Comments

Market Update

US tsys trading lower, yields 1.5-3bps higher, 10Y 2.77%, equities higher (S&P fut +13,  Euro Stocks +0.50%), USD index near lows (DXY -0.09). Quiet day data wise in the US with Redbook retail sales, FHFA home prices and Richmond Fed. Risk on continuation from yest after Larry Kudlow denied an FT article saying a US-China trade meeting this week in the US was cancelled. Core European bonds lower, UK gilts 2bps wider vs bunds (10Y gilt/bund spd 110 bps highest since mod Nov.), GBP above 1.30, on hopes a no-deal Brexit will be avoided.  In Canada, GOCs lower in line with tsys before key Nov Retail Sales (-0.6% exp) –  lower gas prices and auto sales expected to have outsized impact.

News headlines

Trump won’t soften hardline on China to make trade deal: advisers (Reuters) As much as U.S. President Donald Trump wants to boost markets through a trade pact with China, he will not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a deal, advisers say.

CANADA STOCKS-TSX futures gain as oil prices edge higher (Reuters) Futures for Canada’s main stock index rose on Wednesday, as oil prices gained on optimism after China and Japan said they would use fiscal stimulus to boost economic growth in the face of trade protectionism and faltering global demand.

Investors shun stocks, seek safety in bonds as economic gloom spreads (Reuters) Renewed concerns about a global economic slowdown continued to sap investor appetite for assets considered risky, dragging global stocks and bond yields lower on Wednesday, while the U.S. dollar held near three-week highs.

China says will step up fiscal spending this year to support economy (Reuters) China will step up fiscal spending this year to support its economy, focusing on further cuts in taxes and fees for small firms, finance ministry officials said on Wednesday.

Stocks Gain as Traders Eye Earnings; Dollar Drops: Markets Wrap (Bloomberg) U.S. equity-index futures gained alongside stocks in Europe on Wednesday as traders juggled the latest corporate earnings with moves to end the U.S. government shutdown and doubts over progress on trade talks. The yen slid as the Bank of Japan cut its inflation outlook.

Oil Rises on Expectations of Market Balance, Slower Shale Growth (Bloomberg) Oil recovered after its biggest decline in more than a week on signs U.S. shale supply growth is slowing, and expectations that OPEC’s output cuts are well on their way to balancing the market.

Senate sets votes but U.S. shutdown likely to go on (Reuters) There was no sign of quick relief for 800,000 federal workers going without pay because of the partial government shutdown as the U.S. Senate scheduled votes on competing proposals to end the month-long impasse that both faced long odds.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.908%	2 Year	2.604%
5 Year	1.921%	5 Year	2.601%
10 Year	1.991%	10 Year	2.762%
30 Year	2.206%	30 Year	3.08%

US Economic Data

7:00 AM	MBA Mortgage Applications, Jan 18 actual -2.7% Prior 13.5%
9:00 AM	FHFA House Price Index MoM, Nov Surv 0.3% Prior 0.3%
10:00 AM	Richmond Fed Manufact. Index, Jan Surv -2 Prior -8

Canadian Economic Data

8:30 AM	Retail Sales MoM, Nov Surv -0.6% Prior 0.3%
	Retail Sales Ex Auto MoM, Nov Surv -0.4% Prior 0.0%

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

US tsys trading higher, on heavy volume in TY futures (600k), 10Y 2.755(-3bps). Risk off tone (S&P futures -17, crude 52.94 -1.6%) driven by ongoing trade concerns, as the US is intensifying efforts to have a Huawei executive extradited to the US, according to an article in the Globe & Mail. The US shutdown extends to day 32 with House democrats vowing to reject Trump’s latest proposal to reopen the govt .  Core EGBs higher, 10y bunds 1.5bps lower – the ZEW fell sharply in Jan to 27.6 from 43, while expectations came in slightly above exp at -15 vs -18. In Canada, GOCs are higher, lagging tsys by 1bp with the 10Y 1.995%.  Wholesale Trade and Manufacturing Sales for Nov both coming in weaker than exp –  Wholesale Sales -1.0% m/m the largest drop since Mar 2016. Nov Retail Sales scheduled for tomorrow  -0.6% exp

News headlines

China demands U.S. drop Huawei extradition request with Canada (BNN) China on Tuesday demanded the U.S. drop a request that Canada extradite a top executive of the tech giant Huawei, shifting blame to Washington in a case that has severely damaged Beijing’s relations with Ottawa.

The Daily Chase: TSX hot streak continues; Notley lands energy investment (BNN) The S&P/TSX Composite Index is sporting the 12th best year-to-date return of any stock market around the world after logging its 12th straight day of gains yesterday; over that span, Canadian stocks have rallied 8.03 per cent.

