Comments

Market Update

US tsys trading lower before April Nonfarm payrolls & unemp rate, 10Y 2.56% (+2bps).  Core EGBs weaker after Eurozone core inflation rose 0.4% or 1.2% y/y last month, the strongest increase since Oct (0.2% exp, 0.8% y/y in March).  Payrolls expected to have risen 190k in April from 196k in March, Initial claims hit record lows during the survey weak which supports a stronger number. Hourly earnings are also forecast to remain near a cycle high 3.3%.  US equity futures higher (S&P + 10), tesla up 1.3% pre-mkt on larger than exp capital raise. GOCs weaker in line with tsys, , GOC 5s30s curve 6bps flatter wk/wk, most of the move occurring Wed post FOMC.   Provis unch, 10Y Ontario from yest @ 84 was slow, still rumours of Qc 10s or longs.

News headlines

TSX futures edge higher ahead of U.S. jobs data (Reuters) Futures for Canada’s main stock index were higher on Friday, ahead of the closely watched U.S. jobs data.

Stocks Advance, Treasuries Dip Before U.S. Jobs: Markets Wrap (Bloomberg) U.S. equity futures and European stocks gained as bright spots appeared in corporate earnings ahead of the latest American jobs data. Treasuries slipped, while the dollar edged higher.

Strong U.S. job growth expected in April; wages seen moderate (Reuters) U.S. employers likely maintained a strong pace of hiring in April while steadily increasing wages for workers, pointing to solid economic growth and moderate inflation pressures.

Wall Street Weekahead: Record-breaking rally leaving energy stocks behind (Reuters) The stock market surge since the start of the year that has sent the benchmark S&P 500 index up to new record highs is leaving behind one sector that typically outperforms in an expanding economy: energy.

Moore, under fire, withdraws from bid for Fed post (Reuters) Economic commentator Stephen Moore has withdrawn from consideration for a seat on the U.S. Federal Reserve Board after weeks of criticism about his political partisanship, shifting views on interest rate policy, and sexist comments about women.

Gold eyes worst week since end-March ahead of U.S. jobs data (Reuters) Gold was steady on Friday as the market awaited U.S. non-farm payrolls data but was headed for its biggest weekly decline since the end of March, as the dollar gained after the U.S. central bank doused expectations of a near-term rate cut.

U.S. Jobs Report May See Boost From Temporary Hiring for Census (Bloomberg) Temporary federal government hiring for the U.S. Census Bureau’s 2020 count may give nonfarm payrolls a boost starting with the April jobs report due Friday, economists say.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.634%	2 Year	2.357%
5 Year	1.627%	5 Year	2.364%
10 Year	1.782%	10 Year	2.559%
30 Year	2.02%	30 Year	2.942%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Apr Survey 190k Prior 196k
	Change in Private Payrolls, Apr Survey 188k Prior 182k
	Change in Manufact. Payrolls, Apr Survey 10k Prior -6k
	Unemployment Rate, Apr Survey 3.80% Prior 3.80%
	Average Hourly Earnings MoM, Apr Survey 0.30% Prior 0.10%
	Average Hourly Earnings YoY, Apr Survey 3.30% Prior 3.20%
	Average Weekly Hours All Employees, Apr Survey 34.5 Prior 34.5
	Underemployment Rate, Apr Survey — Prior 7.30%
	Wholesale Inventories MoM, Mar P Survey 0.20% Prior 0.20%
09:45 AM	Markit US Services PMI, Apr F Survey 52.9 Prior 52.9
	Markit US Composite PMI, Apr F Survey — Prior 52.8
10:00 AM	ISM Non-Manufacturing Index, Apr Survey 57.0 Prior 56.1

Canadian Economic Data

There is no Canadian 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

Market Update

Tsys lower, US 10Y 2.515% (+1.5bps), on above avg volume in TY futures (370k), extending weakness from yesterday’s post FOMC press conference where Powell described tepid inflation readings as ‘transitory’.  US equity futures slightly higher, crude -1.6% at 62.60 after EIA inventory data showed an increase of 5.5mln barrels for the third week of April. EGBs mixed, German 10Y bunds unch, UK gilts giving up earlier gains from BOE 9-0 decision to leave rates unchanged, Carney saying rate hikes will be needed than the market expects while anticipating a smooth Brexit transition.  GOCs lower in line with tsys, 10Y 1.72%.

News headlines

Stocks Mixed as Focus Turns to Earnings and Trade: Markets Wrap (Bloomberg) Stocks were mixed on Thursday as investors switched their focus from monetary policy back to company earnings and the outlook for global trade. Treasuries retreated.

Oil Extends Loss as Rising U.S. Inventories Counter Supply Risks (Bloomberg) Oil declined for a second day, trading near $63 a barrel in New York, as a massive surge in U.S. crude stockpiles allayed worries about supply disruptions around the world.

Auto sales dip 3.5% in April as downward trend continues (BNN) DesRosiers Automotive Consultants Inc. says light vehicle sales fell an estimated 3.5 per cent in April from a year earlier as a downward trend in Canadian auto sales continued.

Factories on the mend in April but still struggling (Reuters) Global factory activity recovered a little last month but still appeared to be in the doldrums as demand remained weak and trade protectionism concerns prominent, while stimulus measures had yet to fully kick in.

Bank of England ups growth view, Brexit keeps rate rise on ice (Reuters) The Bank of England lifted its growth forecasts on Thursday but warned Brexit continued to cloud the outlook for Britain’s economy and said there was little immediate risk from waiting for a clearer view before raising interest rates.

Turkey’s Erdogan says determined to lower interest rates to targeted levels (Reuters) President Tayyip Erdogan said on Thursday he was determined to lower interest rates to targeted levels and described recent comments on falling central bank forex reserves as aimed at creating negative sentiment towards Turkey.

