Commentaires matinaux

Market Update

Tsys trading lower, yields 1-2bps higher, 10Y 2.67% after positive US/China headlines after Xi noted important progress in talks. EGBs quiet, bunds slightly higher, gilts flat, Italy 10Y BTPs 7bps higher. Equities in Europe 1.3% higher, S&P futures +6. GOCs lower in line with tsys, early close for family day. The BOC announced it will auction $400mln in 30Y rrbs next Wednesday, with long breakevens showing few signs of life trading in a narrow range ~146bps since Dec

News headlines

Xi says trade talks progress, more meetings next week in U.S (Reuters) Talks between China and the United States this week made important progress, President Xi Jinping told top U.S. trade negotiators on Friday, adding that efforts would continue in Washington next week to resolve their bruising trade war.

Deal or delay? Wall Street doesn’t believe no-deal Brexit threat (Reuters) As the United Kingdom’s Brexit crisis deepens, Goldman Sachs and JPMorgan have differing views of the ultimate outcome but the two titans of Wall Street agree on one thing: They don’t believe there will be a no-deal Brexit.

Exclusive: China offers to end market-distorting subsidies but won’t say how (Reuters) China has pledged to end market-distorting subsidies for its domestic industries but offered no details on how it would achieve that goal, according to three people familiar with the U.S.-China trade talks in Beijing this week.

Risk of U.S. corporate recession rises as earnings outlook dims (Reuters) The outlook for Wall Street earnings has deteriorated significantly in recent months, data shows, raising the risk that companies in the United States may slip into recession before its economy does – with Europe close behind.

European shares recover after Mnuchin calls U.S.-China trade talks ‘productive’ (Reuters) Signs of progress from U.S.-China trade talks in Beijing helped European stocks reverse earlier losses on Friday, while auto shares continued to slide after figures showing an ongoing slump in European car sales.

The Bank of Canada might not be done hiking just yet (BNN) Investors wagering that the Bank of Canada is ready to throw in the towel on its tightening cycle are setting themselves up for disappointment, say market strategists at some of the country’s biggest banks.

U.S. Futures, European Stocks Climb on Trade Hopes: Markets Wrap (Bloomberg) U.S. equity futures tracked European stocks higher as positive developments in the trade outlook overshadowed lingering concerns about global growth. Treasuries held steady and the dollar advanced.

Oil Poised for Weekly Gain as OPEC+ Curbs Counter Trade Worries (Bloomberg) Oil headed for its biggest weekly gain in a month as the OPEC+ coalition’s supply cuts and reduced output from the world’s biggest offshore field overshadowed renewed concern over the U.S.-China trade war.

Trump set to declare border emergency, sign shutdown-averting bill (Reuters) U.S. President Donald Trump was poised on Friday to declare a national emergency at the U.S.-Mexico border, a move that Democrats vowed to challenge as an unconstitutional attempt to fund his proposed border wall without approval from Congress.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.773%	2 Year	2.504%
5 Year	1.797%	5 Year	2.485%
10 Year	1.889%	10 Year	2.664%
30 Year	2.147%	30 Year	3.002%

US Economic Data

8:30 AM	Empire Manufacturing, Feb Surv 7.0 Actual 8.8 Prior 3.9
	Import Price Index MoM, Jan Surv -0.2% Actual -0.5%Prior -1.0%
	Import Price Index YoY, Jan Surv -1.6% Actual -1.7% Prior -0.6%
9:15 AM	Industrial Production MoM, Jan Surv 0.1% Prior 0.3%
	Capacity Utilization, Jan Surv 78.7% Prior 78.7%
10:00 AM	Mortgage Delinquencies , 4Q Prior 4.47%
	MBA Mortgage Foreclosures, 4Q Prior 0.99%
	U. of Mich. Sentiment, Feb P Surv 93.7 Prior 91.2
4:00 PM	Net Long-term TIC Flows, Dec Prior $37.6b
	Total Net TIC Flows, Dec Prior $ 31.0b

Canadian Economic Data

8:30 AM	Int’l Securities Transactions, Dec Actual -18.96b Prior 9.45b
9:00 AM	Existing Home Sales MoM, Jan Surv -0.6% Prior -2.5%

