Comments

Market Update

US tsys significantly higher, yields 4-6bps lower with the 10Y below 2.50% for the first time since Jan 2018, now 2.475 (-6bps). Weak European PMIs driving 10Y bund below 0% for the first time since 2016.  German Manuf PMI fell to 44.7 in March vs 48 exp, the third consecutive month of contraction, new orders falling to the lowest since 2009. UK gilts lagging the rally in tsys, bunds – the EU has agreed to delay Brexit by two weeks from next Friday.  GOC yields 2-6bps lower , curve flatter led by 10s, 10Y 1.60%, the GOC curve trading below cash thru 2029. Two corp deals yest – $750mln IPL 29s @ ~522 & $500mln Bruce Power @275 – the IPLs gapping in ~20bps on the break

News headlines

Stocks Drop, Bonds Climb After German Data Shocker: Markets Wrap (Bloomberg) European stocks fell with U.S. equity futures and Treasuries rose after miserable data from the German manufacturing sector renewed worries about global growth on Friday. The yield on Germany’s 10-year bonds — Europe’s benchmark — tumbled below zero.

U.S. corporate breakups could be catalyst to change Dow index (Reuters) Shake-ups come infrequently for the Dow Jones Industrial Average, but some degree of change may be in the works for the stock index as two of its 30 constituents prepare to transform from large conglomerates into smaller companies.

German manufacturing contracts for third month in a row: PMI (Reuters) German manufacturing contracted further in March, a survey showed on Friday, compounding fears that unresolved trade disputes are exacerbating a slowdown in Europe’s biggest economy.

Skittish investors pull more than $20 billion from stocks, rush into bonds: BAML (Reuters) Global equity funds saw massive outflows this week, a sharp reversal from last week’s inflows as pessimism over economic growth gripped investors once again, driving them instead to search for yield in credit and buy safer assets like bonds.

China, Italy looking to strengthen trade, infrastructure ties-Xi (Reuters) Italy and China want to revive the spirit of the ancient Silk Road by deepening their trade and investment ties, Chinese President Xi Jinping said on Friday during a trip to Rome that has raised eyebrows in Washington.

TSX futures fall on lower crude prices (Reuters) Futures for Canada’s main stock index traded lower on Friday, as oil prices dropped on concerns over a slowdown in global economic growth.

Trump: China trade deal likely; carmakers can avoid tariffs with U.S. plants (Reuters) U.S. President Donald Trump said trade negotiations with China were progressing and a final agreement “will probably happen,” adding that his call for tariffs to remain on Chinese imported good for some time did not mean talks were in trouble.

Fitch warns Canada’s debt close to level incompatible with ‘AAA’ status (BNN) A major credit rating agency is warning Ottawa that sustained deficits will make Canada more vulnerable to an economic downturn.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.573%	2 Year	2.369%
5 Year	1.509%	5 Year	2.286%
10 Year	1.615%	10 Year	2.478%
30 Year	1.924%	30 Year	2.914%

US Economic Data

9:45 AM	Markit US Manufacturing PMI, Mar P Surv 53.5 Prior 53.0
	Markit US Services PMI, Mar P Surv 55.5 Prior 56
	Markit US Composite PMI, Mar P Prior 55.5
10:00 AM	Wholesale Inventories MoM, Jan Surv 0.1%  Prior 1.1%
	Existing Home Sales, Feb Surv 5.10m Prior 4.94m
	Existing Home Sales MoM, Feb Surv 3.2% Prior -1.2%
2:00 PM	Monthly Budget Statement, Feb Surv -$227.0b Prior -$215.2b

Canadian Economic Data

8:30 AM	Retail Sales MoM, Jan Surv 0.4% Actual -0.3% Prior -0.1%
	Retail Sales Ex Auto MoM, Jan Surv 0.1% Actual 0.1% Prior -0.5%
	CPI NSA MoM, Feb Surv 0.6% Actual 0.7% Prior 0.1%
	CPI YoY, Feb Surv 1.4% Actual 1.5% Prior 1.4%

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 continuing higher, adding to Wed post FOMC rally, on moderate futures volume (327k TY1), US 10Y 2.51% (-2bps), off the highs after March Phili Fed (13.7 vs 4.8exp). EGBS higher, in catchup mode from yest FOMC.  UK gilt yields 5-8bps lower, BOE left rates on hold as exp saying that rates could move in either direction. GOCs higher, in line with tsys, 10Y 1.635%  a 21 month low – 10s looking very expensive on the curve on a 3 month basis ( 3 stds vs 2s/30s). The BOC auctions  $3.0bln in 2Y bonds , reopening the 1.75% May 21 issue which will take it to $9.0bln outstanding, the May 21/Feb 21 roll -0.1/-0.4. Quebec budget later this aft.

News headlines

Bonds Rally, Dollar Rebounds as Fed Spurs Caution: Markets Wrap (Bloomberg) Government bond yields retreated while U.S. equity futures and European stocks fell on Thursday as investors digested a dovish lurch by policy makers in the world’s largest economy. The dollar rebounded after Wednesday’s loss.

Fed sees no 2019 hikes, plans September end to asset drawdown (BNN) Federal Reserve officials scaled back their projected interest-rate increases this year to zero and said they would end the drawdown of the central bank’s bond holdings in September after holding policy steady on Wednesday.

‘Opportunity missed’: What these analysts hoped to see in the federal budget but didn’t (BNN) The federal budget, largely seen as a pre-election document, introduced measures on Tuesday that targeted a number of different groups. From support for debt-burdened students and worried retirees, to help for first-time homebuyers, the budget was wide-reaching.

