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Market Update

US tsys higher, rebounding from early losses, with the long end outperforming and the 10Y 2.75% (-1bp). Quiet start to otherwise busy week in the US in terms of data with Chicago Fed Index & Dallas Fed Man Index .  Equity futures moving lower (S&P -17) after Caterpillar missed Q4 eps by $0.44 – $2.55 vs $2.99, shares are ~6% lower pre-mkt.  FOMC decision & Non-farm payrolls highlights for the week – Fed chairman Powell may provide more clarity of the topic of balance sheet reduction after last week’s article in the WSJ.

News headlines

$1.5 trillion U.S. tax cut has no major impact on business capex plans: survey (Reuters) The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

Stock futures dip on weak Caterpillar forecast, China woes (Reuters) U.S. stock index futures dipped on Monday, as weak forecast from Caterpillar added to nerves about Chinese economy, while optimism over the end to the longest U.S. government shutdown in history faded.

Trudeau Ousts China Envoy After Comments About Huawei Case (Bloomberg) Canadian Prime Minister Justin Trudeau has ousted his ambassador to China in the middle of a diplomatic feud with Beijing after a string of public remarks drew criticism.

Explainer: Key Issues, implications of U.S.-China trade talks (Reuters) U.S.-China trade talks will reach a pivotal phase this week when Chinese Vice Premier Liu He comes to Washington for negotiations with his U.S. counterparts, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.

UPDATE 1-Sterling trade turns cautious ahead of parliamentary votes on Brexit (Reuters) The pound slipped on Monday after posting its biggest weekly rise in more than 15 months last week as investors took profits before crucial votes in the British parliament that will aim to break the Brexit deadlock.

Dollar dips as investors prepare for volatile markets, Fed meeting (Reuters) The euro climbed to a 10-day high on Monday as investors sold the dollar and prepared for volatile markets before U.S.-China trade talks and a Federal Reserve policy decision.

Long winter’s nap? Global slowdown, market fears could extend Fed pause (Reuters) Ebbing global growth and shaky financial markets threw the U.S. Federal Reserve off course in early 2016, and it took nearly a year for officials to regain confidence growth would continue and convince investors they would again raise interest rates.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.883%	2 Year	2.609%
5 Year	1.906%	5 Year	2.603%
10 Year	1.988%	10 Year	2.758%
30 Year	2.208%	30 Year	3.064%

US Economic Data

8:30 AM	Chicago Fed Nat Activity Index, Dec Prior 0.22
10:30 AM	Dallas Fed Manf. Activity, Jan Surv -2.7 Prior -5.1

Canadian Economic Data

10:00 AM

Bloomberg Nanos  Confidence, Jan 25 Prior 54.5

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

US tsys moving lower, TY futures at lows of o/n session on moderate volume (~335k), 10Y 1.735% (+2bps), MNI citing a WSJ article on earlier than earlier Fed balance sheet runoff , no Fedspeak before FOMC decision next Wednesday, whiel todays US Durable Goods & New Home Sales data are postponed.  EGBs trading mixed, bunds sideways, gilts underperforming before next week’s parliament vote on –  German IFO expecations fell to the lowest since Nov 2012 yet was priced in after yesterdays weak ZEW.  Month end extensions in focus with the Bloomberg-Barclays US Tsy index expected to increase by 0.06yrs vs 0.07 last Jan.  GOCs lower, in line with tsys, 10Y 1.955%, Can/US 2-3bps tighter vs the US wk/wk led by 10s.

News headlines

Fed Officials Weigh Earlier-Than-Expected End to Bond Portfolio Runoff (WSJ)Federal Reserve officials are close to deciding they will maintain a larger portfolio of Treasury securities than they’d expected when they began shrinking those holdings two years ago, putting an end to the central bank’s portfolio wind-down closer into sight.

Global stocks gain on earnings, euro rebounds after dovish ECB (Reuters) Global stocks rose on Friday, as strong earnings helped to underpin investor sentiment in the face of growing signs that the global economy is slowing and a still unresolved trade dispute between the United States and China.

U.S. fund managers play defense during shutdown (Reuters) U.S. fund managers are retreating from consumer-related stocks and increasing exposure to loan-focused companies as investors worry the U.S. government shutdown – now the longest in U.S. history – may leave some deep scars on the economy.

Global shipping rates slump in latest sign of economic slowdown (Reuters) Freight rates for dry-bulk and container ships, carriers of most of the world’s raw materials and finished goods, have plunged over the last six months in the latest sign the global economy is slowing significantly.

Shutdown Talks Signal Potential for Deal Even as Trump Demands Wall (Bloomberg) New negotiations between the Senate’s top Republican and Democrat and the White House signaled the potential for a deal to end the partial government shutdown even as President Donald Trump continued to insist on money for a border wall that Democrats reject.

