Commentaires matinaux

Market Update

US tsys slightly lower, near top of narrow range overnite, 10Y 2.445%, heavy volume in TY futures (670k), US/China trade and Trump tweets making headlines with the US raising tariffs on $200bln in Chinese goods and the Chinese threatening to retailiate.  US April CPI forecast to have risen 0.4% , unch from March with the y/y moving up to 2.1% from 1.9%, the main culprit being another solid  monthly increase in retail gas prices (10% in April). Also multiple Fed speakers – Bostic, Brainard and Williams.  GOCs slightly wider vs tsys before April Employment –  11.6k exp vs -7.2k in March., with the unemployment rate unch at 5.8%.

News headlines

Trump Ends China Trade Truce as Both Sides Plan More Tariffs (Bloomberg) President Donald Trump boosted tariffs Friday on $200 billion in goods from China and was preparing more in his most dramatic steps yet to extract trade concessions, saying there’s “no need to rush” a deal even though the uncertainty is roiling markets and clouding the global economy.

U.S. Stock Futures Decline as Europe, Asia Rebound: Markets Wrap (Bloomberg) U.S. equity futures dropped on Friday, bucking a rebound in stocks from Europe to Asia as investors scrambled to gauge the outlook for the latest round of trade talks.

Oil Shrugs Off U.S. Tariff Hike to Climb on Tighter Supply (Bloomberg) Oil pushed higher even after the U.S. went ahead with a planned tariff increase on Chinese goods, as rising tensions in Iran and elsewhere kept the supply outlook tight.

U.S. escalates trade war amid negotiations, China says will hit back (Reuters) The United States escalated a tariff war with China on Friday by hiking levies on $200 billion worth of Chinese goods in the midst of last-ditch talks to rescue a trade deal.

Pre-Brexit rush by factories boosts UK economy in early 2019 (Reuters) Britain’s economy got a sharp one-off boost in the first three months of 2019, official figures showed on Friday, as manufacturers rushed to deliver orders before a Brexit that never came.

EU commissioner says agriculture not on agenda for U.S. talks (Reuters) The European Union intends to keep agriculture off the agenda in its trade talks with the United States and continues to support rules-based, open and predictable international commerce, the EU’s agriculture commissioner said on Friday.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.587%	2 Year	2.254%
5 Year	1.56%	5 Year	2.24%
10 Year	1.686%	10 Year	2.446%
30 Year	1.932%	30 Year	2.873%

US Economic Data

08:30 AM	CPI MoM, Apr Survey 0.40% Actual: 0.3% Prior 0.40%
	CPI Ex Food and Energy MoM, Apr Survey 0.20% Actual: 0.1% Prior 0.10%
	CPI YoY, Apr Survey 2.10% Actual: 2.0% Prior 1.90%
	CPI Ex Food and Energy YoY, Apr Survey 2.10% Actual: 2.1% Prior 2.00%
	CPI Core Index SA, Apr Survey 261.884 Actual: 261.735 Prior 261.374
	CPI Index NSA, Apr Survey 255.800 Actual: 255.548 Prior 254.202
02:00 PM	Monthly Budget Statement, Apr Survey $160.5b Prior $214.3b

Canadian Economic Data

08:30 AM	Building Permits MoM, Mar Survey 2.40% Actual: 2.1% Prior -5.70%
	Net Change in Employment, Apr Survey 11.6k Actual: 106.5k Prior -7.2k
	Unemployment Rate, Apr Survey 5.80% Actual:  5.7%  Prior 5.80%
	Participation Rate, Apr Survey 65.7 Actual: 65.9  Prior 65.7
	Full Time Employment Change, Apr Survey — Actual: 73  Prior -6.4
	Part Time Employment Change, Apr Survey — Actual: 33.6  Prior -0.9

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 on rising trade tensions between the US & China, after Trump said China ‘broke the deal’ last nite, 10Y 2.45% (-3.5bps). Risk-off with US equities lower, S&P futures -21,  European equities  -1.0%, while the MSCI Asia Pacific index fell for a third day to the lowest since March 29th. C ore EGBs higher, lagging tsys, yields 1-2bps lower, quiet day for European data. In the US April PPI & jobless claims, as well as $19bln 30Y US t-bond auction at 1:00ET – Yesterday’s $27bln 10Y auction saw the second tail in a row, awarded at 2.479% 2.465% WI.  Competition from US corporate issuance – IBM issuing $20bln bringing the weekly total to $44.5bln the largest in eight months.  GOCs higher,  1bp wider vs tsys, GOC curve 1bp flatter 2s10s, the narrowest in five weeks, 10s30s bucking the flattening trend over the last week, ~3bps steeper.

News headlines

As tariff hike looms, China asks U.S. to meet it halfway, denies backtracking (Reuters) China appealed to the United States to meet it halfway to salvage a deal that could end their trade war, with its chief negotiator in Washington for two days of talks hoping to stave off U.S. tariff increases set to be triggered on Friday.

Trump says Beijing ‘broke’ trade talk deals, pledges to keep tariffs on Chinese goods (Reuters) U.S. President Donald Trump said on Wednesday that China “broke the deal” it had reached in trade talks with the United States, and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing “stops cheating our workers.”

