Comments

Market Update

US tsys higher, yields 2.5-3bps lower led by the long end, 10Y 2.355% (-2.5bps), yields across the curve at new lows, heavy volume in TY futures (~540k).  The 3M 10Y curve inverted again down -3.67 bps at -2.34%. ‘Risk off’ on trade rhetoric,  with China’s Commerce Ministry warning talks wont continue unless the US changes its approach,  S&P futures -28pts, crude lower for a third day -1.7% 60.35.  GOCs higher, in line with tsys, Can/US continues to cheapen, 5-6bps over the week.

News headlines

Stocks Slump, Dollar Rises as Trade Worries Deepen: Markets Wrap (Bloomberg) Stocks slumped globally on Thursday as the simmering trade dispute between the world’s two largest economies took a greater toll on markets. Safe assets were in demand, with gold and the yen gaining alongside the dollar and Treasuries.

Oil Extends Losses on Rising U.S. Inventories and Trade Tension (Bloomberg) Oil extended losses after a surprise jump in American crude inventories alleviated concerns over a supply crunch, while fears of a full-blown trade war between the U.S. and China weighed on the outlook for demand.

TSX futures fall on fears of endless trade war (Reuters) Stock futures for Canada’s main equity index fell on Thursday, tracking losses in global stocks over fears that the Sino-U.S. trade spat was fast developing into a technology cold war.

China says U.S. needs to correct wrong actions to continue trade talks (Reuters) The United States needs to correct its wrong actions if it wants to continue negotiations with China to end a damaging tariff war, China’s Commerce Ministry said on Thursday, adding that talks should be based on mutual respect.

German Economy Suffers Another Blow as Business Confidence Drops (Bloomberg) German business confidence fell to the weakest in more than four years as the escalation of global trade tensions weighed heavily on the outlook.

U.S. Fed minutes signal patience on rate moves for ‘some time’ (BNN) Federal Reserve officials judged at their latest meeting that their patient approach to interest-rate changes would be appropriate “for some time,” and many sided with Chairman Jerome Powell’s view that the recent dip in inflation was probably temporary.

Futures tumble on fears of possible U.S.-China tech cold war (Reuters) U.S. stock index futures slid on Thursday, as investors worried that the U.S.-China trade war could spiral into a technology cold war between the two countries, with no signs of resolution in sight.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.637%	2 Year	2.196%
5 Year	1.59%	5 Year	2.153%
10 Year	1.689%	10 Year	2.356%
30 Year	1.927%	30 Year	2.783%

US Economic Data

08:30 AM	Initial Jobless Claims, May 18 Survey 215k Prior 212k
	Continuing Claims, May 11 Survey 1666k Prior 1660k
09:45 AM	Bloomberg Consumer Comfort, May 19 Survey — Prior 59.9
	Bloomberg Economic Expectations, May Survey — Prior 50.0
	Markit US Manufacturing PMI, May P Survey 52.7 Prior 52.6
	Markit US Services PMI, May P Survey 53.5 Prior 53.0
	Markit US Composite PMI, May P Survey — Prior 53.0
10:00 AM	New Home Sales, Apr Survey 675k Prior 692k
	New Home Sales MoM, Apr Survey -2.50% Prior 4.50%
11:00 AM	Kansas City Fed Manf. Activity, May Survey 6 Prior 5

Canadian Economic Data

08:30 AM

Wholesale Trade Sales MoM, Mar Survey 0.90% Prior 0.30%

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 1-2.5bps lower led by the short end with S&P futures moving deeper into the red (-12) and crude down ~1.0%. The trump administration is considering limits on China’s video surveillance firm Hikvision ability to use US technology. Qualcomm fell 12% after a US judge ruled the company’s licencing practices are anti competitive.  St Louis Fed Pres Bullard said the Fed may have ‘overdone it’ when it raised rates in Dec. FOMC minutes for the May 1st meeting are scheduled for 2:00ET. Powell sought to contain expectations for a rate cut, saying the slowing in inflation was due to transitory factors.   In Canada, GOCs are higher, lagging the rise in tsys by ~1bp in the short end, Can/US 3-5bps wider over the week.  March Retail Sales forecast to have risen 1.2% vs 0.8% in Feb, mostly due to gas prices. The BOC auctions $700mln in  Dec 2050 rrbs at noon with long breakevens  trading in the low 140s, real yields ~0.54%.

News headlines

U.S. Stock Futures Edge Down as Tech Tensions Grow: Markets Wrap (Bloomberg) U.S. equity futures dipped and European stocks fluctuated after a mixed session in Asia as investors digested the latest in the Sino-American confrontation over technology. Oil declined while the dollar and Treasuries were steady before the latest Fed minutes.

CANADA STOCKS-TSX futures lower as oil prices slip (Reuters) Stock futures for Canada’s main equity index edged lower on Wednesday as oil prices fell due to an increase in U.S. crude inventories and on demand worries related to the U.S.-China trade war.

