Comments

Market Update

US tsys higher, yields 3-5bps lower and the tsy curve 2bps steeper, 10Y 2.39% lowest since Dec 2017, S&P futures moving lower since early morning (-3.25).  Core EGBs rallying led by 10Y bunds, 10Y bund auction sold at -0.05%, first negative auction yield since 2016 with the highest bid-cover since May 2018. UK gilts lagging bunds by 2bps, the UK parliament to vote on PM May’s Brexit deal (extending deadline to end of May). ECB president Mario Draghi with further dovish comments, saying the ECB could adjust its forward guidance and delay rate increases if conditions warrant. Fed nominee Stephen Moore, said the central bank should cut rates immediately by 50bps, in an interview with the NYT.  GOCs higher in line with tsys, curve 1bp steeper with the 10Y 1.53% (-4bps), 2Y 1.46% low since Dec 2017. The BOC auctions $2bln in reopened 0.50% Mar 1 2022s at noon with the roll to 2Ys now negative, -0.4bps, in the context of  2s5s  at -4.5bps.

News headlines

Bonds Rally as Europe Stocks, U.S. Futures Decline: Markets Wrap (Bloomberg) Treasuries rallied with German bunds and the yen as investors turned their focus to a worrying economic outlook and a decisive shift toward accommodation by major central banks. Stocks in Europe declined along with U.S. equity futures.

U.S. consumer confidence slumps in March, missing all estimates (BNN) U.S. consumer confidence declined for the fourth time in five months on dimmer assessments of present conditions, suggesting that weak first-quarter growth and slower job gains in February are weighing on attitudes and potentially spending.

Oil Slides From Near $60 Amid Mixed Signs on U.S. Inventories (Bloomberg) Oil slid from near $60 a barrel in New York amid conflicting signals on U.S. crude inventories, while traders continued to weigh OPEC supply cuts and fragile demand.

China’s industrial profits shrink most since late 2011 as economy cools (Reuters) China’s industrial firms posted their worst slump in profits since late 2011 in the first two months of this year, data showed on Wednesday, as increasing strains on the economy in the face of slowing demand at home and abroad took a toll on businesses.

Recession Risks Creep Beyond Yield Curve Into U.S. Economic Data (Bloomberg) As the bond market’s yield curve flashes warning signs of a U.S. recession, some key economic indicators are offering more conflicting signals about the outlook.

Weak euro zone growth could raise stability risks: ECB’s de Guindos (Reuters) Weak euro zone growth is increasing the risk of financial instability as bank profits weaken and sovereign debt sustainability concerns rise, European Central Bank Vice President Luis de Guindos said on Wednesday.

May’s Deal Gains Support Ahead of Votes on Plan B: Brexit Update (Bloomberg) Theresa May’s Brexit deal is finally winning a bit of support from Conservative hardliners, though she may have to promise to step down to get it over the line. Brexiteers’ minds have been focused by the prospect of Parliament taking control of the process and voting to soften — or cancel — the divorce.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.466%	2 Year	2.2%
5 Year	1.419%	5 Year	2.153%
10 Year	1.533%	10 Year	2.379%
30 Year	1.831%	30 Year	2.838%

US Economic Data

7:00 AM	MBA Mortgage Applications, Mar 22 Actual 8.9% Prior 1.6%
8:30 AM	Trade Balance, Jan -$57.0b  Prior -$59.8b
10:00 AM	Current Account Balance, 4Q Surv -$130.0b Prior -$124.8b

Canadian Economic Data

8:30 AM

Int’l Merchandise Trade, Jan Surv -3.55b Prior -4.59b

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 reversing yesterday’s gains, 10Y 2.44% (+4bps) with the long end outperforming. equity futures higher (S&P +14.75, Nasdaq +41). Housing Starts fell the most in eight months in Feb -8.7% vs -1.6% exp . The US auctions $40bln in 2Y notes at 1:00PM, the WI at 2.27% is below the 2Y auction level since Feb 2018 and 20bps richer than last month.  Mars Inc to price eight-part USDF benchmark this morn, CIBC issuing 5Y USD bail-in bonds @~105bps (GOCs + 126) . Volatility is back in the US treasury mkt based on the ‘MOVE’ index- which has surged to the highest level since 2016 over the last two days.  GOCs lower, outperforming tsys by ~bp across the curve, provis 1-1.5bps tighter.

News headlines

Treasury Yields Rise as U.S. Stock Futures Advance: Markets Wrap (Bloomberg) Treasuries fell and U.S. stock index futures climbed on Tuesday as investor fears triggered by signals from the American bond market showed signs of easing. The dollar was steady and European shares advanced.

Recession obsession keeps the mood subdued (Reuters) Calm returned to global markets on Tuesday as a steadier day for Europe and Asia’s bourses and a tick higher in benchmark bond yields helped ease nerves after a jarring few days dominated by recession worries.

Macron calls on China and EU to strengthen multilateralism (Reuters) French President Emmanuel Macron on Tuesday said competition between the European Union and China must not lead to a breakdown in world trade systems or political isolationism, as his Chinese counterpart promised to work side-by-side with Europe.

