Comments

Market Update

Having previously reached a (fragile) truce on NAFTA and currently appearing to make progress on bilateral trade talks with China, the US now seems to be opening up another front against the EU. The US has been accused of attempting to pressure EU members into opposing the Nord Stream 2 project, while President Donald Trump has stated that European automobile manufacturers are a national security threat. 10-Yr futures continue to trade in a contracting triangle formation with the near term upside focus on the Feb 8 high at 122-15 and the downside focus on the Feb 13 low at 121-21. A bullish break would open the Jan 3 high at 123-08. A break of the triangle base would suggest a run at the 50-dma & Jan 18 low at 121-18/02, below here would enable a run at the Dec 26 low at 120-28.

News headlines

Stocks Mixed as Trade Hopes Fail to Lift Europe: Markets Wrap (Bloomberg) Stocks in Europe and U.S. futures drifted after a rally in Asia boosted shares to their highest level since October on optimism over China’s economy and trade talks. Commodities from oil to copper climbed.

World stocks lifted to 2-1/2 month highs by trade optimism (Reuters) Hopes of progress in Sino-U.S. trade talks and expectations of policy stimulus from central banks lifted world stocks to 2-1/2 month highs on Monday, though European gains were dampened by concerns over the car sector’s outlook.

U.S. agency submits auto tariff probe report to White House (Reuters) The U.S. Commerce Department sent a report on Sunday to U.S. President Donald Trump that could unleash steep tariffs on imported cars and auto parts, provoking a sharp backlash from the industry even before it is unveiled, the agency confirmed.

Brent steadies, set for biggest first-quarter rise since 2011 (Reuters) Brent crude oil steadied on Monday, on track for its strongest first quarter in eight years, thanks to a growing belief among investors that OPEC’s supply cuts will prevent a build-up in unused fuel, though concern over China’s economy offset gains.

Euro gains as U.S.-China trade-talk optimism boosts sentiment (Reuters) The euro rallied and riskier currencies like the Australian dollar strengthened on Monday as optimism over a breakthrough in U.S.-China trade war talks encouraged investors.

European stocks hold onto four-month highs as trade talks progress (Reuters) Fresh from touching their highest level in four months on Friday, European stocks stalled on Monday as investors cashed in their gains ahead of further U.S.-China trade talks in Washington this week.

EU does not see U.S. car imports as national security matter: Germany (Reuters) A spokesman for Germany’s government said it was the European Union’s view that the U.S.’s car imports were not a national security matter, meaning that security could not be a justification for imposing additional tariffs on cars.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.778%	2 Year	2.514%
5 Year	1.802%	5 Year	2.493%
10 Year	1.895%	10 Year	2.663%
30 Year	2.152%	30 Year	2.994%

US Economic Data

There is no US economic data for today.

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 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