Commentaires

Market Update

Tsys trading higher, led by the short end with the curve 2bps steeper, 10Y 2.12% (-2.5bps) before May CPI (0.1%, 1.9% exp).  US equity futures lower (S&P -8.5), crude falling to weekly low, -2.7% 51.84. API reported crude inventories rose for a second week by 4.85mln bbls vs forecasts of a 480k drawdown. GOCs higher in line with tsys, 10Y 1.51%. Corp and Provi supply impacting Can/US spreads which were out  ~2bps yest.  In provis $500mln HQ 55s , $200mln Sask 28s and $1bln Ont 29s (500mln carve out), spreads fairly solid at the tights  despite supply. In corps Fairfax issued $500mln 10Y @ 270 which looked fair (30 bps vs FFHCN 12/27s or 25bps/yr). Keyera Energy in the mkt with $600mn  60NC10 Hybrids at 6.875%.  Focus today on GOC 3Y auction ($2.4bln reopening of Can 1% Sep 2022)  with the S22/May21 roll -2.7bps

News headlines

Trump renews Fed attack, saying interest rates way too high (BNNBloomberg) President Donald Trump slammed the Federal Reserve for high interest rates in a tweet on Tuesday, complaining the euro and other currencies were “devalued” against the dollar. “The Fed interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” Trump said on Twitter, renewing his complaints about the U.S. central bank a week before it meets in Washington to discuss monetary policy.

The president also tweeted that the U.S. has “VERY LOW INFLATION,” calling it a “beautiful thing!

South Korea’s won is Asia’s whipping boy in U.S.-China trade war (Reuters) South Korea’s exposure to a stressed global manufacturing supply chain has knocked its currency – Asia’s most risk sensitive – to over two-year lows as investors use it as a proxy to bet on the economic costs of a protracted U.S.-China trade war.

U.S. Commerce Secretary says Fed’s last rate hike was ‘premature’: Bloomberg TV (Reuters) U.S. Commerce Secretary Wilbur Ross said in a television interview on Wednesday the Federal Reserve should reconsider its last rate increase, which he said was premature. “I think the Fed taking a more cautious attitude on rates and reconsidering, in effect, the last rate increase that they put in, I think that’s good. I think they should reconsider. I think it’s quite likely that that last increase was, at best, premature,” Ross told Bloomberg TV.

U.S. mortgage applications jump to highest since September 2016: MBA (Reuters) U.S. mortgage applications jumped to their highest level in more than 2-1/2 years last week, led by a surge in refinancing activity, as some home borrowing costs tumbled to their cheapest level since September 2017, the Mortgage Bankers Association said on Wednesday.

Turkey’s central bank cites ‘disinflation’ as it holds rates (Reuters) Turkey’s central bank on Wednesday left its key interest rate unchanged at 24% as expected and said it will keep its policy stance tight to “reinforce the disinflation process,” a somewhat more upbeat assessment than its past statement.

Market Overview: US 10yr note futures are up 0.099% at 126-30, S&P 500 futures are down -0.27% at 2883.25, Crude oil futures are down -2.8% at $51.78, Gold futures are up 0.44% at $1337, DXY is up 0.02% at 96.707, CAD/USD is up 0.09% at 0.7521.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.461%	2 Year	1.899%
5 Year	1.415%	5 Year	1.887%
10 Year	1.52%	10 Year	2.124%
30 Year	1.768%	30 Year	2.602%

US Economic Data

07:00 AM	MBA Mortgage Applications, 39234    Actual: 26.80% Prior: 1.50%
08:30 AM	CPI MoM, May  Survey: 0.10%   Prior: 0.30%
	CPI Ex Food and Energy MoM, May  Survey: 0.20%   Prior: 0.10%
	CPI YoY, May  Survey: 1.90%   Prior: 2.00%
	CPI Ex Food and Energy YoY, May  Survey: 2.10%   Prior: 2.10%
	CPI Core Index SA, May  Survey: 26228.00%   Prior: 26173.50%
	CPI Index NSA, May  Survey: 25617.90%   Prior: 25554.80%
	Real Avg Hourly Earning YoY, May  Prior: 1.20%
	Real Avg Weekly Earnings YoY, May  Prior: 0.90%
10:30 AM	DOE U.S. Crude Oil Inventories, 39234  Survey: -1000k   Prior: 6771k
	DOE U.S. Gasoline Inventories, 39234  Survey: 950k   Prior: 3205k
02:00 PM	Monthly Budget Statement, May  Survey: -$202.5b   Prior: -$146.8b