Oil Falls as Deepening Trade War Stokes Fear Over Global Growth (Bloomberg) Oil fell on signs the worsening U.S.-China trade war will take a toll on global economic growth, overshadowing the prospect of OPEC and its allies extending production curbs.

In Fed policy review, labor may finally win out over inflation (Reuters) At 2.3 percent, Minneapolis’ jobless rate seems impossibly low, even with national unemployment at a 50-year trough.

Prepare for difficult times, China’s Xi urges as trade war simmers (Reuters) China must prepare for difficult times as the international situation is increasingly complex, President Xi Jinping said in comments carried by state media on Wednesday, as the U.S.-China trade war took a mounting toll on tech giant Huawei.

British Steel goes into liquidation after failing to secure loan (Reuters) British Steel, the country’s second largest steel producer, has collapsed after failing to secure emergency government funding, jeopardising some 25,000 jobs, Britain’s Official Receiver said on Wednesday.

Dollar near one-month highs before Fed minutes; pound dives (Reuters) The dollar held near a one-month high on Wednesday as trade tensions between the world’s two biggest economies remained high before Fed minutes that may give more clues on what prompted U.S. policymakers to strike a broadly neutral stance this month.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.675%	2 Year	2.235%
5 Year	1.638%	5 Year	2.211%
10 Year	1.746%	10 Year	2.416%
30 Year	1.967%	30 Year	2.838%

US Economic Data

07:00 AM	MBA Mortgage Applications, May 17 Actual 2.4% Prior -0.60%
02:00 PM	FOMC Meeting Minutes, May 1

Canadian Economic Data

08:30 AM	Retail Sales MoM, Mar Survey 1.20% Prior 0.80%
	Retail Sales Ex Auto MoM, Mar Survey 0.90% Prior 0.60%

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, 10Y 2.43% (+1.5bps) , above avg volume in TY futures (425k), US equity futures higher, S&P +13. US/China trade tensions moderated somewhat as the US eases some restrictions on Huawei according to WSJ article.  Core EGBs lower, 10Y gilt 2bps higher, PM May to unveil new proposal for getting Brexit deal through Parliament. GOCs lower, yields 4-5bps higher in catch-up mode  with the US after Cdn mkt close yest.  No Cdn data today, March Retail Sales tomorrow (1.2% exp vs 0.8% Feb). On Friday , BOC Poloz said there is still underlying stregth in the Cdn economy and that the natural tendency would be for rates to move higher leading to 1-2bp widening in Can/US by Friday afternoon.

News headlines

S&P Futures Climb With Europe Stocks; Bonds Mixed: Markets Wrap (Bloomberg) U.S. equity futures and European stocks advanced on Tuesday following a mixed session in Asia as the trade-war driven turbulence that has dominated markets this month showed few signs of abating. The dollar strengthened while Treasuries slipped.

TSX futures rise on higher oil prices (Reuters) Stock futures for Canada’s main equity index rose on Tuesday, supported by higher oil prices which gained on escalating tensions between the United States and Iran.

Trump’s Huawei ban raises hopes for Chinese chip suppliers (Reuters) Washington’s blacklisting of technology giant Huawei has taken a toll on U.S. semiconductor shares, but China-listed firms have rallied as investors bet they can gain from Beijing’s stepped-up efforts to build a homegrown supply chain.

China rebuffs Trump claim U.S. tariffs are making firms leave (Reuters) Foreign investors remained enthusiastic about China, the foreign ministry said on Tuesday, following U.S. President Donald Trump’s claim that his tariffs are causing companies to move production away from the world’s second largest economy.

Canadian retaliatory tariffs lifted as U.S. kills steel aluminum penalties (BNN) Canada collected more than $1.27 billion from the retaliatory tariffs on U.S. products over the last year and all of it will go to the Canadian steel and aluminum industry even though the steel trade war with the United States is over.

Top U.S. Tech Companies Begin to Cut Off Vital Huawei Supplies (Bloomberg) The impact of the Trump administration’s threats to choke Huawei Technologies Co. reverberated across the global supply chain on Monday, hitting some of the biggest component-makers.

Russian Oil Sales to U.S. ‘on Steroids’ Amid Venezuela Sanctions (Bloomberg) Petroleum exports from Russia to the U.S. are growing rapidly as the supplier takes advantage of lost deliveries from sanctions-hit Venezuela and supply cuts by OPEC members.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.66%	2 Year	2.237%
5 Year	1.631%	5 Year	2.22%
10 Year	1.738%	10 Year	2.426%
30 Year	1.955%	30 Year	2.844%

US Economic Data

10:00 AM	Existing Home Sales, Apr Survey 5.35m Prior 5.21m
	Existing Home Sales MoM, Apr Survey 2.70% Prior -4.90%

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, May 17 Survey — Prior 54.7

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