Comments

Market Update

Tsys off the lows after  weaker Dec Durable Goods & Feb Phili Fed (-4.1 vs 14), yields still  2-3bps higher from o/n session on positive news on trade with Reuters reporting the US & China are close to a trade deal. Fed Bullard , in interview with CNBC, said rates are close to neutral, felt the Fed ‘went too far in Dec’.  Core EGBs lower despite poor German Man. PMI data. GOCs  lower, in line with tsys, 10Y 1.93%.

News headlines

Oil Extends Gains After Muted Increase in U.S. Crude Stockpiles (Bloomberg) Oil extended gains from a three-month high as industry data signaled a limited increase in American crude stockpiles, and on signs that the U.S. and China are moving closer to a trade deal.

TSX futures flat as investors focus on U.S.-China trade talks (Reuters) Futures pointed to a flat opening for Canada’s main stock index on Thursday, as investors await the United States and China to make progress in resolving their trade dispute.

U.S. Stock Futures Drift as Treasury Yields Climb: Markets Wrap (Bloomberg) U.S. equity futures pared a gain, European stocks edged lower and Asian shares rose as investors grappled with a mixed bag of headlines on global trade. Treasuries fell, the greenback was steady and the Aussie dollar slumped.

Exclusive: U.S., China sketch outlines of deal to end trade war – sources (Reuters) The United States and China have started to outline commitments in principle on the stickiest issues in their trade dispute, marking the most significant progress yet toward ending a seven-month trade war, according to sources familiar with the negotiations.

Exclusive: China central bank sees benchmark rate cut as last resort, may use other tools – sources (Reuters) China’s central bank is not yet ready to cut benchmark interest rates to spur the slowing economy, despite cooling inflation and a stronger yuan, which have fanned market expectations of such a move, policy sources told Reuters.

Will the Bank of Canada buck dovish trend? Watch Poloz for clues (Bloomberg) Bank of Canada Governor Stephen Poloz gives his last speech Thursday before next month’s rate decision, with investors looking for indications on whether he will follow the Federal Reserve toward a more dovish tilt on policy.

China expected to propose $30 billion more agriculture imports from U.S.: Bloomberg (Reuters) China is expected to propose spending $30 billion more on U.S. agricultural imports, Bloomberg TV reported on Thursday.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.795%	2 Year	2.516%
5 Year	1.823%	5 Year	2.495%
10 Year	1.925%	10 Year	2.673%
30 Year	2.17%	30 Year	3.018%

US Economic Data

8:30 AM	Philadelphia Fed Business Outlook, Feb Surv 14.0 Prior 17.0
	Initial Jobless Claims, Feb 16 Surv 228k Prior 239k
	Continuing Claims, Feb 9 Surv 1743k Prior 1773k
	Durable Goods Orders, Dec P Surv 1.7% Prior 0.7%
	Durables Ex Transportation, Dec P Surv 0.3% Prior -0.4%
	Cap Goods Orders Nondef Ex Air, Dec P Surv 0.2% Prior -0.6%
9:45 AM	Bloomberg Consumer Comfort, Feb 17 Prior 60.0
	Markit US Manufacturing PMI, Feb P Surv 54.8 Prior 54.9
	Markit US Services PMI, Feb P Surv 54.3 Prior 54.2
	Markit US Composite PMI, Feb P Prior 54.4
10:00 AM	Leading Index, Jan Surv 0.1% Prior -0.1%
	Existing Home Sales,  Jan Surv 5.00m Prior 4.99m
	Existing Home Sales MoM, Jan Surv 0.2% Prior -6.4%

Canadian Economic Data

8:30 AM

Wholesale Trade Sales MoM, Dec Surv -0.2% Prior -1.0%

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 slightly higher, 10Y 2.63%, modest volume in TY futures (283k), with S&P futures -3.0 and the USD unch. FOMC minutes to be released at 2:00PM expected to discuss shift to a neutral bias at January meeting, as well as the likelihood of a pause in the rolloff of treasuries and MBS on the Fed’s balance sheet. GOCs higher, in line with tsys, 10Y 1.89%. Volatility in the Cdn govi mkt is back to the lows of Dec, based on Scotia’s SNOVI <index> which measures implied vol across the curve.  The BOC auctions 30Y rrbs at noon, reopening the Dec 1 2050 issue for $400mln (vs $700mln in Nov), with the rrb 50/47 roll having widened to 1.3/1.0 vs an average -0.14 over the past year. 30Y breakevens have consolidated ~145bps having lagged the rally in tips by ~20bps since year end. In corps, ARTIS REIT (BBB low DBRS) issued $250mln Feb 21s @ 190 , a 10-15bp concession. At 180bps the new Artis trades BAs +140 or  ~50bps over the Artis Feb 20 FRNs (BAs +93).

News headlines

Fed minutes to shed light on biggest policy reversal in years (BNN)It was a big reversal: Federal Reserve officials pivoted last month toward keeping interest rates on hold, and now minutes of their meeting may shed light on just how long.