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

Market Update

Modest overnight volume from sidelined accts partially based on competing headlines that Trump will sign bipartisan border funding deal and to avoid self-imposed Feb 15 deadline, but potential for late hour rejection always a potential. On another matter, Pres Trump weighing 60 day extension to March 1 deadline to end China tariff cease fire. Dec retail sales very weak, -1.2% vs +0.1% expected by analysts and +0.3% expected by markets, ex-mtr veh -1.8% vs flat expected, with declines in every category except for vehicle sales and building materials. Nov sales were rev down to +0.1% vs +0.2% prev. Jan final demand PPI -0.1% overall vs +0.1% expected on sizable declines in both food and energy, but +0.3% ex food and energy vs +0.2% expected and +0.2% ex. food, energy, and trade services +0.2%, so some underlying strength. Initial unemployment claims were above expectations in the Feb 9 wk, +4k to 239k vs 227k expected. The 4-wk moving avg +6,750 to 231,750 in the Feb 9 wk. The avg would rise next week if there is no change from this week’s headline figure as the 200k level in Jan 19 week rolls out. Canada Dec mfg sales -1.3% vs -0.2% expected, and Nov revised down to -1.7% from -1.4%. Ex petro and coal sales -0.3%. Sales down in 12 of 21 industries.

News headlines

Oil prices push TSX futures higher (Reuters) Stock futures for Canada’s main stock index rose on Thursday, supported by higher oil prices, which gained on investor optimism that the United States and China could resolve their trade dispute.

U.S. Futures Rise With Europe Stocks; Oil Climbs: Markets Wrap (Bloomberg) U.S. equity futures advanced and European stocks climbed for a fourth day after the White House was said to weigh postponing higher tariffs on China for 60 days. Treasuries nudged higher alongside the dollar, and oil advanced.

SNC-Lavalin Seen Speeding Asset Sales Amid Deepening Crisis (Bloomberg) If a mine dispute were all that SNC-Lavalin Group Inc. had to worry about, Chief Executive Officer Neil Bruce might be looking forward to next week’s earnings report with some equanimity.

Canadian households aren’t strained by rising interest rates, survey shows (BNN) There is little evidence Canadian households are feeling more strained from rising Canadian interest rates, telephone polling shows, a finding that may reassure Bank of Canada policy makers their previous hikes haven’t gone too far.

U.S. group says Trump trade tariffs cost businesses $2.7 billion in November (Reuters) U.S. businesses paid an additional $2.7 billion in tariffs in November 2018, according to data from a coalition of U.S. business groups fighting President Donald Trump’s trade tariffs.

China January trade data beats forecasts, but sustainability in doubt (Reuters) China’s exports unexpectedly returned to growth in January after a shock decline the previous month, while imports fell much less than expected, but analysts said the strength was likely due to seasonal factors and predicted renewed trade weakness ahead.

China to cut private firms’ financing costs, improve access to funds – Xinhua (Reuters) China’s state council said on Thursday it aims to cut private firms’ financing costs to reasonable and stable levels and improve their ability to raise funds through various measures including issuing bonds, the Xinhua news agency reported.

Shares and oil at three-month highs but no love for euro (Reuters) Optimism about U.S.-China trade talks and bumper earnings lifted European shares to a three-month high on Thursday, though news that Germany only dodged recession by the narrowest of margins left the euro feeling unloved.

U.S.-China trade talks move to higher level as deadline looms (Reuters) U.S. Treasury Secretary Steven Mnuchin said he was looking forward to trade talks with China on Thursday, as discussions in Beijing moved to a higher level in a push to de-escalate a tariff war ahead of a March 1 deadline for a deal.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.806%	2 Year	2.526%
5 Year	1.828%	5 Year	2.51%
10 Year	1.917%	10 Year	2.688%
30 Year	2.164%	30 Year	3.019%

US Economic Data

8:30 AM	PPI Final Demand MoM, Jan Surv 0.1% Prior -0.2%
	PPI Ex Food and Energy MoM, Jan 0.2% Prior -0.1%
	PPI Final Demand YoY, Jan Surv 2.1% Prior 2.5%
	PPI Ex Food and Energy YoY, Jan Surv 2.5% Prior 2.7%
	Initial Jobless Claims, Feb 09 Surv 225k Prior 234k
	Continuing Claims, Feb 02 Surv 1740k  Prior 1736k
	Retail Sales Advance MoM, Dec Surv 0.1% Prior 0.2%
	Retail Sales Ex Auto MoM, Dec Surv 0.0% Prior 0.2%
	Retail Sales Ex Auto and Gas, Dec Surv 0.4% Prior 0.5%
9:45 AM	Bloomberg Consumer Comfort, Feb 10 Prior 58.2

