue but is prepared to reduce interest rates if trade and other uncertainties put that outlook at risk.

Brent oil up 6% in one week on fears of U.S. attack on Iran (Reuters) Brent oil rallied above $65 per barrel and was set to notch up a 6% gain this week on fears of a U.S. military attack on Iran that would disrupt flows from the Middle East, which provides more than a fifth of the world’s oil output.

Chevron Phillips Chemical in bid to acquire Nova Chemicals (Reuters) Chevron Phillips Chemical Company, a joint venture between Chevron Corp and Phillips 66, has offered to acquire Nova Chemicals Corp for more than $15 billion including debt, people familiar with the matter said on Thursday.

European central bankers claim oversight over Facebook’s cryptocurrency (Reuters) Three European central bankers are claiming oversight over Facebook’s planned virtual currency to ensure it will not jeopardize the financial system or be used to launder money.

Slack’s direct listing reference price is set at US$26 by NYSE for Thursday debut (FP) The New York Stock Exchange set a reference price of US$26 per share for trading in workplace messaging application Slack Technologies Inc.

The number is in line with the volume weighted average price at which the stock has been changing hands in the private markets. Slack said in a filing last month that number was US$26.82 for May, a slight increase from US$25.91 in April.

Market Overview: US 10yr note futures are down -0.22% at 127-25, S&P 500 futures are down -0.24% at 2952.75, Crude oil futures are up 0.51% at $57.36, Gold futures are up 0.27% at $1400.7, DXY is down -0.08% at 96.555, CAD/USD is up 0.01% at 0.7579.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.436%	2 Year	1.766%
5 Year	1.364%	5 Year	1.776%
10 Year	1.477%	10 Year	2.025%
30 Year	1.712%	30 Year	2.537%

US Economic Data

09:45 AM	Markit US Manufacturing PMI, Jun P  Survey: 50.5  Prior: 50.5
	Markit US Services PMI, Jun P  Survey: 51.0  Prior: 50.9
	Markit US Composite PMI, Jun P  Survey: —  Prior: 50.9
10:00 AM	Existing Home Sales, May  Survey: 5.30m  Prior: 5.19m
	Existing Home Sales MoM, May  Survey: 2.10%  Prior: -0.40%

Canadian Economic Data

08:30 AM	Retail Sales MoM, Apr Survey: 0.20%  Prior: 1.10%
	Retail Sales Ex Auto MoM, Apr  Survey: 0.40%  Prior: 1.70%

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 2-3bps lower across the curve led by the short end, the 2Y 1.72%, 10s below 2.0% for the first time since Nov 2016 as markets now fully priced for 25bp cut at the July FOMC with 50% odds of a 50bp cut, 2s10s tsy curve 10bps steeper since Tuesday’s close. Prices weakening post Phili Fed despite weak headline and drop in prices paid to 12.9 vs 23.1 in May.   The Fed’s ‘dot plot’ revealed there are now eight FOMC members in favour of at least one rate cut this year. Equities rallying in the US, S&P futures +1.0% on increased prospects of stimulus. GOC yields continuing to diverge from their US counterparts, 3% surge in crude on Iran weighing on Cda/US,  +2bps wider on top of the ~10bp yest post FOMC, longs particularly heavy.  

News headlines

TSX futures rise as oil prices soar (Reuters) Futures for Canada’s main stock index rose on Thursday, as oil prices surged after Iran shot down a U.S. military drone, raising fears of a military confrontation between the two countries.

Treasury 10-Year Yield Slides Below 2% to Lead Global Decline (Bloomberg) Treasuries led a global bond rally, with 10-year yields dropping below 2% for the first time since November 2016 as expectations grow that major central banks will ease policy.

U.S. Fed scraps patient approach, opens door to potential rate cut (BNN) The Federal Reserve signaled it was ready to lower interest rates for the first time since 2008, citing “uncertainties” that have increased the case for a cut as officials seek to prolong the near-record U.S. economic expansion.

China, U.S. to resume trade talks but China says demands must be met (Reuters) Top Chinese and U.S. officials will resume trade talks in accordance with the wishes of their leaders, but China hopes the United States will create the necessary conditions for dialogue, the Chinese commerce ministry said on Thursday.

Russia’s Putin says U.S. move against Huawei aims to weaken China (Reuters) Russian President Vladimir Putin said on Thursday that U.S moves against technology giant Huawei aimed to weaken China, while U.S. tariffs sought to hold the Chinese economy back.

Trump and Trudeau to confront disputes over uranium, lumber (BNN) Canadian Prime Minister Justin Trudeau plans to take up trade disputes with President Donald Trump in Washington on Thursday and meet with congressional leaders on the proposed U.S.-Canada-Mexico trade pact.

Oil surges after Iran downs U.S. drone, Fed signals rate cut (BNN) Oil rose after Iran said it shot down a U.S. spy drone in its airspace, stoking Middle East tensions further after the attack on two tankers last week, while a more dovish stance from the Federal Reserve lifted financial markets.

Market Overview: US 10yr note futures are up 0.208% at 128-04, S&P 500 futures are up 0.95% at 2961.25, Crude oil futures are up 3.5% at $55.64, Gold futures are up 2.68% at $1384.9, DXY is down -0.48% at 96.647, CAD/USD is down -0.86% at 0.7595.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.386%	2 Year	1.702%
5 Year	1.315%	5 Year	1.723%
10 Year	1.431%	10 Year	1.994%
30 Year	1.678%	30 Year	2.514%

US Economic Data

08:30 AM	Current Account Balance, 1Q  Survey: -$124.3b  Actual: — Prior: -$134.4b
	Initial Jobless Claims, Jun 15  Survey: 220k  Actual: — Prior: 222k
	Continuing Claims, Jun 8  Survey: 1680k  Actual: — Prior: 1695k
	Philadelphia Fed Business Outlook, Jun  Survey: 10.4  Actual: — Prior: 16.6
09:45 AM	Bloomberg Consumer Comfort, Jun 16  Survey: —  Actual: — Prior: 61.6
	Bloomberg Economic Expectations, Jun  Survey: —  Actual: — Prior: 52.5
10:00 AM	Leading Index, May  Survey: 0.10%  Actual: — Prior: 0.20%

Canadian Economic Data

08:30 AM

ADP Canada Releases May. Payroll Estimates

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