U.S. Fed holds key rate steady, reiterates patience on future path (BNN) Federal Reserve Chairman Jerome Powell said U.S. inflation is possibly being dragged down by “transitory” forces and there is no bias to either tighten or ease monetary policy.

Alberta enacts law that could cut energy flows to British Columbia (Reuters) The new Alberta government has enacted a law enabling it to restrict the flow of oil and gas to neighboring British Columbia, raising the stakes in a dispute between Canada’s westernmost provinces over the Trans Mountain pipeline.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.602%	2 Year	2.331%
5 Year	1.579%	5 Year	2.323%
10 Year	1.73%	10 Year	2.523%
30 Year	1.978%	30 Year	2.916%

US Economic Data

08:30 AM	Initial Jobless Claims, Apr 27 Survey 215k Prior 230k
	Continuing Claims, Apr 20 Survey 1660k Prior 1655k
	Nonfarm Productivity, 1Q P Survey 2.2% Prior 1.9%
09:45 AM	Bloomberg Consumer Comfort, Apr 28 Survey — Prior 60.8
10:00 AM	Factory Orders, Mar Survey 1.50% Prior -0.50%
	Durable Goods Orders, Mar F Survey — Prior 2.70%
	Durables Ex Transportation, Mar F Survey — Prior 0.40%
	Cap Goods Orders Nondef Ex Air, Mar F Survey — Prior 1.30%
	Cap Goods Ship Nondef Ex Air, Mar F Survey — Prior -0.20%

Canadian Economic Data

There is no Canadian 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

Market Update

US tsys slightly trading slightly higher, 10Y 2.50% before ISM & Fed decision this aft, volume in TY futures running at ~50% of daily avg (115k) as Many European mkts are closed for May holiday. UK gilts higher after April Manuf PMI  matched estimates (53.1).  US equity  futures positive led by Nasdaq (+0.66%) after earnings from Apple (+5.3% pre mkt). Fed expected to leave rates unch at 2.5%, press conference expected to acknowledge latest weakness in core inflation, while growth accelerated at a much faster pace in the first quarter due to inventory build. In Canada, GOCs unch  in line with tsys, 10Y 1.70% narrow 3bp range over the past week, yesterday’s weak Feb GDP little impact on rates, 5s10s curve continues to steepen thou the J28/27 roll is at its narrowest in five months,possibly due to the upcoming roll in CGBs with June 28s becoming CTD.

News headlines

U.S. Futures Advance, Treasuries Steady Before Fed: Markets Wrap (Bloomberg) U.S. equity futures advanced on Wednesday following an upbeat forecast from Apple Inc. and as holidays in much of Asia and Europe weighed on trading. Treasuries and the dollar were in a holding pattern ahead of the Federal Reserve’s policy decision.

TSX futures rise on global cues (Reuters) Futures for Canada’s main stock index were higher on Wednesday, after global equity markets rose as investors cheered Apple’s strong results.

Oil Retreats as U.S. Stockpile Jump Counters Global Supply Fears (Bloomberg) Oil retreated amid signs of a sharp increase in U.S. crude inventories and concerns over the strength of economic growth in China.

Fed eyes inflation as Trump pushes rate cut (BNN) Federal Reserve policy makers may decide Wednesday that falling inflation reinforces a message of caution on interest-rate moves, rather than bowing to President Donald Trump’s demands for drastic action to boost the U.S. economy.

The debate behind Trump’s move to tighten Iran oil sanctions (Reuters) U.S. President Donald Trump’s unexpected decision to ban all Iranian oil purchases after May 1 – ending exemptions for eight nations – came after hawkish economic and security advisors allayed the president’s fears of an oil price hike, according to three sources familiar with the internal debate.

Fed likely to ignore Trump’s call to cut interest rates (Reuters) The U.S. Federal Reserve, leaning back against pressure from President Donald Trump to slash interest rates, is expected to leave borrowing costs unchanged on Wednesday as it maintains a ‘patient’ monetary policy stance amid strong economic growth.

China, U.S. hold ‘productive’ trade talks in Beijing (Reuters) China and the United States held “productive” trade talks in Beijing on Wednesday and will continue discussions in Washington next week, U.S. Treasury Secretary Steven Mnuchin said, as the two try to end their trade war.

Trump, Democrats agree to spend $2 trillion on U.S. infrastructure (Reuters) President Donald Trump and Democratic leaders agreed on Tuesday to spend $2 trillion on U.S. roads, bridges, power grids, water and broadband infrastructure, while leaving the thorny details of how to pay for it all to another meeting in three weeks.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.553%	2 Year	2.262%
5 Year	1.532%	5 Year	2.27%
10 Year	1.705%	10 Year	2.495%
30 Year	1.985%	30 Year	2.923%

US Economic Data

07:00 AM	MBA Mortgage Applications, Apr 26 Survey – Actual -4.3% Prior -7.30%
08:15 AM	ADP Employment Change, Apr Survey 180k Actual 275k Prior 129k Revised 151k
09:45 AM	Markit US Manufacturing PMI, Apr F Survey 52.4 Prior 52.4
10:00 AM	ISM Manufacturing, Apr Survey 55.0 Prior 55.3
	ISM Prices Paid, Apr Survey 55.0 Prior 54.3
	Construction Spending MoM, Mar Survey 0.00% Prior 1.00%
02:00 PM	FOMC Rate Decision (Upper Bound), May 1 Survey 2.50% Prior 2.50%
	FOMC Rate Decision (Lower Bound), May 1 Survey 2.25% Prior 2.25%

Canadian Economic Data

à 09:30 AM

Markit Canada Manufacturing PMI, Apr Survey — Prior 50.5

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