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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

Market Update

US tsys trading little lower, 10Y 2.48%, heavier volume in TY futures (600k),  stock futures lower (S&P -0.7%) on  renewed trade concerns with the US threatening to raise tariffs on Friday, and China’s trade negotiator scheduled to travel to the US. Core EGB and gilt yields have moved lower thru the morning, the EU Commission slashed economic growth forecasts for the EU & Germany, the latter to 0.5% from 1.1%.  The RBA kept rates on hold vs. expectations for a rate cut(50%). GOCs higher, outperforming tsys 1-2bps,  crude -1.0% 61.55. April Ivey PMI on tap.

News headlines

China vice premier going to U.S. for trade talks despite Trump threats (Reuters) Chinese Vice Premier Liu He will visit the United States this week for trade talks, Beijing said on Tuesday, playing down a sudden increase in tension after U.S. President Donald Trump vowed to impose new tariffs.

Stocks Decline as Trade Concerns Linger; Oil Dips: Markets Wrap (Bloomberg) U.S. equity-index futures extended declines on Tuesday alongside stocks in Europe as the gloom surrounding the outlook for global trade refused to dissipate. The dollar edged higher and Treasury yields were steady.

TSX futures down on U.S.-China trade worries (Reuters) Futures for Canada’s main stock index were lower on Tuesday, as investors cautiously tracked developments around U.S.-China trade talks.

Oil Slips as Saudi Arabia Is Said to Give Extra Supply to Asia (Bloomberg) Oil traded near $62 a barrel as Saudi Arabia was said to give extra crude supplies to its customers in Asia but they’ll pay a heavy price for it.

Poloz issues ‘call to arms’ for mortgage market innovations (BNN) Bank of Canada governor Stephen Poloz says it’s time for fresh ideas when it comes to Canadians’ mortgage options.

Trump’s tariff push squeezes businesses and consumers (Reuters) The first time President Donald Trump threatened tariffs on the luggage that Tiffany Williams imports for her Texas store, she stockpiled high-end suitcases and other products ahead of the deadline to protect profits.

Fed’s Kaplan optimistic U.S., China will find ways to tackle trade issues (Reuters) Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday he was optimistic the United States and China would find ways to deal with their trade issues.

U.S. to impose tariffs on Mexican tomatoes as new pact remains elusive (Reuters) The United States will impose a 17.5 percent tariff on Mexican tomato imports starting on Tuesday, as the two countries were unable to renew a 2013 agreement that suspended a U.S. anti-dumping investigation, a Mexican official said on Monday.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.612%	2 Year	2.282%
5 Year	1.581%	5 Year	2.262%
10 Year	1.712%	10 Year	2.467%
30 Year	1.97%	30 Year	2.881%

US Economic Data

10:00 AM	JOLTS Job Openings, Mar Survey 7350 Prior 7087
03:00 PM	Consumer Credit, Mar Survey $16.000b Prior $15.188b

Canadian Economic Data

10:00 AM

Ivey Purchasing Managers Index SA, Apr Survey — Prior 54.3

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 rallying hard, 10Y below 2.50% (2.485% -4bps) on renewed US/China trade threats after Trump tweets, heavy volume in TY futures (~600k),  S&P futures  down 1.6%, 1900, off the lows of the session. Light data week with focus on April CPI Thursday, with the US auctions $84bln in 3, 10 & 30Y bonds.  Core Euro bonds opened strong, but yields have pushed higher, 10Y bund -1.5bps, 10Y gilt unch. GOCs higher, lagging the rally in tsys by 2bps in 2s and 5s, 0.5bps in 10s.  BOC Governor Poloz speaks in Montreal at 1:45PM on the mortgage market.

News headlines

Stocks Tumble as Trump’s Trade Threat Reverberates: Markets Wrap (Bloomberg) Equities slumped globally on Monday and Treasuries rallied with other haven assets after President Donald Trump’s threat to increase tariffs on Chinese imports called into question the chances of a resolution to the trade war. The yen rose while crude oil declined.

Oil Falls to Five-Week Low After Trump Jeopardizes Trade Talks (Bloomberg) Oil tumbled toward $60 a barrel as President Donald Trump threw trade talks between the world’s two largest economies into disarray with a threat to raise tariffs on Chinese imports, roiling global markets.

China trade team still preparing to go for talks after Trump cranks up pressure (Reuters) China said on Monday that a delegation is still preparing to go to the United States for trade talks, after U.S. President Donald Trump dramatically increased pressure on Beijing to reach a deal, saying he would hike tariffs on Chinese goods this week.

China gives modest boost to economy with RRR cut amid renewed trade tensions (Reuters) China’s central bank said on Monday it will cut reserve requirement ratios (RRRs) to release about 280 billion yuan ($41 billion) for some small and medium-sized banks, in a targeted move to help companies struggling amid an economic slowdown.

TSX futures fall after Trump vows China tariff hike (Reuters) Futures for Canada’s main stock index fell on Monday after U.S. President Donald Trump threatened to raise tariffs on China, triggering a global rout in risky assets.

Toronto home sales surge in April, climb near 17 per cent from last year’s sluggish level (GlobeandMail) Toronto home sales roared ahead in April, climbing almost 17 per cent from last year’s sluggish sales level as detached houses saw a sales leap. The Toronto Real Estate Board said 9,042 homes sold in the Greater Toronto Area last month, a 16.8-per-cent jump from April last year when sales were weak after the implementation of a new mortgage stress test. Sales rose 11.3 per cent on a month-over-month basis from March, based on TREB’s preliminary seasonal adjustment.

Strong Dollar Confronts Clashing Signs (FT) The ICE Dollar Index, which measures the dollar against a basket of six other currencies, stands just below its highest level since May 2017. The measure is up more than 5% over the last 12 months, boosted by comparatively high U.S. interest rates and expectations the U.S. will outperform other economies. Higher rates make the greenback more attractive to investors seeking yield. Determining the dollar’s path is important for companies and investors, as the currency’s movements ripple throughout the world and affect everything from corporate profits to commodity prices.

One Word Grips the Bond Market Before Crucial Inflation Update (Bloomberg) Bond traders will have one word on their minds as they gear up for the latest readings on inflation: “transitory.” That’s how Federal Reserve Chairman Jerome Powell characterized the factors behind muted price pressures after last week’s policy meeting, where officials kept interest rates unchanged. Markets whipsawed on his comments, with benchmark 10-year Treasury yields bouncing off their lowest levels in a month.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.62%	2 Year	2.286%
5 Year	1.588%	5 Year	2.27%
10 Year	1.724%	10 Year	2.48%
30 Year	1.972%	30 Year	2.886%

US Economic Data

There is no Canadian economic data for today.

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, May 3 Surv – Prior 54.9

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