Commentaires matinaux

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

Market Update

Tsy & GOC yields 2-4bps higher before US & Cdn employment data, US 1.595% (+3.5bps), S&P futures +13, crude 55.45 (-1.5%).  China injected $126bln into the economy by lowering the amount of reserves banks are required to hold, hoping banks will in turn increase lending.  China’s Shanghai Comp had risen 0.5% or 3.9% wk/wk before the stimulus announcement.  In Canada, GOCs lower in line with tsys, 10Y 1.30% a two-week high. Yest BOC deputy Schembri reiterated the Bank’s neutral, patient approach with regards to rate cuts, saying that ‘in contrast to the global economy Canadian data since July have surprised to the upside. ‘Risk-on’ spurred a wave of corporate issuance in the US & Cdn markets, $74bln in the US a new weekly record. BCE issued $550mln 10Y @ 165 (170 +/-5 guidance), 10% fills reported.

News headlines

Stock futures gain ahead of U.S. jobs report (Reuters) U.S. stock index futures edged higher on Friday ahead of a crucial jobs report and as China rolled out a stimulus plan to shore up its flagging economy.

CANADA STOCKS-TSX futures little changed ahead of monthly jobs data (Reuters) Futures for Canada’s main stock index were little changed on Friday as investors stayed on the sidelines ahead of jobs data in Canada and the United States.

China cuts banks’ reserve ratios, frees up $126 billion for loans as economy slows (Reuters) China’s central bank said on Friday it was cutting the amount of cash that banks must hold as reserves for the third time this year, releasing 900 billion yuan ($126.35 billion) in liquidity to shore up the flagging economy.

Bank of Canada says economy resilient, U.S.-China dispute may drag on (Reuters) The Canadian economy is showing “a welcome degree of resilience” to negative shocks, a senior Bank of Canada official said on Thursday, even as he suggested the U.S.-China trade war could drag on, hampering global growth.

Bank of Canada remains defiant, still doesn’t see case for cut (BNN) The Bank of Canada held firm to its narrative they are prepared to defy any global monetary policy easing and won’t be in any rush to cut interest rates unless they see clear signs of economic deterioration at home.

U.S. shale firms cut budgets, staff as oil-price outlook dims (Reuters) Oil producers and their suppliers are cutting budgets, staffs and production goals amid a growing consensus of forecasts that oil and gas prices will stay low for several years.

Explainer: ECB weighs stimulus options to boost ailing economy (Reuters) The European Central Bank is all but certain to approve new stimulus measures on Sept. 12 to boost an ailing economy, but the composition of its package is far from clear as a rift has opened between hawkish northern European policymakers and doves from the south.

Slower U.S. job growth expected, but enough to support economy (Reuters) U.S. job growth likely slowed further in August, but the pace of gains probably remains sufficient to keep the economy expanding moderately amid rising threats from trade tensions and weakness overseas that have left financial markets fearing a recession.

Market Overview: US 10yr note futures are down -0.262% at 130-31, S&P 500 futures are up 0.49% at 2986.5, Crude oil futures are down -1.55% at $55.43, Gold futures are down -0.84% at $1512.7, DXY is up 0.06% at 98.469, CAD/USD is down -0.03% at 0.7562.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.491%	2 Year	1.564%
5 Year	1.332%	5 Year	1.471%
10 Year	1.3%	10 Year	1.599%
30 Year	1.535%	30 Year	2.079%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Aug  Survey: 160k  Prior: 164k
	Change in Private Payrolls, Aug  Survey: 150k  Prior: 148k
	Change in Manufact. Payrolls, Aug  Survey: 5k  Prior: 16k
	Unemployment Rate, Aug  Survey: 3.70%  Prior: 3.70%
	Average Hourly Earnings MoM, Aug  Survey: 0.30%  Prior: 0.30%
	Average Hourly Earnings YoY, Aug  Survey: 3.00%  Prior: 3.20%
	Average Weekly Hours All Employees, Aug  Survey: 34.4  Prior: 34.3
	Labor Force Participation Rate, Aug  Survey: —  Prior: 63.00%
	Underemployment Rate, Aug  Survey: —  Prior: 7.00%

Canadian Economic Data

08:30 AM	Net Change in Employment, Aug  Survey: 20.0k  Prior: -24.2k
	Unemployment Rate, Aug  Survey: 5.70%  Prior: 5.70%
	Hourly Wage Rate Permanent Employees YoY, Aug  Survey: 4.50%  Prior: 4.50%
	Full Time Employment Change, Aug  Survey: 17.5  Prior: -11.6
	Part Time Employment Change, Aug  Survey: 7.0  Prior: -12.6
	Participation Rate, Aug  Survey: 65.60  Prior: 65.60
10:00 AM	Ivey Purchasing Managers Index SA, Aug  Survey: —  Prior: 54.2

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 slightly higher before  May Payrolls (175k exp, 3.6% unemp rate), 10Y  2.11%, low volume in Ty futures overnite (257k).  Core Euro bond mixed, gilts lower while bunds slightly higher in the long end – ECB rate guidance to leave rates lower for longer adding momentum to flattener trade.  GOCs unch before  May employment – 5K forecast after April’s blockbuster 107k increase. Wage growth has also been ticking up since Dec, 2.4% in April, back above the 5Y avg 2.2%.