Trump says tariffs will stay on until China complies with a deal (BNN) President Donald Trump said Wednesday he’ll keep tariffs on China until he is sure Beijing is complying with any trade deal the two nations reach.

SNC-Lavalin Chief Says Job Losses Possible Amid Canadian Scandal (Bloomberg) The head of the Montreal-based construction giant at the center of a political firestorm warned the company remains undervalued, is vulnerable to a takeover and at risk of shedding jobs in Canada.

PRECIOUS-Gold hits 3-week high as Fed stalls 2019 rate hikes; palladium scales new peak (Reuters) Gold prices rose to a three-week high on Thursday, after the U.S. Federal Reserve abandoned plans to raise interest rates for the year, while a cut in its U.S. growth forecast exacerbated worries of a global economic slowdown.

Oil Holds Near $60 as U.S. Stockpiles Plunge, Saudis Cut Supply (Bloomberg) Oil held near a four-month high after U.S. crude inventories plunged by the most since July, while Saudi Arabia pressed on with export cuts.

PRECIOUS-Gold hits 3-week high as Fed stalls 2019 rate hikes; palladium scales new peak (Reuters) Gold prices rose to a three-week high on Thursday, after the U.S. Federal Reserve abandoned plans to raise interest rates for the year, while a cut in its U.S. growth forecast exacerbated worries of a global economic slowdown.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.578%	2 Year	2.384%
5 Year	1.524%	5 Year	2.304%
10 Year	1.642%	10 Year	2.505%
30 Year	1.965%	30 Year	2.957%

US Economic Data

8:30 AM	Philadelphia Fed Business Outlook, Mar Surv 4.8 Actual 13.7 Prior -4.1
	Initial Jobless Claims, Mar 16 Surv 225k Actual 221k Prior 229k Revised 230k
	Continuing Claims, Mar 9 Surv 1770k Actual 1750k Prior 1776k Revised 1777k
9:45 AM	Bloomberg Consumer Comfort, Mar 17 Prior 60.8
	Bloomberg Economic Expectations, Mar Prior 54.5
10:00 AM	Leading Index, Feb Surv 0.1% Prior -0.1%

Canadian Economic Data

8:30 AM

Wholesale Trade Sales MoM, Jan Surv 0.6% Actual 0.6% Prior 0.3%

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 trading higher on moderate futures volume (198k TY1) 10Y below 2.60% (2.59%) , ahead of FOMC policy announcement later this aft, tsy curve flatter 2s10s 13.6bps narrowest since Jan 29th. UK gilts spiking as PM May asked the EU for a Brexit deadline until June 39th.  GOCs lagging the rally in tsys by 1bp in 10s.  Canada budget highlights – deficit projection for this FY ~$3bln lower at $14.9bln, unch for 2020FY at $19.8bln. The DMS outlines an $19bln in additional issuance to $119bln for FY 19/20, with the increase falling on the short end and the 30Y sector, with one less 10Y & rrb auction. 

News headlines

Fed’s balance sheet plan, economic outlook under microscope (Reuters) The U.S. Federal Reserve on Wednesday is expected to hold interest rates steady, shave the number of hikes projected for the rest of the year, and release long-awaited details of a plan to end the monthly reduction of its massive balance sheet.

Stocks Decline, U.S. Futures Fluctuate Before Fed: Markets Wrap (Bloomberg) U.S. equity-index futures drifted and European shares fell Wednesday as investors adopted a cautious stance before the Federal Reserve policy decision and awaited further news on U.S.-China trade talks, where negotiators remain at odds. Ten-year Treasury yields slipped.

Oil’s Rally Stuck Near $59 as U.S.-China Trade Jitters Return (Bloomberg) Oil’s rally stuttered as uncertainty over the status of trade negotiations between the U.S. and China stoked concerns over global economic growth.

Canada lifts bond borrowing ahead of election as maturities rise (BNN) Canada plans to increase federal bond issuance by almost 20 per cent next fiscal year to finance a growing budget deficit and a jump in debt maturities.

Canada offers stimulus budget, but may be too little to re-elect Trudeau government (Reuters) Canadian Prime Minister Justin Trudeau’s government, seeking to move past a political crisis threatening its re-election, lavished new spending on middle-class voters in its budget on Tuesday, but the measures may be spread too thin to move the needle before October’s vote.

Dollar rises on trade war angst before Fed (Reuters) The dollar gained on Wednesday, attracting safe-haven bids after reports of further tension in U.S.-China trade negotiations, but its gains were slight, with caution expected from the Federal Reserve at its policy meeting later in the day.

Abe describes BOJ’s inflation goal as means to spur growth (Reuters) Japanese Prime Minister Shinzo Abe said on Wednesday he sees the central bank’s inflation target as a means to achieve the more important goal of reviving the economy, in a sign that firing up inflation may no longer be a priority for the government.

EU leaders will ask ministers to clear negotiating mandates for U.S. trade talks (Reuters) European Union leaders will ask their trade ministers on Friday to quickly approve negotiating mandates for the European Commission to start formal trade talks with the United States, draft conclusions showed.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.647%	2 Year	2.462%
5 Year	1.622%	5 Year	2.414%
10 Year	1.723%	10 Year	2.6%
30 Year	2.009%	30 Year	3.012%

US Economic Data

7:00 AM	MBA Mortgage Applications, Mar 15 Actual 1.6% Prior 2.3%
2:00 PM	FOMC Rate Decision (Upper Bound), Mar 20 Surv 2.50% Prior 2.50%
	FOMC Rate Decision (Lower Bound), Mar 20 Surv 2.25% Prior 2.25%
	Interest Rate on Excess Reserves, Mar 21 Surv 2.40% Prior 2.40%

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