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Market Update

Tsys  trading weaker, yet have rebounded close to highs of European session, on light volume in TY futures (260k),10Y 2.095% (+1.2bps).  US equity futures slightly higher (S&P +3.5), crude ~1.0% lower. Data today second tier with June Empire Man, NAHB & TIC flows.  GOCs moving higher with tsys, 10Y 1.44%.  Expect more provincial issuance with all in yields low and  relative lack of corp supply.

News headlines

S&P Futures Drift as Focus Turns to Central Banks: Markets Wrap (Bloomberg) U.S. equity futures drifted on Monday while European stocks edged lower following a mixed session in Asia as a big week for central-bank policy gets underway. Treasuries fell and the dollar was steady.

ECB Officials Say Bank Ready to Act Amid ‘Alarming’ Market Signs (Bloomberg) European Central Bank policy makers said the institution will act if needed to support the economy, keeping alive the possibility of interest-rate cuts or quantitative easing returning to the euro area.

Fed likely to resist pressure to cut U.S. rates this week (Reuters)  The U.S. Federal Reserve, facing fresh demands by President Donald Trump to cut interest rates, is expected to leave borrowing costs unchanged at a policy meeting this week but possibly lay the groundwork for a rate cut later this year.

Stocks, dollar hold gains with all eyes on Fed meeting (Reuters) Share markets couldn’t add to recent gains and government bond yields inched fractionally higher on Monday, as investors hunkered down for what is shaping up to be a crucial week for global monetary policy.

China pulls WTO suit over claim to be a market economy (Reuters) China has halted a dispute at the World Trade Organization over its claim to be a market economy, a panel of three WTO adjudicators said on Monday, meaning Beijing must accept continued EU and U.S. “anti-dumping” levies on cheap Chinese goods.

BOJ to stand pat even as trade war, dovish Fed cloud outlook (Reuters) The Bank of Japan is expected to maintain its massive stimulus program on Thursday and signal its readiness to ramp up monetary support if growing risks such as the escalating U.S.-China trade war threaten the economy’s modest expansion.

Iran, Russia talks raise hopes of progress on OPEC+ meeting date (Reuters) Iran’s oil minister is scheduled to meet his Russian counterpart in Iran later on Monday, industry sources said, raising hopes of progress in resolving a month-long impasse over when OPEC and its allies will hold their next policy gathering.

Market Overview: US 10yr note futures are up 0.012% at 127-10, S&P 500 futures are up 0.1% at 2897.75, Crude oil futures are down -0.86% at $52.06, Gold futures are down -0.08% at $1343.4, DXY is down -0.16% at 97.42, CAD/USD is down -0.07% at 0.7462.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.389%	2 Year	1.867%
5 Year	1.334%	5 Year	1.851%
10 Year	1.442%	10 Year	2.094%
30 Year	1.697%	30 Year	2.592%

US Economic Data

08:30 AM	Empire Manufacturing, Jun  Survey: 10.5  Actual: -8.6 Prior: 17.8
	NAHB Housing Market Index, Jun  Survey: 67  Actual: — Prior: 66
04:00 PM	Net Long-term TIC Flows, Apr  Survey: $30.8b  Actual: — Prior: -$28.4b
	Total Net TIC Flows, Apr  Survey: —  Actual: — Prior: -$8.1b

Canadian Economic Data

08:30 AM	Int’l Securities Transactions, Apr  Survey: —  Actual: -12.80b Prior: -1.49b
10:00 AM	Bloomberg Nanos Confidence, Jun 14  Survey: —  Actual: — Prior: 56.4

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

Tsy yields ~1bp lower, 10Y 2.115%, average volume in TY futures (350k) with equity futures  +0.30%, crude  3.6% on suspected attack on two oil tankers in Gulf of Oman. Core Euro bond higher led by UK gilts, yields now ~3bps lower on the day, while bunds lack direction with the 10Y bund 0.245%.  Focus in the US on May import prices and $16bln 30Y bond auction at 1:00ET. GOCs higher in line with tsys 10Y 1.48%. GOC 5s30s curve 13bps flatter since month end, while the US is 14bps steeper, the 5s30s box is -36bps or -2.3 stds rich on a five year basis (GOC curve relatively flat),  long outperformance on the GOC curve noteworthy. CMB 5Y pricing today in the area of 33.5bps.  CIBC 10NC5 NVCC issue yest @ 155 now 153/150. MCAP issued $100mln 5s @ 275  or 50bps vs MCAP 22s.  Needless to say this ‘yieldy’ paper did well on the brak comign in ~10bps.

News headlines

Brexiteer Boris Johnson far ahead in first round of contest to replace UK PM (Reuters) Boris Johnson, who has pledged to deliver Brexit on Oct. 31, edged closer to power on Thursday when he won by far the most support from Conservative Party lawmakers in the first round of the contest to replace Prime Minister Theresa May.

Oil surges after Gulf tanker attacks, stocks claw higher (Reuters) Suspected attacks on two tankers off the coast of Iran saw oil markets erupt out of their recent slump on Thursday and kept traders gobbling up ultra-safe government bonds, gold and the Japanese yen. Oil tanker attacks in Gulf of Oman fuel security, oil supply fears.

China says won’t yield to any U.S. pressure over trade (Reuters) China’s commerce ministry said on Thursday Beijing will not yield to any “maximum pressure” from Washington, and any attempt by the United States to force China into accepting a trade deal will fail.

Chinese vice premier urges more support for economy amid trade war (Reuters) Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice Premier Liu He said on Thursday, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.

Majority of Canada’s exporters see global recession, EDC finds (BNNBloomberg) Canadian exporters are reporting widespread concerns about a global recession, with sentiment in the sector falling to the lowest level in seven years, according to a survey by the country’s export financing agency. Export Development Canada’s trade confidence index, a composite gauge based on a bi-annual survey of 1,000 businesses, dropped to 69.8, compared with 73.7 at the end of last year. It’s the lowest reading since 2011 and the second lowest since the last recession a decade ago.

Market Overview: US 10yr note futures are up 0.135% at 127-05, S&P 500 futures are up 0.23% at 2891.5, Crude oil futures are up 4.18% at $53.28, Gold futures are up 0.21% at $1339.6, DXY is down -0.05% at 96.95, CAD/USD is down -0.28% at 0.7515.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.435%	2 Year	1.868%
5 Year	1.379%	5 Year	1.858%
10 Year	1.483%	10 Year	2.108%
30 Year	1.742%	30 Year	2.606%

US Economic Data

08:30 AM	Import Price Index MoM, May  Survey: -0.20%  Prior: 0.20%
	Export Price Index MoM, May  Survey: -0.20%  Prior: 0.20%
	Initial Jobless Claims, 39600  Survey: 215k  Prior: 218k
	Continuing Claims, 37043  Survey: 1660k  Prior: 1682k
09:45 AM	Bloomberg Consumer Comfort, 39965  Prior: 6170.00%

Canadian Economic Data

08:30 AM	New Housing Price Index MoM, Apr  Survey: 0.00%  Prior: 0.00%
	New Housing Price Index YoY, Apr  Survey: 0.10%  Prior: 0.10%

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

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