Stock futures lower on global growth worries after IMF trims outlook (Reuters) U.S. stock index futures fell on Tuesday, as investors were hit by fears of global economic slowdown after the International Monetary Fund trimmed its growth forecasts in a week of heavy corporate earnings.

Oil drops nearly 2 percent as China slowdown bites (Reuters) Oil prices fell nearly 2 percent on Tuesday on signs that an economic slowdown in China is spreading, stoking concerns about global growth and fuel demand.

China’s growth slowed by service, farm sectors, despite construction rebound (Reuters) Weakness in the service and farm sectors slowed China’s economic growth in the fourth quarter, despite a strong pickup in construction activity, official data showed on Tuesday.

Global Stocks Fall, Bonds Rise as Risk Rally Flags: Markets Wrap (Bloomberg) Stocks dropped on Tuesday alongside U.S. futures as a cloudy outlook for trade and growth continued to weigh on risk appetite. Treasuries climbed and the yen strengthened.

Spanish yields hit six-month lows after record demand at 10-year bond sale (Reuters) Spain’s long-dated government bond yields fell to six-month lows on Tuesday after a new 10-year bond, sold via a syndicate of banks, attracted record demand.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.92%	2 Year	2.589%
5 Year	1.933%	5 Year	2.593%
10 Year	1.997%	10 Year	2.752%
30 Year	2.218%	30 Year	3.065%

US Economic Data

8:30 AM	Wholesale Trade Sales MoM, Nov Surv -0.3% Prior 1.0%
	Manufacturing Sales MoM, Nov Surv -1.0% Prior -0.1%

Canadian Economic Data

10:00 AM	Existing Home Sales, Dec Surv 5.24m Prior 5.32m
	Existing Home Sales MoM, Dec Surv -1.5% Prior 1.9%

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

T-Notes initially drew support from the latest BBG story re: U.S.-China trade talk impasse, with risk-off flows apparent in the wake of the story hitting, although the contract stuck to a narrow range, with U.S. cash markets closed for Martin Luther King Day. Tsys futures pulled back from best levels on the back of Chinese GDP data meeting exp., on both a 2018 & Q418 basis. Futures then ticked back to best levels subsequently, with little in the way of fresh news flow apparent. With the U.S. closed for a market holiday, focus Monday is set to fall on Brexit matters in the UK.

News headlines

Global stock markets falter after China data, Brexit Plan B awaited (Reuters) European shares fell on Monday from recent six-week highs as a global equity rally stalled after data confirmed a slowdown in China’s economy and investors awaited for Britain’s next steps to break the deadlock over Brexit.

Trump, Democrats Inch Closer Amid Personal Shutdown Sniping (Bloomberg) Donald Trump and senior Democrats took their first steps toward a possible compromise deal on immigration and border security over the weekend, even as the president ramped up his feud with Speaker Nancy Pelosi with the government shutdown in its fifth week.

TSX futures slip on lower crude prices (Reuters) Futures for Canada’s main stock index edged lower on Monday as oil prices dropped after data showed the Chinese economy slowed last year.

Stocks Mixed as Investors Weigh Latest on Trade: Markets Wrap (Bloomberg) European stocks and U.S. equity futures slipped on Monday while Asian markets posted modest gains as investors assessed the latest headlines on the economy and trade. The dollar was steady, while bonds in Europe were mixed.

China’s 2018 growth slows to 28-year low, more stimulus seen (Reuters) China’s economy cooled in the fourth quarter under pressure from faltering domestic demand and bruising U.S. tariffs, dragging 2018 growth to the lowest in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown.

Canadian Oil Surge Fails to Lift Producers Out of the Doldrums (Bloomberg) Alberta’s crude curtailment plan has caused a dramatic rise in the price of heavy Canadian oil. But for shares of energy companies, it hasn’t been as much of a help.

China’s Huawei in unprecedented media blitz as it battles heightened scrutiny (Reuters) China’s Huawei has launched an unprecedented public relations blitz, thrusting its low-key founder in front of international media as the telecoms firm seeks to ease concern among Western nations bent on shutting it out of their markets.

Sterling volatile before May’s Brexit ‘Plan B’ (Reuters) Sterling edged off early lows but remained volatile on Monday as traders awaited a statement from Prime Minister Theresa May in parliament on her plans to break a deadlock over Brexit.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.937%	2 Year	2.614%
5 Year	1.95%	5 Year	2.623%
10 Year	2.018%	10 Year	2.784%
30 Year	2.241%	30 Year	3.097%

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