China will not change prudent monetary policy: Premier Li (Reuters) China has not and will not change its prudent monetary policy and will not resort to “flood-like” stimulus, Premier Li Keqiang said on Wednesday.

U.S.-China trade hopes extend equity surge; central banks supportive (Reuters) World stocks hit a four-month high on Wednesday on hopes of progress in trade talks between the United States and China, with a dovish backdrop at major central banks also helping push markets back into the black.

U.S. Futures Drift as Europe, Asia Stocks Advance: Markets Wrap (Bloomberg) U.S. equity futures struggled for direction and stocks in Europe and Asia climbed as investors awaited the release of minutes from the latest meetings of two of the world’s key central banks. The dollar edged higher and the yuan rose after a report America is asking China to keep its currency stable.

ECB to discuss new round of loans to banks soon, Praet says (Reuters) The European Central Bank will soon discuss new, multi-year loans to banks, its chief economist said on Wednesday, but he hinted that a new round of credit may not be as generous as a previous facility.

Amid trade talks, China urges U.S. to respect its right to develop, prosper (Reuters) The United States should respect China’s right to develop and become prosperous, the Chinese government’s top diplomat told a visiting U.S. delegation, reiterating that the country’s doors to the outside world would open wider.

British PM May says Honda plant closure can’t be blamed on Brexit (Reuters) British Prime Minister Theresa May said Honda’s announcement that it would close its factory in England in 2021 was deeply disappointing, but could not be blamed on the country’s upcoming departure from the European Union.

Oil Near Three-Month High as OPEC Cuts Amid Rising U.S. Supply (Bloomberg) Oil held near a three-month high as investors weighed OPEC’s production cuts against estimates of rising crude inventories in the U.S.

Canada’s British Columbia sees surplus, new child benefit (Reuters) Canada’s British Columbia province on Tuesday projected a budget surplus of C$274 million ($207 million) in fiscal 2019-20, with larger surpluses forecast over the following two years and launched a new child benefit program and several initiatives to tackle climate change.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.773%	2 Year	2.487%
5 Year	1.793%	5 Year	2.459%
10 Year	1.889%	10 Year	2.634%
30 Year	2.138%	30 Year	2.977%

US Economic Data

7:00 AM	MBA Mortgage Applications, Feb 15 Actual 3.6% Prior -3.7%
2:00 PM	FOMC Meeting Minutes, Jan 30

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 trading  mixed, 1bp lower in short end with yields out the curve unch, 10Y 2.665%, above avg vol in TY futures (380k). Equities off recent lows, S&P futures (-7.75) , Walmart posting Q4 eps above est, stock up 5% pre-mkt. Core EGBs close to unch, bund curve bull flattening, after disappointing Eurozone eco data – German ZEW current conditions falling to lowest since 2014. GOCs slightly lower in line with tsys, 10Y 1.90%, the CAD slightly lower despite crude rising to the highest level in two months.

News headlines

New round of U.S.-China trade talks to begin in Washington on Tuesday (Reuters) A new round of talks between the United States and China to resolve their trade war will take place in Washington on Tuesday, with follow-up sessions at a higher level later in the week, the White House said.

Global shares slip from four-month high, Swedish crown slumps (Reuters) European and Asian shares hovered near four-month highs on Tuesday as investors took heart from some progress in Sino-U.S. trade talks, while the yen dribbled lower as Japan’s central bank said it could ease policy again.

WTO warns of global trade slowdown as indicator hits nine-year low (Reuters) A quarterly leading indicator of world merchandise trade slumped to its lowest reading in nine years on Tuesday, which should put policymakers on guard for a sharper slowdown if trade tensions continue, the World Trade Organization said on Tuesday.

Despite sanctions, Iran’s oil exports rise in early 2019: sources (Reuters) Iran’s exports of crude oil were higher than expected in January and are at least holding steady this month, according to tanker data and industry sources, as some customers have increased purchases due to waivers from U.S. sanctions.

British supermarkets battle to secure stocks as chaotic Brexit looms (Reuters) Britons could face shortages of fresh food, price rises and less variety if the country leaves the European Union next month without agreeing on trade terms, food industry officials say.

US STOCKS-Futures dip ahead of fresh U.S.-China trade talks (Reuters) U.S. stock index futures dipped on Tuesday, as investors started a holiday-shortened week on a cautious note ahead of a fresh round of trade talks between the United States and China.

Trudeau’s Top Aide Resigns Amid Reports of Meddling in SNC-Lavalin Probe (Bloomberg) Canadian Prime Minister Justin Trudeau has lost his top aide as the controversy over the government’s role in the SNC-Lavalin Group Inc. legal case deepens.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.781%	2 Year	2.504%
5 Year	1.805%	5 Year	2.486%
10 Year	1.9%	10 Year	2.661%
30 Year	2.154%	30 Year	2.995%

US Economic Data

10:00 AM

NAHB Housing Market Index, Feb Surv 59 Prior 58

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Feb 15 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