Canada’s China Ambassador Says He ‘Misspoke’ on Politics of Huawei Case (Bloomberg) Canada’s ambassador to China sought to retract comments suggesting politics would play a role in the potential extradition to the U.S. of a Huawei Technologies Co. executive, adding another setback to weeks of tension between the two countries.

Tech exuberance lifts European shares near two-month highs (Reuters) European shares on Friday hit their highest level in nearly two months as investors flocked to technology stocks after positive U.S. earnings overnight, while news of slowing revenue growth from Vodafone weighed on telecoms.

US STOCKS-Futures higher as upbeat corporate earnings lift sentiment (Reuters) U.S. stock index futures rose on Friday, as upbeat earnings reports lifted market optimism, which has recently been hit by worries about global economic growth, U.S. government shutdown and uncertainty around U.S.-China trade talks.

European shares hit highest level in nearly two months, helped by tech rally (Reuters) European shares on Friday hit their highest level in nearly two months as investors flocked to technology stocks after positive U.S. earnings overnight, while news of slowing revenue growth from Vodafone weighed on telecoms.

Overnight markets

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

Rates trade firmer, at/near top end of range on moderate volume, curves mildly flatter at moment; equities bumping around recent highs. Treasuries following EGBs lead after weaker European PMIs. Otherwise, generally quiet as mkts await ECB rate annc shortly. Overnight flow included early selling in 5s, better buying in 2s and 10s during early London hours, prep and real$ buying 10s and 30s more recently. Initial unemployment claims were well below expectations in the Jan 19 wk, -13k to 199k vs 210k expected. Claims were revised down to 212,000 in the Jan 12 wk from the previously reported 213k level. NSA claims were -76,558 in the Jan 19 wk, vs -58,793 seasonal factors expected.

News headlines

ECB keeps policy unchanged but may acknowledge weak growth (Reuters) The European Central Bank left its policy stance unchanged as expected on Thursday, keeping a rate hike later this year on the table even as the euro zone economy suffers its biggest slowdown in half a decade.

Stock futures edge higher, chip results soothe growth worries (Reuters) U.S. stock index futures eked out some gains on Thursday after a string of better-than-feared earnings from chipmakers helped calm concerns over trade tensions and the longest U.S. government shutdown ever.

China says to have in-depth talks with U.S. on economic, trade issues (Reuters) China and the United States will have in-depth discussions on economic and trade issues during Chinese Vice Premier Liu He’s U.S. visit next week, the Chinese commerce ministry said on Thursday.

IMF’s Lagarde: China-U.S. trade tension a major risk to global growth (Reuters) International Monetary Fund Managing Director Christine Lagarde on Thursday reiterated that the major risk facing the global economy was the trade tension between China and the United States.

Oil Slides as Economic and Supply Fears Offset Venezuela Risk (Bloomberg) Oil fell as a darkening outlook for the global economy offset the risk of American sanctions on OPEC member Venezuela’s crude.

Trump Says He’ll Put Off State of the Union Until After Shutdown (Bloomberg) President Donald Trump said he would deliver his State of the Union address when the partial government shutdown is over, clarifying his plans hours after House Speaker Nancy Pelosi blocked him from delivering the speech in the chamber while federal agencies are closed.

Bank of Canada’s next rate move depends on data, says Stephen Poloz, but hike still on the table (FP) Bank of Canada Governor Stephen Poloz said he is keeping a close eye on developments in the nation’s housing market, as well as global trade tensions and the impact of lower oil prices, as he gauges the timing of his next interest rate increase.

Volatility jumps in Canadian oil market after OPEC-style cut (BNNBloomberg)  Calls for a better system to inform the market about Canadian crude inventories, output and shipments are occupying center stage after local price volatility hit unprecedented levels as the country grapples with its worst-ever pipeline crunch.

Pessimistic economic forecasts can’t be going over well at the Ministry of Finance (FP) Last week, the Canadian wing of the news-and-data machine started by U.S. billionaire Michael Bloomberg  introduced us to a new participant in the “short Canada” trade, a hedge fund called Crescat Capital that is betting against this country’s banks. And on Jan. 22, it published the provocative thoughts of Jim Mylonas, a strategist at BCA Research Inc., the Montreal-based research outfit that once employed Stephen Poloz, the Bank of Canada governor. “I think we’re just on the precipice of embarking on a serious recession,” Mylonas told Bloomberg. “It’s not a matter of if, but when.”

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.878%	2 Year	2.573%
5 Year	1.882%	5 Year	2.56%
10 Year	1.946%	10 Year	2.723%
30 Year	2.167%	30 Year	3.038%

US Economic Data

8:30 AM	Initial Jobless Claims, Jan 19 Surv 218K Prior 213K
Continuing Claims, Jan 12 Surv 1730K Prior 1737K
9:45 AM	Markit US Manufacturing PMI, Jan P Surv 53.5 Prior 53.8
	Markit US Services PMI, Jan P Surv 54.0 Prior 54.4
10:00 AM	Leading Index, Dec Surv -0.1% Prior 0.2%

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