Fed could build firepower for new Operation Twist: Harker (Reuters) The U.S. Federal Reserve intends to shorten the duration of bonds it has on its balance sheet to build some firepower in case it needs to use it as a stimulus tool once again, Federal Reserve Bank of Philadelphia President Patrick Harker said on Tuesday.

TSX futures rise on higher oil prices (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices rose with OPEC-led supply cuts and expectations of lower U.S. inventories countering concerns about global economic growth.

Canada’s inverted yield curve signals holding pattern for Poloz (BNN) Canada has joined the U.S. in the inverted yield curve club, signaling a growing risk of recession that may keep Stephen Poloz on hold for his final 14 months as head of Canada’s central bank.

SNC Dealt Another Blow With Copper Mine Project Cancellation (Bloomberg) SNC-Lavalin Group Inc., the embattled engineering firm at the heart of Canada’s biggest political crisis in years, has been dealt another blow in Chile.

Oil Rises as Growth Angst Eases, Venezuela Fears Mount (Bloomberg) Oil rebounded along with global markets as pessimism over the global growth outlook eased a little, while rising tension in Venezuela revived fears of supply losses.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.514%	2 Year	2.293%
5 Year	1.477%	5 Year	2.235%
10 Year	1.59%	10 Year	2.446%
30 Year	1.883%	30 Year	2.896%

US Economic Data

8:30 AM	Housing Starts, Feb Surv 1210k Prior 1230k
	Housing Starts MoM, Feb Surv -1.6% Prior 18.6%
	Building Permits, Feb Surv  1305k Prior 1345k
9:00 AM	FHFA House Price Index MoM, Jan Surv 0.4% Prior 0.3%
	S&P CoreLogic CS 20-City YoY NSA, Jan Surv 3.80% Prior 4.18%
	S&P CoreLogic CS 20-City NSA Index, Jan Surv 212.79 Prior 212.96
10:00 AM	Richmond Fed Manufact. Index, Mar Surv 10 Prior 16
	Conf. Board Consumer Confidence, Mar Surv 132.5 Prior 131.4

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 trading weaker, yields 1-3bps higher, US 10Y 2.465% (+2.5bps). US equity futures slightly lower (S&P -0.1%), crude 0.40% lower 58.79.  Phili Fed Harker said this morn he sees one rate hike this year ‘at most’, while Fed Evans said the Fed may have to put increases on hold or even cut rates should activity soften further or inflation expectations run too low.  Core Euro bonds lower, bund yields ~1bp higher, German business confidence coming in better than exp in March (99.6 vs 98.5). Gilts underperforming bunds, PM May under pressure to quiet under a non deal Brexit scenario. GOCs consolidating after Friday’s  7-8bp rally, OIS mkts now pricing in a rate cut by next year.

News headlines

Trump Claims Vindication as Mueller Finds No Russia Collusion (Bloomberg) Attorney General William Barr handed Donald Trump the biggest political victory of his presidency with an assessment that there was no collusion with Russia during the 2016 campaign and that there wasn’t enough evidence to find he obstructed justice.

U.S. Futures, Europe Stocks Trim Drop; Bonds Slip: Markets Wrap (Bloomberg) U.S. equity futures and stocks in Europe stabilized on Monday, as a measure of calm returned to markets following Friday’s selloff. Treasuries and European sovereign bonds fell.

Oil Steady After Biggest Loss in Three Weeks Amid Economy Fears (Bloomberg) Oil steadied in New York after its biggest loss in three weeks, yet concerns lingered that a slowdown in global economic growth will erode fuel consumption.

TSX futures little changed amid global growth fears (Reuters) Stock futures for Canada’s main stock index were little changed on Monday, as fears mount over a global economic slowdown.

Seller’s market seen aiding Illinois and Chicago bond issues (Reuters) Financial uncertainties swirling around Illinois and Chicago may not deter bond buyers when the two fiscally shaky governments sell more than $1.1 billion of debt this week.

Flattened yield curve reason to be nervous, but U.S. economy solid: Fed’s Evans (Reuters) Chicago Federal Reserve Bank President Charles Evans said on Monday it was understandable for markets to be nervous when the yield curve flattened, though he was still confident about the U.S. economic growth outlook.

Positive German data tempers equity selloff, lifts bond yields (Reuters) World stocks hit a 12-day trough on Monday as fears for economic growth sent investors dashing for safe-haven assets, but the selloff lost some momentum after better-than-expected data from Germany.

Trump push for China trade reform draws wide support at home, abroad (Reuters) U.S. President Donald Trump’s blunt-force use of tariffs in pursuing his “America First” trade agenda has angered many, from company executives to allied governments and members of both parties of Congress.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.536%	2 Year	2.333%
5 Year	1.495%	5 Year	2.265%
10 Year	1.611%	10 Year	2.466%
30 Year	1.905%	30 Year	2.903%

US Economic Data

8:30 AM	Chicago Fed Nat Activity Index, Feb Surv -0.38 Actual -0.29 Prior -0.43
10:30 AM	Dallas Fed Manf. Activity, Mar Surv 8.5 Prior 13.1

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Mar 22 Prior 55.2

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