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Market Update

US tsys  weaker on low volume in TY futures (250k), yields 0.5-1bp higher with the 10Y 2.73%, taking their cue from mild risk on tone in Europe, with EGBs underperforming tsys, 10y bund +2bps @ 1.93% – the Euro Stoxx index at a two-month high, while the SPX is above key 63% retracement of the Oct -> Dec decline (2713). Data on tap in the US includes Market Services Index for Jan and the ISM non-man index while the US auctions $38 bln in 3Y notes at 1:00PM. GOCs lower in line with tsys, 10Y 1.97%, some early steepening in 10s30s 1bp wider 24.1bps.

News headlines

Exclusive: Fed could raise rates as much as twice this year – BlackRock’s Rieder (Reuters) The Federal Reserve wants to raise interest rates one to two more times this year and will do so if inflation gathers steam, BlackRock Inc’s Rick Rieder told Reuters this week.

Futures advance, Trump’s State of the Union speech in focus (Reuters) U.S. stock futures posted small gains on Tuesday as investors navigate through the busy earnings season, while waiting for President Donald Trump’s State of the Union address.

Draghi’s long farewell may delay ECB guidance move: sources (Reuters) Some European Central Bank policymakers are reluctant to alter their guidance on interest rates as a move could tie the hands of the bank’s next president many months before an appointment is even made, four sources close to the matter said.

In squeezed oil industry, some rethink hunt for new barrels (Reuters) New partnerships are emerging in the global hunt for oil discoveries, with some explorers essentially offering an outsourcing service for the riskiest part of the energy business.

UK PM May told ministers she wants legally binding changes to Brexit deal (Reuters) Prime Minister Theresa May told her top ministers on Tuesday her objective was to secure legally binding changes to Britain’s EU exit deal to ensure that the country could not be trapped indefinitely in the Northern Irish backstop, her spokesman said.

Slump in Canadian consumer confidence shows no sign of reversing (BNN) A one-year slide in Canadian consumer confidence showed little sign of improving in January, with sentiment levels hovering at depressed levels amid turmoil in financial markets and signs the nation’s economy has hit a soft patch.

Trade hawks quietly bristle as Trump guns for deal with China (BNN) One of Donald Trump’s most persistent economic promises has been to rewrite the U.S. relationship with China. Yet as he approaches a potential deal, some of the very hawks who have cheered on the president’s trade war already fear he may end up falling short.

Iran criticizes Greece, Italy for not buying its oil despite U.S. waivers (Reuters) Iran’s oil minister on Tuesday criticized Greece and Italy for not buying its oil despite U.S. waivers and said they had not offered Tehran any explanation for their decision.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.845%	2 Year	2.543%
5 Year	1.88%	5 Year	2.545%
10 Year	1.973%	10 Year	2.732%
30 Year	2.21%	30 Year	3.067%

US Economic Data

9:45 AM	Markit US Services PMI, Jan F Surv 54.2 Prior 54.2
Markit US Composite PMI, Jan F Prior 54.5
10:00 AM	ISM Non-Manufacturing  Index, Jan Surv 57.1 Prior 57.6

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 slightly weaker on below avg TY volume (266k), yields 1-1.5bps higher 10Y 2.70%. Stock futures unch after somewhat volatile session . US data releases include Nov Factory orders (delayed due to shutdown) and Durable Goods. The US treasury auctions $23bln in 3Y notes tomorrow, followed by $40bln in 10 & 30Y bonds Wed & Thurs. GOCs trading lower, 1bp tighter vs tsys, 10Y 1.96%. Light weeks in terms of Cdn data with Jan Employment the highlight on Friday ( -19k exp). Wells Fargo issued $1bln in 5Y maples Friday @132 (5-7bp conc) which broke 4bps tigher – we are 128.5bid for $2mm

News headlines

World stocks muted, dollar firms on fading U.S. job’s bounce (Reuters) World stocks clung to near two-month highs on Monday, with the dollar strengthening and oil prices racing to a 2019 peak, though some European bourses struggled as momentum provided by U.S. employment and manufacturing data started to fade.

Futures eke out gains ahead of Alphabet results (Reuters) U.S. stock index futures were subdued on Monday following a strong jobs report which highlighted strength in the domestic economy, while investors waited for Alphabet’s earnings following a mixed bag of results from other FAANG stocks.

CANADA STOCKS-Futures signal flat opening for TSX (Reuters) Futures for Canada’s main stock index were little changed on Monday after rising nearly 1 percent last week.

Dollar stands tall as other currencies struggle (Reuters) The dollar snapped a two-week losing streak on Monday as strong U.S. jobs data fueled demand while other currencies were trapped in narrow ranges.