Canadian Economic Data

There is no CDA 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 trading lower, yields 2-2.5bps higher for a second day, stocks higher in Europe led by car makers, Shanghai Comp +2.5%. Core Euro bonds mixed, UK gilts weaker from the start -UK employment rose 3.8% in April the largest one month rise since May 2008 with unemployment rate unch at record low 3.8% below the BOE’s 3.9% forecast.  GOCs lower in line with tsys, 10Y 1.54%. In the US May PPI expected to have risen 0.1% bringing the y/y rate back to 2.0% from 2.2% in April. The US auctions $38bln in 3 year notes at 1:00ET.

News headlines

Under pressure, Fed faces an outlook clouded by trade wars and signs of weakness (Reuters) U.S. President Donald Trump’s attacks on the Federal Reserve have broken one set of precedents, his talk of stacking the central bank with political allies has strained another, and his on-again off-again tariff threats have made the economic outlook harder than ever to predict.

Battered Beyond Meat bears are grappling with an ‘extraordinarily rare’ situation where it’s more expensive to short the stock than own it (BI) Not everyone is happy with Beyond Meat’s soaring stock price. Short-sellers, or traders who have bet against the best-performing initial public offering of the year, have lost hundreds of millions of dollars as the stock has climbed to more than 600% of its initial IPO price of $25 a share.

Canaccord to buy Australian securities business Patersons for $23M (BNN) Canaccord Genuity Group Inc. has struck a deal to acquire Australian financial services firm Patersons Securities Ltd. for roughly $23 million in cash. The Melbourne-based securities business has operations in wealth management and capital markets. Canaccord chief executive Dan Daviau says the addition of Patersons is part of its strategy to increase the scale of its wealth management operations and improve its business mix in Australia.

SNC-Lavalin names interim CEO as Neil Bruce steps aside (BNN) The chief executive officer of SNC-Lavalin Group Inc. is leaving the embattled engineering and construction giant. Neil Bruce is stepping aside, effective immediately, and will return to his family in the United Kingdom, SNC announced Tuesday morning. He’s being replaced on an interim basis by Chief Operating Officer Ian Edwards, who has been tasked with a full review of the company’s strategic direction.

Exclusive: Top Japanese chip gear firm to honor U.S. blacklist of Chinese firms – executive (Reuters) Japan’s Tokyo Electron, the world’s No.3 supplier of semiconductor manufacturing equipment, will not supply to Chinese clients blacklisted by Washington, a senior company executive told Reuters.

World shares rally again on Trump tariff relief, Fed hopes (Reuters) World shares rallied on Tuesday to hold near one-month highs, with German carmakers outperforming and Wall Street looking to extend gains after the United States stepped back from imposing tariffs on Mexico.

UK April pay data beats forecasts, employment growth slow (Reuters) British wages in the three months to April grew faster than expected and hiring slowed less sharply, as the jobless rate held at its lowest rate since 1975, official figures showed on Tuesday.

Market Overview: US 10yr note futures are down -0.123% at 126-19, S&P 500 futures are up 0.52% at 2904.25, Crude oil futures are up 1.13% at $53.86, Gold futures are down -0.3% at $1325.3, DXY is up 0.02% at 96.777, CAD/USD is down -0.07% at 0.7542.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.485%	2 Year	1.922%
5 Year	1.433%	5 Year	1.929%
10 Year	1.54%	10 Year	2.164%
30 Year	1.786%	30 Year	2.646%

US Economic Data

06:00 AM	NFIB Small Business Optimism, May  Survey: 102.00  Actual: 105.00 Prior: 103.50
08:30 AM	PPI Final Demand MoM, May  Survey: 0.10%  Prior: 0.20%
	PPI Ex Food and Energy MoM, May  Survey: 0.20%  Prior: 0.10%
	PPI Final Demand YoY, May  Survey: 2.00%  Prior: 2.20%
	PPI Ex Food and Energy YoY, May  Survey: 2.30%  Prior: 2.40%

