Commentaires

Market Update

US tsys trading higher, 10Y 2.68% (-1bp), avg volume in TY futures (320k). EGBs outperforming, gilt yields in risk-off mode before ECB Draghi comments this aft and weak German business confidence data.  Equity futures higher (S&P +11) on more US/China trade talk news, and despite a ~20% plunge in Kraft after the co. revealed it is under an SEC investigation. Raft of Fed speakers today including VC Clarida and Harker in panel discussion in NYC.  GOCs rallying, 10Y below 1.90% before Dec Retail Sales (exp -0.3% vs -0.9% Nov). Yest BOC Poloz  said future rate hikes are uncertain due to the risk of a housing downturn and weak investment.  Ford bonds 5-10bps wider on emissions testing inaccuracies, Kraft Heinz also wider on SEC news.

News headlines

A Fed pivot, born of volatility, missteps, and new economic reality (Reuters) The Federal Reserve’s promise in January to be “patient” about further interest rate hikes, putting a three-year-old process of policy tightening on hold, calmed markets after weeks of turmoil that wiped out trillions of dollars of household wealth.

CANADA STOCKS-Trade optimism, higher oil prices lift TSX futures (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Friday on hopes that Washington and Beijing are on course to resolve their trade dispute.

Euro zone core inflation edges higher in Jan (Reuters) Euro zone headline consumer inflation slowed slightly in January because of a sharp deceleration of energy price growth, but core inflation watched closely by the European Central Bank in policy decisions edged slightly higher, data showed on Friday.

U.S., China haggle over toughest issues in trade war talks (Reuters) Top U.S. and Chinese trade negotiators haggled on Thursday over the details of a set of agreements aimed at ending their trade war, just one week before a Washington-imposed deadline for a deal expires and triggers higher U.S. tariffs.

EU debates how and when to start trade talks with Trump (Reuters) European ministers will begin debating on Friday how and when to start trade negotiations with the United States, aware that U.S. President Donald Trump may impose punitive tariffs on EU car imports if the bloc waits too long.

Stocks Climb With Bonds Before Trump-China Meeting: Markets Wrap (Bloomberg) U.S. equity futures extended gains on Friday alongside stocks in Europe as investors awaited results from top-level trade talks between America and China. Oil rose, while Treasuries posted a modest advance.

Oil Set for Second Weekly Gain on Trade Optimism and OPEC Curbs (Bloomberg) Oil headed for a second weekly increase as the U.S. and China worked on resolving their trade impasse, and as output cuts by OPEC and its allies balanced surging American supply.

Bank of Canada’s Poloz says rate hike path ‘highly uncertain’ (BNN) Bank of Canada Governor Stephen Poloz said the path toward higher interest rates is “highly uncertain” due to lingering questions around housing and investment, even as he stuck to his message that borrowing costs eventually need to head higher.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.789%	2 Year	2.52%
5 Year	1.81%	5 Year	2.507%
10 Year	1.907%	10 Year	2.679%
30 Year	2.161%	30 Year	3.036%

US Economic Data

Canadian Economic Data

8:30 AM	Retail Sales MoM, Dec Surv -0.3% Prior -0.9%
	Retail Sales Ex Auto MoM, Dec Surv -0.3% Prior -0.6%

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 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