Oil Holds Near 2-Month High on Venezuela Risk, Lower OPEC Output (Bloomberg) Oil held gains near a two-month high after data showed U.S. production growth slowing at a time when OPEC cuts and American sanctions on Venezuela have already eased concerns over a supply glut.

Trump Threatens to Bust Border Deal as Shutdown Deadline Nears (Bloomberg) Congress has only a few days left to come up with an agreement on border security spending to prevent a government shutdown and may yet see the process upended once President Donald Trump delivers his State of the Union address on Tuesday.

Germany facing big budget hole as economy slows: finance ministry document (Reuters) Germany is facing a budget shortfall of around 25 billion euros ($28.62 billion) by 2023 as an economic slowdown means tax revenues will come in below previous estimates, a Finance Ministry document obtained by Reuters showed.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.833%	2 Year	2.516%
5 Year	1.861%	5 Year	2.517%
10 Year	1.959%	10 Year	2.697%
30 Year	2.186%	30 Year	3.038%

US Economic Data

10:00 AM	Factory Orders, Nov Surv 0.3% Prior -2.1%
Durable Goods Orders, Nov F Surv 1.5% Prior 0.8%
Durables Ex Transportation, Nov F Surv 0.1% Prior -0.3%
Cap Goods Orders Nondef Ex Air, Nov F Surv 0.1% Prior -0.6%
Cap Goods Ship Nondef Ex Air, Nov F Surv 0.1% Prior -0.1%

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Feb 1 Prior 54.4

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

US tsys continuing higher from FOMC steepening rally on above avg volume in TY fut (425k), 10Y 2.68% the lowest since Jan 4th. Equity futures back to unch (S&P +0.75) having given up earlier gains. The Fed shifted to a neutral stance saying it will be ‘patient’ – dropping the phrase ‘further gradual increases’ and implying the next move in rates could even be lower depending on the data – odds of a 25bp hike by y/e ~6% based on FF futures. Also, despite rising deficits, the US Treasury announced that issuance will remain unch this qtr. GOCs after Nov GDP fell 0.1% as exp, with Dec IPP weaker than exp (-0.7% vs 0.1%). Provis narrowing 1.5-2bps post FOMC yest and trading up this morning – Ont 28s @79, Ont longs 94bps, the Ont 48/28 box 0.3bps wider at 14.7/14.5.

News headlines

Friendly Fed fires world stocks to best January on record (Reuters) Soothing sounds from the Federal Reserve propelled world stocks to their best January on record on Thursday, although having scored stellar gains this time last year only to flop spectacularly, traders were trying not to get too carried away.

U.S. Fed adopts ‘patient’ rate stance with balance-sheet flexibility (BNN) The Federal Reserve said it will be “patient” on any future interest-rate moves and signaled flexibility on the path for reducing its balance sheet, in a substantial pivot away from its bias just last month toward higher borrowing costs.

Alberta eases crude cuts as prices surge, producers suffer (BNN) Alberta is easing mandatory oil curtailments after prices for heavy crude from the oil-rich Canadian province surged while producers were getting exasperated.

China factory slowdown eases for now as U.S. trade talks resume (BNN) The first official gauge of China’s economy in 2019 showed a slowdown in the manufacturing sector eased off a little in January, though uncertainty over the future of trade with the U.S. remains a headwind.

Stocks Pause for Breath After Fed; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity futures and European stocks fluctuated on Thursday following gains in Asia as investors took a pause to digest corporate earnings and the Federal Reserve’s dovish turn. Treasury yields and the dollar extended Wednesday’s declines.

European powers launch mechanism for trade with Iran (Reuters) France, Germany and Britain have set up a European mechanism for non-dollar trade with Iran to avert U.S. sanctions, although diplomats acknowledged it is unlikely to yield big commercial transactions Tehran says it needs to keep a nuclear deal afloat.

OPEC oil output drops in January on Saudi cut, outages and sanctions (Reuters) OPEC oil supply has fallen in January by the largest amount in two years, a Reuters survey found, as top exporter Saudi Arabia over-delivered on the group’s supply pact while Iran, Libya and Venezuela registered involuntary declines.

U.S. lawmakers move to curtail president’s power to levy tariffs (Reuters) U.S. lawmakers on Wednesday introduced legislation to limit the president’s power to levy import tariffs for national security reasons

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.797%	2 Year	2.496%
5 Year	1.805%	5 Year	2.475%
10 Year	1.901%	10 Year	2.667%
30 Year	2.151%	30 Year	3.022%

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