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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

Market Update

US tsys trading weaker, Jan ADP 213k vs 180k exp, yields 1-2bps higher with the 10Y 2.73%.  Equity futures at the highs of o/n session  (S&P +11) – positive earnings from Apple and Boeing while AT&T posted in line eps  while revenues lagged estimates. FOMC later this aft – no change in rates exp  thou Powell is expected to address rumours of a curtailing the runoff in the Fed’s balance sheet.  GOCs lower in line with tsys – Nov GDP tommorrow expcted to show 0.1% decline the first monthly contraction since Jan 2018.

News headlines

Powell to Stress Fed Patience on Rate Hikes: Decision Day Guide (Bloomberg) Jerome Powell will debut the Federal Reserve’s latest communications strategy — a press conference eight times a year — by emphasizing patience in raising interest rates, a message the chairman struggled to deliver in December.

Stocks steady before Fed as Apple relief offsets Brexit complications (Reuters) World stocks and the dollar steadied on Wednesday ahead of policy guidance from the U.S. Federal Reserve, with Apple results providing relief while market confidence that a no-deal Brexit can be avoided took a hit.

Fed likely to hold rates steady as it navigates data blind spots (Reuters) In the six weeks since a confident U.S. Federal Reserve raised interest rates in response to a “strong” U.S. economy, consumer confidence dropped, wholesale prices weakened, financial markets wobbled and home sales fell.

Canada Has Until March to Assess U.S. Request for Huawei CFO (Bloomberg) Canada has until March 1 to assess a U.S. request to extradite the chief financial officer of Huawei Technologies Co. in a case that’s sparked an unprecedented diplomatic dispute as Washington broadens its attack on the Chinese technology giant.

U.S. sends 70 questions to WTO about China’s subsidies (Reuters) The United States has accused China of hiding some trade-distorting subsidy programs from international scrutiny while disclosing others it does not need to, according to a document circulated on Wednesday at the World Trade Organization.

Oil Extends Gain After Rising Most in a Week on Venezuela Crisis (Bloomberg) Oil rises in New York after jumping the most in more than a week on concerns that U.S. sanctions on Venezuela will pose significant market disruption.

U.S., China face deep trade, IP differences in high-level talks (Reuters) The United States and China launch a critical round of trade talks on Wednesday amid deep differences over Washington’s demands for structural economic reforms from Beijing that will make it difficult to reach a deal before a March 2 U.S. tariff hike.

TSX futures rise on higher oil prices (Reuters) Futures for Canada’s main stock index edged higher on Wednesday, as oil prices rose on supply concerns after the United States imposed sanctions on Venezuela’s exports.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.857%	2 Year	2.579%
5 Year	1.875%	5 Year	2.557%
10 Year	1.954%	10 Year	2.722%
30 Year	2.18%	30 Year	3.045%

US Economic Data

7:00 AM	MBA Mortgage Applications, Jan 25 Actual -3.0% Prior -2.7%
8:15 AM	ADP Employment change, Jan Surv 181K Prior 271K
10:00 AM	Pending Home Sales MoM, Dec Surv 0.5% Prior -0.7%
	Pending Home Sales NSA YoY, Dec Surv -7.0% Prior -7.7%
2:00 PM	FOMC Rate Decision (Upper Bound), Jan 30 Surv 2.50% Prior 2.50%
FOMC Rate Decision (Lower Bound), Jan 30 Surv 2.25% Prior 2.25%

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

US tsys slightly higher, curve 0.5bps steeper, 10Y 2.74% on avg volume in TY futures (316k).  Crude rebounding from yest losses, up 0.85% after the US levied sanctions on Venezuela’s State oil co.  Equities higher in Europe (Stoxx +0.60%), US equity futures higher (S&P +2) – trade talks ongoing between the US & China with the US govt launching criminal charges against Huawei. Gilts underperforming bunds as mkt awaits UK parliament votes on Brexit amendment. GOCs lower in line with tsys, curve unch 10Y 1.96%

News headlines

Powell faces early reckoning on Fed’s $4-trillion question (Reuters) Federal Reserve Chairman Jerome Powell has a problem: how to explain that the Fed may soon begin to taper its ongoing asset-shedding operation without looking like he’s hunkering down for a coming recession, or caving to U.S. President Donald Trump.

Gold reaches seven-month high as stocks, dollar struggle (Reuters) Gold climbed to a seven-month high on Tuesday as markets opted for caution before three major macro events and a blizzard of big tech company earnings in the coming days, starting with Apple later.

Stocks Mixed as Investors Weigh U.S.-China Outlook: Markets Wrap (Bloomberg) It was a mixed picture across global stock markets on Tuesday, with European shares climbing, U.S. futures mixed and Asian equities slipping as investors juggled concerns about the fallout from America’s trade war with China against hopes for progress in this week’s talks.

EU-Canada trade deal is lawful: EU court adviser (Reuters) The EU-Canada free trade deal’s provisions on investor protection are in line with EU law, a senior court adviser said on Tuesday in a recommendation to the European Court of Justice (ECJ) about terms seen by critics as favoring multinationals.

MONEY MARKETS-Dollar LIBOR falls for five straight sessions (Reuters) A key barometer of interbank interest rates declined on Tuesday for the fifth consecutive trading session to its lowest level since early December ahead of the U.S. Federal Reserve’s two-day policy meeting.

Trump to wade into China trade talks as U.S. targets Huawei (BNN) The Trump administration will press China to prove it can keep promises in talks this week aimed at ending the trade war, Treasury Secretary Steven Mnuchin said, as the U.S. ratcheted up legal pressure on one of the biggest examples of Chinese technological might.

U.S. sanctions Venezuela state oil firm, escalating pressure on Maduro (Reuters) The Trump administration on Monday imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, aimed at severely curbing the OPEC member’s crude exports to the United States and at pressuring socialist President Nicolas Maduro to step down.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.868%	2 Year	2.583%
5 Year	1.881%	5 Year	2.572%
10 Year	1.959%	10 Year	2.739%
30 Year	2.18%	30 Year	3.069%

US Economic Data

9:00 AM	S&P CoreLogic CS 20-City YoY NSA, Nov Surv 4.90% Prior 5.03%
	S&P CoreLogic CS 20-City MoM SA, Nov Surv 0.40% Prior 0.41%
	S&P CoreLogic CS 20-City NSA Index, Nov Prior 213.89
	S&P CoreLogic CS US HPI YoY NSA, Nov Prior 5.48%
	S&P CoreLogic CS US HPI NSA Index, Nov Prior 206.03
10:00 AM	Conf. Board Consumer Confidence, Jan Surv 124.0 Prior 128.1

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