News headlines

Pence says Mexico tariffs still set for Monday as talks continue (BNNBloomberg) Vice President Mike Pence said the U.S. still plans to impose tariffs on Mexico next week, as American and Mexican officials planned further talks aimed at defusing a crisis between the two countries over the flow of undocumented migrants into the U.S. Negotiations wrapped up on Thursday evening without an agreement, Mexican Foreign Minister Marcelo Ebrard said, adding that another round of discussions would take place on Friday in Washington to head off the tariffs.

Trudeau worried China could target imports of other Canadian products (BNNBloomberg) Prime Minister Justin Trudeau says he’s worried China could block imports of other Canadian products — in addition to its recent rejection of canola shipments. Speaking to reporters Thursday in France, Trudeau says he will see if it’s appropriate to have a conversation directly with China’s President Xi Jinping about a number of bilateral difficulties later this month at the G20 summit in Japan. Relations between Canada and China have deteriorated since the December arrest in Vancouver of Huawei senior executive Meng Wanzhou at the behest of the United States.

Mexico pushing forward with ratification of new NAFTA despite Trump tariff threat (FP) Mexico’s ambassador to Canada says his country is pushing forward with the ratification of the new NAFTA despite ongoing threats from U.S. President Donald Trump to slap tariffs on Mexican goods. But Juan Jose Gomez Camacho — just two and a half months into his appointment as Mexico City’s top diplomat in Ottawa — wouldn’t speculate on the deal’s fate if Trump follows through on his pledge to impose the levies by Monday.

Strong U.S. jobs growth expected in May, trade tensions a threat (Reuters) U.S. job growth likely increased solidly in May, with wage gains expected to pick up, showing strength in the labor market before an escalation in trade tensions that analysts have cautioned could pressure an already slowing economy. Futures rise ahead of May jobs report, U.S. stock index futures rose on Friday, as hopes of an interest rate cut by the Federal Reserve continued to buoy sentiment ahead of a highly awaited jobs report.

Beyond Meat sees sales more than doubling in 2019, shares jump 21% (Reuters) Beyond Meat Inc, a maker of plant-based burgers and sausages, said it expects to more than double its revenue and report breakeven EBITDA this year, sending the its shares up over 21 percent. The company said it expects to record revenue of $210 million in 2019, with break-even earnings, before interest, tax, depreciation and amortization (EBITDA). Analysts on average forecast full-year sales of $205 million, and a loss, before interest, tax, depreciation and amortization, of $10.28 million, according to Refinitiv IBES data.

Elliott Management in talks to buy Barnes & Noble (Reuters) Hedge fund Elliott Management Corp is in talks to acquire Barnes & Noble Inc, in a deal that would mark the end of the once-dominant U.S. book retailer as a publicly listed company, a source familiar with the matter said on Thursday.

Markets Overview: US 10yr note futures are up 0.086% at 127-02, S&P 500 futures are up 0.25% at 2853, Crude oil futures are up 1.2% at $53.22, Gold futures are down -0.16% at $1340.5, DXY is up 0.04% at 97.079, CAD/USD is down 0% at 0.7484.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.375%	2 Year	1.872%
5 Year	1.321%	5 Year	1.873%
10 Year	1.45%	10 Year	2.112%
30 Year	1.738%	30 Year	2.603%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, May  Survey: 175k  Prior: 263k
	Change in Private Payrolls, May  Survey: 174k  Prior: 236k
	Change in Manufact. Payrolls, May  Survey: 3k  Prior: 4k
	Unemployment Rate, May  Survey: 3.60%  Prior: 3.60%
	Average Hourly Earnings MoM, May  Survey: 0.30%  Prior: 0.20%
	Average Hourly Earnings YoY, May  Survey: 3.20%  Prior: 3.20%
	Average Weekly Hours All Employees, May  Survey: 34.50  Prior: 34.40
	Labor Force Participation Rate, May  Prior: 62.80%
	Underemployment Rate, May  Prior: 7.30%
10:00 AM	Wholesale Trade Sales MoM, Apr  Survey: -0.20%  Prior: 2.30%
	Wholesale Inventories MoM, Apr F  Survey: 0.70%  Prior: 0.70%
03:00 PM	Consumer Credit, Apr  Survey: $13.000b  Prior: $10.281b

Canadian Economic Data

08:30 AM	Net Change in Employment, May  Survey: 5.0k  Prior: 106.5k
	Unemployment Rate, May  Survey: 5.70%  Prior: 5.70%
	Participation Rate, May  Survey: 65.80%  Prior: 65.9%
	Full Time Employment Change, May  Survey: 9.00%  Prior: 7.3%
	Part Time Employment Change, May  Survey: 50.00%   Prior: 33.60%
	Capacity Utilization Rate, 1Q  Survey: 81.00%   Prior: 81.70%

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