Stocks Drop, Treasuries Gain as Fresh Tariffs Loom: Markets Wrap (Bloomberg) Stocks dropped globally and U.S. equity futures retreated on Thursday as a deadline approached for America and China to raise reciprocal tariffs. The yen climbed with gold and Treasuries as investors sought havens, while the yuan fell to its weakest since January.

CANADA STOCKS-Futures down ahead of crucial U.S.-China trade talks (Reuters) Futures for Canada’s main stock index dipped on Thursday ahead of crucial trade talks between the United States and China, with investors waiting to see if the world’s largest economies can avoid further worsening of the trade war.

Oil Drops as Trump’s Battle With China Offsets Iranian Tensions (Bloomberg) Oil fell as flaring trade tensions between the world’s two biggest economies overshadowed concerns over supply disruptions from Iran to Venezuela.

New Colorado environmental law stalls oil investment (Reuters) New environmental regulations in Colorado have chilled investment in the state’s oil and gas fields as companies grapple with how local officials will respond to a law giving them more power to restrict energy production.

China to bid on D.C. Metro rail deal as national security hawks circle (Reuters) China’s CRRC plans to bid on a big Washington D.C. subway project as it doubles down on a charm campaign in the United States to quash a rising chorus of critics who have cast the rail car maker as a threat to cyber security and U.S. industry.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.578%	2 Year	2.264%
5 Year	1.543%	5 Year	2.247%
10 Year	1.672%	10 Year	2.446%
30 Year	1.931%	30 Year	2.865%

US Economic Data

08:30 AM	PPI Final Demand MoM, Apr Survey 0.30% Prior 0.60%
	PPI Ex Food and Energy MoM, Apr Survey 0.20% Prior 0.30%
	PPI Final Demand YoY, Apr Survey 2.30% Prior 2.20%
	PPI Ex Food and Energy YoY, Apr Survey 2.50% Prior 2.40%
	Trade Balance, Mar Survey -$50.1b Prior -$49.4b
	Initial Jobless Claims, May 4 Survey 220k Prior 230k
	Continuing Claims, Apr 27 Survey 1670k Prior 1671k
09:45 AM	Bloomberg Consumer Comfort, May 5 Survey — Prior 60.4
10:00 AM	Wholesale Inventories MoM, Mar F Survey 0.00% Prior 0.00%

Canadian Economic Data

08:30 AM	Int’l Merchandise Trade, Mar Survey -2.40b Prior -2.90b
	New Housing Price Index MoM, Mar Survey 0.00% Prior 0.00%

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 higher on ‘risk off’ tone with EGBs, concerns over US-China trade and Iran nuclear tensions, US 10Y 2.435% (-2.2bps). Core EGBs higher led by 10Y UK gilts, Brexit talks between the govt and opposition ‘close to being terminated’ according to ITV.  US equity futures lower yet off the lows of the session, S&P -14.75.  The US auctions $27bln in 10Y notes at 1:00. GOCs slightly lower, lagging the rally  in tsys by 1-1.5bps – Housing Starts coming in above exp for April 235k vs 195k. At noon the BOC $4bln in reopened Can 1.5 Sep 2024s , the 5Y sector having underperformed 5bps over the past two weeks.

News headlines

Exclusive: China backtracked on nearly all aspects of U.S. trade deal – sources (Reuters) The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks.

Stocks Extend Global Slide as Trade Worries Simmer: Markets Wrap (Bloomberg) The global stock selloff triggered by worries over the outlook for trade extended into a third day, with U.S. equity-index futures and European shares tracking declines across Asia. The pound slipped as hopes for a Brexit breakthrough faded.

TSX futures slip on U.S.-China trade concerns (Reuters) Futures for Canada’s main stock index edged lower on Wednesday, as deepening U.S.-China trade tensions and global economy slowdown fears drove investors away from risky assets.

Oil Slips Near Five-Week Low as Trade Angst Counters Supply Risk (Bloomberg) Oil traded near a five-week low as concern over supply losses from Iran to Russia were offset by high American stockpiles and fears that if U.S.-China trade talks fail it could dent global demand.

TREASURIES-Worries about U.S.-China trade talks push U.S. yields to 5-week lows (Reuters) U.S. Treasury yields fell on Wednesday with longer-dated yields hitting five-week lows as investors piled more money into low-risk government debt on worries about upcoming trade negotiations between China and the United States.

Huawei CFO Meng set to appear in Canada court (Reuters) Huawei Chief Financial Officer Meng Wanzhou is set to appear in a Canadian court on Wednesday to begin what is expected to be a long legal battle against the United States’ request that she be extradited to face fraud charges.

Dollar slips as trade tensions raise rate cut expectations (Reuters) The dollar weakened across the board on Wednesday as growing concerns about the escalating trade dispute between China and the United States prompted investors to raise their expectations of a U.S. rate cut later in the year.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.572%	2 Year	2.26%
5 Year	1.539%	5 Year	2.237%
10 Year	1.669%	10 Year	2.433%
30 Year	1.935%	30 Year	2.847%

US Economic Data

07:00 AM

MBA Mortgage Applications, May 3 Actual 2.7% Prior -4.3%

Canadian Economic Data

08:15 AM

Housing Starts, Apr Survey 195.5k Actual 235.5k Prior 192.5k

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