Canadian Economic Data

There is no CDA economic data for today. c

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 trading lower, US equity futures higher on the back of Trump postponing plans to impose tariffs on Mexico, tsy yields 4-6bps higher with the 10Y 2.14% (+6bps), above avg volume in TY futures (~400k). European govt bonds lower, German bund 2s30s curve ~8bps steeper, bund curve . Selling of E200mln of Spanish 30Y bonds (BN) related to Spanish Treasury planning to issue three new 30-Y linkers for E350mln.  GOCs lower, 1bps wider vs tsys out to 10s,  10Y 1.52% (+5.5bps). May Housing Starts 202K vs 207k exp.  Friday’s employment report strong – jobs rose 27.7k vs 5k exp with full-time up 28k and the unemployment rate down to 5.4% – lowest on record. Theme of the week was long outperforming on the curve and vs the US last week. even after the strong data and long provi supply, 10s30s ~3bps flatter , Can/US 10s30s BOX 5bps flatter. Provis 1-1.5bps tighter on ‘risk on’, Quebec reopened Dec 51s @ 79, now 78/77.

News headlines

Clear path ahead for new NAFTA as Mexico tariffs dropped: Morneau (BNNBloomberg) U.S. President Donald Trump’s decision not to slap tariffs on Mexico over migration clears the path for the U.S.-Mexico-Canada trade agreement to move forward, said Canadian Finance Minister Bill Morneau. The removal of that uncertainty and the U.S. cancellation of steel and aluminum tariffs on Canada have pushed the joint deal toward ratification, he said. Less clear is what’s ahead for world trade, and how any additional tariffs — or threats of them — will impact Canada and the global economy.

Manulife Bank out to poach millennials from the Big Five with targeted digital banking packages (FP) Canada’s biggest banks have a track record of swallowing up competitors – from upstart retail banks such as ING Direct to the Canadian credit card portfolios of U.S. banks including JP Morgan and Citigroup. But another giant on the domestic financial services landscape, Manulife Financial Corp., is taking aim at the big banks’ customers with the launch of a multi-product banking package by subsidiary Manulife Bank.

Delay the ‘dot plot’? Fed policymakers face communications quandary (Reuters) As Federal Reserve policymakers grapple with how to downplay their quarterly “dot plot” projection of interest rates without eliminating it altogether, some are looking at a compromise: delay its release to reduce the chances that analysts treat it as a sneak peek of where Fed policy is heading.

China exports grow despite U.S. tariffs, but import slump most in nearly three years (Reuters) China’s exports unexpectedly returned to growth in May despite higher U.S. tariffs, but imports fell the most in nearly three years in a further sign of weak domestic demand that could prompt Beijing to step up stimulus measures.

Trump threatens more tariffs on Mexico over part of immigration deal (Reuters) President Donald Trump said on Monday the United States had signed another portion of an immigration deal with Mexico that would need to be ratified by Mexican lawmakers.

China stays silent on G20 Xi-Trump meeting, but says door open for talks (Reuters) China is open for more trade talks with Washington but has nothing to announce about a possible meeting between the Chinese and U.S. leaders at this month’s G20 summit, the Foreign Ministry said on Monday.

Market Overview: US 10yr note futures are down -0.332% at 126-26, S&P 500 futures are up 0.49% at 2889, Crude oil futures are up 0.63% at $54.33, Gold futures are down -1.22% at $1329.7, DXY is up 0.37% at 96.903, CAD/USD is up 0.04% at 0.7533.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.459%	2 Year	1.892%
5 Year	1.403%	5 Year	1.904%
10 Year	1.523%	10 Year	2.138%
30 Year	1.775%	30 Year	2.623%

US Economic Data

10:00 AM

JOLTS Job Openings, Apr  Survey: 7496  Prior: 7488

Canadian Economic Data

08:15 AM	Housing Starts, May  Survey: 207.5k  Actual: 202.3k Prior: 235.5k
08:30 AM	Building Permits MoM, Apr  Survey: 1.80%  Prior: 2.10%

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