Canadian Economic Data

8:30 AM	Manufacturing Sales MoM, Dec Surv 0.4% Prior -1.4%
	New Housing Price Index MoM, Dec Surv 0.0% Prior 0.0%
	New Housing Price Index YoY, Dec Surv 0.0% Prior 0.0%

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 trading  2bps higher after Jan CPI came in weaker than exp – 0.0%/1.6% vs 0.1%/1.5% exp), core 1.6% vs 1.5% exp –  10Y  2.70%. Global equities extending gains after data, S&P futures + 8. Trade news with Trump mentioning he is ready to extend the March 1st deadline to raise Chinese tariffs. GOCs lower in line with tsys, 10Y 1.94%. Canada 5Y auction at noon – $3.0bln reopening March 24s with the M24/5Y roll 0.4/0.3 at the lows of the three month range (0.3- 2.8bps). March 24s @1.85% 8bps lower than at last auction Jan 16th. CMB 10Y pricing this morning , spread 49bps.

News headlines

Stock futures gain on trade optimism; inflation data eyed (Reuters) U.S. stock index futures rose on Wednesday, driven by optimism over the ongoing U.S.-China trade talks, and as investors awaited the latest inflation data.

‘So far, so good,’ Mnuchin says of trade talks in China (Reuters) U.S. Treasury Secretary Steven Mnuchin said talks with China went well on Wednesday, as the world’s two largest economies try to iron out an agreement to resolve their trade dispute.

Oil rises after Saudi output pledge, declining U.S. inventories (Reuters) Brent oil prices rose on Wednesday, after top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production, while U.S. futures gained on a decline in domestic oil inventories.

Euro zone industrial production falls more than expected in December (Reuters) Euro zone industrial production fell more than expected in December, official estimates showed on Wednesday, pulled down by a drop in the output of capital goods, used for investment.

Ottawa, Saskatchewan set for ‘monumental’ carbon tax clash (BNN) Legal experts, government officials and industry leaders will all watch this week as Saskatchewan and Ottawa head to court over the constitutionality of a federally imposed carbon tax.

Powell says U.S. economy ‘strong’ but prosperity missing some places (BNN) Federal Reserve Chairman Jerome Powell said the U.S. economy is “strong” though its benefits haven’t been felt evenly across the country.

Trump open to letting March 1 deadline for China tariffs slide (BNN) President Donald Trump said he is open to letting a March 1 deadline to raise tariffs on Chinese products pass without penalty if the two sides are near an agreement, sending a conciliatory signal as talks to resolve a trade war between countries continue.

Trump Edges Toward Taking Shutdown-Averting Border Deal (Bloomberg) President Donald Trump is eyeing a path to avoid another government shutdown where he would reluctantly accept the congressional border-security deal and attempt to tap other funds for his wall.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.801%	2 Year	2.512%
5 Year	1.828%	5 Year	2.498%
10 Year	1.918%	10 Year	2.686%
30 Year	2.165%	30 Year	3.023%

US Economic Data

7:00	MBA Mortgage Applications, Feb 8 Actual -3.7% Prior -2.5%
8:30	CPI MoM, Jan Surv 0.1% Actual 0.0% Prior -0.1%
	CPI Ex Food and Energy MoM, Jan Surv 0.2% Actual 0.2% Prior 0.2%
	CPI YoY, Jan Surv 1.5% Actual 1.6% Prior 1.9%
	CPI Ex Food and Energy YoY, Jan Surv 2.1% Actual 2.2% Prior 2.2%
	CPI Core Index SA, Jan Surv 260.603 Actual 260.701 Prior 260.027
	CPI Index NSA, Jan Surv 251.625 Actual 251.712 Prior 251.233
	Real Avg Weekly Earnings YoY, Jan Actual 1.9% Prior 1.2%
	Real Avg Hourly Earning YoY, Jan Actual 1.7% Prior 1.1%
2:00 PM	Monthly Budget Statement, Dec Surv -$11.0b Prior -$204.9b

Canadian Economic Data

8:30 AM	Teranet/National Bank HPI MoM, Jan Actual -0.1% Prior -0.3%
	Teranet/National Bank HP Index, Jan Actual 223.96 Prior 224.07
	Teranet/National Bank HPI YoY, Jan Actual 2.2% Prior 2.5%

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