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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

Market Update

Carry over risk-on, relief rally in equities (SPX +19.00 at 2727.25) as risk sentiment has received a boost from signs that Republicans and Democrats have reached a tentative truce to avoid another government shutdown, as well as indications that the Trump administration is still seeking a meeting with Chinese President Xi Jinping in a bid to reach a new trade settlement.Another slow day for data (NFIB Small Business Index, Redbook retail sales and JOLTS job openings), but Fed Chairman Powell kicks off round of several Fed speakers on week, KC Fed President George and Cleveland Fed President Mester later in the evening. US Trade Representative Robert Lighthizer touched down in Beijing today ahead of the planned meeting, with both sides seemingly keen to reach a deal before the March 1 deadline expires (at which point US tariffs on $200bln of Chinese imports will increase to 25% from 10%). US TSYs have been been trading sideways following the early morning sell-off with yields near the top of the day’s ranges. Current yield levels: 2-year 2.506%, 10-year 2.681%, 30-year 3.014%.

News headlines

Stock futures gain on deal to avert government shutdown, trade hopes (Reuters) U.S. stock index futures rose on Tuesday, as sentiment was lifted after lawmakers reached a tentative deal to avert another partial government shutdown and the United States and China expressed optimism about their ongoing trade talks.

Trade talk hopes and shutdown deal buoy global stocks (Reuters) World shares and bond yields rode a renewed surge in risk appetite on Tuesday, as investors were optimistic about U.S.-China trade talks and cheered Washington’s deal to avoid another government shutdown.

Top U.S. officials arrive in China for trade talks as deadline looms (Reuters) Top U.S. officials arrived in the Chinese capital on Tuesday ahead of high-level trade talks as the world’s two largest economies attempt to hammer out a deal ahead of a March 1 deadline and avoid another escalation of tariffs.

U.S. solar jobs down for second year as Trump tariffs weigh (Reuters) The number of jobs in the U.S. solar industry dropped by 3.2 percent in 2018, a second year of losses, as the Trump administration’s tariffs on foreign panels and state-level policy changes hit demand for installations, according to an industry report released on Tuesday.

Dollar set for biggest winning streak in two years (Reuters) The dollar was on track for its longest winning streak in two years on Tuesday, as hopes of a breakthrough in U.S-China trade talks and a tentative deal to avoid a U.S. government shutdown encouraged investors to cover short bets on the currency.

Oil tumbles as resumption of trade talks offers little optimism (BNN) Oil skidded to its lowest close in two weeks as worries of a stalemate in U.S.-China trade talks fueled concerns about global growth.

Canada PM welcomes probe into allegations officials tried to help SNC (Reuters) Canadian Prime Minister Justin Trudeau on Monday welcomed a probe into whether officials improperly tried to help construction company SNC-Lavalin Group Inc, making clear he sought to ride out a potential scandal just months ahead of elections.

TSX futures rise on higher oil prices (Reuters) Canada’s main index futures rose on Tuesday, as crude prices climbed more than two percent.

Theresa May seeks more time to negotiate Brexit deal with EU (BNN) U.K. Prime Minister Theresa May will address lawmakers in the House of Commons on Tuesday as she seeks more time to renegotiate her Brexit deal with the European Union.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.808%	2 Year	2.508%
5 Year	1.838%	5 Year	2.498%
10 Year	1.932%	10 Year	2.684%
30 Year	2.177%	30 Year	3.018%

US Economic Data

06:00 AM	NFIB Small Business Optimism, Jan Surv 103.0 Actual 101.2 Prior 104.4
10:00 AM	JOLTS Job Openings, Dec Surv 6846 Prior 6888

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 weaker across the curve, on low volume (230k), 10Y 2.65% (+1.6bps).  ‘Risk on’ with equities higher -S&P futures reversing earlier decline now +9, USD index higher for eighth day, crude lower – expectations that trade talks with US & China will yield positive results ahead of March 1st deadline for higher tariffs.  GOCs lower, 0.5-1bp wider vs tsys, 10y 1.90%, 10Y butterfly 2bps weaker on the curve. GOC yields barely 2-3bps higher since Friday’s blockbuster employment data after short covering led by CGBs. Provis opening unch , more supply expected (alberta, Sask)

News headlines

Stocks inch higher as investors look ahead to trade talks, Brexit (Reuters) World stock markets edged higher on Monday, as investors eyed the resumption of trade talks between the United States and China and watched for signs of progress on Brexit.

China upbeat on U.S. trade talks, but South China Sea tensions weigh (Reuters) China struck an upbeat note on Monday as trade talks resumed with the United States, but also expressed anger at a U.S. Navy mission through the disputed South China Sea, casting a shadow over the prospect for improved Beijing-Washington ties.

TSX futures up on U.S-China trade deal hopes (Reuters) Stock futures for Canada’s main index rose on Monday, lifted by fresh hopes that the United States and China will take necessary steps to resolve their trade dispute.

Oil Near $52 After Worst Week Since December on Growth Concerns (Bloomberg) Oil slipped again, trading near $52 a barrel in New York after mounting concerns about the health of the global economy triggered the sharpest weekly price drop since December.

Ottawa expects trade interest in China to slow amid tensions (BNN) Canada’s trade minister says the government expects Canadian business interest in China to slow given current tensions, but he is confident the two countries will work through their differences and allow economic ties to again flourish.

With Iran squeezed out, U.S. oil takes on new rivals in Europe (Reuters) When the global oil trading industry gathered for its biggest annual meeting in Asia in September last year, U.S. oil producing companies came well prepared.

Exclusive: German trade surplus with U.S. declined in 2018 but was still almost 49 billion euros (Reuters) Germany’s trade surplus with the United States, a frequent source of tension with U.S. President Donald Trump, declined last year but nonetheless remained at around 49 billion euros ($55.37 billion), data seen by Reuters showed on Monday.

Time Running Out to Avoid Government Shutdown as Talks Falter (Bloomberg) Time is running out to avoid a second partial government shutdown, as congressional talks about border-security funding broke down during the weekend in the latest dispute over detention beds for immigrants.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.788%	2 Year	2.471%
5 Year	1.813%	5 Year	2.455%
10 Year	1.904%	10 Year	2.647%
30 Year	2.153%	30 Year	2.988%

US Economic Data

There is no US economic data for today.

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Feb 8 Prior 54.2

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