Commentaires matinaux

Market Update

US tsys trading higher on decent volume (400k TY fut), long end outperforming, 10Y 1.795(-1.5bps).  US futures close to unch, paring earlier losses: Target -7.0% pre-mkt after holiday sales rose 1.4% vs 5.7% last year, comparable sales now expected to be 1.4% for the qtr vs 3.8% forecast. BAC beat on Q4 eps , with ‘solid client activity in growing loans and gathering deposits’, stock is down slightly pre-mkt. Big rally in  gilts on weaker UK  CPI (1.3% vs 1.5% exp) and comments from MPC Saunders on need for further stimulus, 10Y  8bps lower @ 0.64% – a two month low while the 10Y gilt/bund spd at 20 month lows. GOCs higher & 1bp narrower vs tsys out the curve, 10Y approaching Jan low 1.53%

News headlines

U.S. Futures Slip Amid Mixed Earnings; Bonds Gain: Markets Wrap (Bloomberg) U.S. equity-index futures slipped amid mixed corporate earnings and concern over trade tensions that lingered even as America and China were set to sign their initial accord. Treasuries rose and the dollar steadied.

TSX futures rise as gold prices gain ahead of U.S.-China trade deal (Reuters) Canada’s main stock index futures rose on Wednesday ahead of signing of the U.S.-China phase 1 trade deal, supported by gains in gold prices.

U.S., China set to sign massive purchases deal, easing trade war (Reuters) The U.S.-China trade war is set to enter a new, quieter phase on Wednesday as U.S. President Donald Trump and Chinese Vice Premier Liu He sign an initial trade deal that aims to vastly increase Chinese purchases of U.S. manufactured products, agricultural goods, energy and services.

Phase 2 of China trade deal to address certain tech issues: U.S. Treasury Secretary (Reuters) U.S. Treasury Secretary Steven Mnuchin said on Wednesday that some technology and cybersecurity issues will be resolved in the next chapter of a deal to end the trade war between the United States and China.

German growth slows sharply in 2019 as trade disputes bite (Reuters) The German economy grew by 0.6% in 2019, the weakest expansion rate since 2013 and a marked cooling from the previous year, as export-dependent manufacturers in Europe’s largest economy face increased headwinds from trade disputes and less foreign demand.

Exclusive: India plans new law to protect foreign investment – sources (Reuters) India is planning a new law to safeguard foreign investment by speeding up dispute resolution, aiming to attract more capital from overseas to boost stuttering domestic growth, two officials with direct knowledge of the matter told Reuters.

China tariffs to remain until after 2020 election despite deal (BNN) Existing tariffs on billions of dollars of Chinese goods coming into the U.S. are likely to stay in place until after the American presidential election, and any move to reduce them will hinge on Beijing’s compliance with the terms of a phase-one trade accord, people familiar with the matter said.

Keystone XL inches forward with work planned for next month (BNN) TC Energy Corp. plans to begin pre-construction work on the Keystone XL oil pipeline next month, moving the long-delayed project forward even as opponents continue to fight it in court.

Market Overview: US 10yr note futures are up 0.121% at 129-10, S&P 500 futures are down -0.03% at 3287, Crude oil futures are down -0.03% at $58.21, Gold futures are up 0.39% at $1550.6, DXY is down -0.06% at 97.31, CAD/USD is up 0.04% at 0.7653.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.652%	2 Year	1.564%
5 Year	1.573%	5 Year	1.608%
10 Year	1.561%	10 Year	1.795%
30 Year	1.673%	30 Year	2.253%

US Economic Data

07:00 AM	MBA Mortgage Applications, Jan 10  Survey: —  Actual: 30.20% Prior: 13.50%
08:30 AM	PPI Final Demand MoM, Dec  Survey: 0.20% Actual: 0.10%  Prior: 0.00%
	PPI Ex Food and Energy MoM, Dec  Survey: 0.20% Actual: 0.10%  Prior: -0.20%
	PPI Ex Food, Energy, Trade MoM, Dec  Survey: 0.20% Actual: 0.10% Prior: 0.00%
	PPI Final Demand YoY, Dec  Survey: 1.30% Actual: 1.30%  Prior: 1.10%
	PPI Ex Food and Energy YoY, Dec  Survey: 1.30% Actual: 1.10% Prior: 1.30%
	PPI Ex Food, Energy, Trade YoY, Dec  Survey: — Actual: 1.50% Prior: 1.30%
	Empire Manufacturing, Jan  Survey: 3.60 Actual: 4.80 Prior: 3.50
02:00 PM	U.S. Federal Reserve Releases Beige Book

Canadian Economic Data

09:00 AM

Existing Home Sales MoM, Dec  Survey: —  Prior: 0.60%

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 slightly higher on avg volume (330k TY futures), 10Y 1.84%, US equity futures paring earlier losses (S&P -3.75). JPM up ~2.0% pre-mkt on stronger Q4 fixed income & trading revenues, eps $2.57 vs $2.36 est. US Dec CPI on tap – 0.3% m/m, 2.4% y/y and 2.1% core expected.  Core EGBs higher, UK gilts continue to outperform, 2Y UK/German spread at two-year lows, GBP extending its decline on speculation of BOE easing this month in the wake of negative Nov GDP.  GOCs higher in line with tsys, BOC Business Outlook survey indicator rose to the highest since 2018, 0.7% in Q4 vs 0.3% prev.  while inflation expectations over the next year fell to the lowest since 2017.

News headlines

U.S. Futures, Europe Stocks Fluctuate; Bonds Rise: Markets Wrap (Bloomberg) American equity-index futures fluctuated with European stocks on Tuesday as U.S. earnings season kicked off and officials prepared to sign the China trade deal in Washington. The yuan held close to its strongest level since July.

CANADA STOCKS-TSX futures drop ahead of Phase 1 U.S-China trade deal (Reuters) Canada’s main stock index futures fell on Tuesday, as investors remained cautious before the U.S.-China Phase 1 trade deal is signed on Wednesday.

Futures pause after rally, JPMorgan results draw cheer (Reuters) U.S. stock index futures were flat to slightly lower on Tuesday, as investors took a breather following a record rally, even as JPMorgan’s quarterly results set a positive tone for big bank earnings.

Phase 1 commodity targets likely more than China can chew: analysts (Reuters) Commodity traders and analysts are struggling to map out how China will reach the eye-popping amounts it is committing to buy from the United States under Phase 1 of their trade deal.

China’s yuan gains after U.S. drops China FX manipulator label (Reuters) China’s yuan climbed to its highest level since July on Tuesday and the Japanese yen plumbed eight-month lows as the U.S. Treasury Department reversed its decision in August to designate China as a currency manipulator.

China posts strong December exports as world awaits Sino-U.S. trade deal signing (Reuters) China’s exports rose for the first time in five months in December and by more than expected, signaling a modest recovery in demand as Beijing and Washington agreed to defuse their prolonged trade war.

Switzerland rejects U.S. allegations of currency manipulation (Reuters) Switzerland is not manipulating the Swiss franc for competitive gain, the country’s government said on Tuesday after the United States added it to a watchlist of currency manipulators.

Gold Falls Again as Demand for Havens Wanes (Bloomberg) Gold nudged lower, extending declines from last week’s peak, as the soon-to-be clinched U.S.-China trade pact undermines the case for havens. Palladium hit a fresh record.

Market Overview: US 10yr note futures are up 0.024% at 128-31, S&P 500 futures are down -0.06% at 3287.75, Crude oil futures are up 0.72% at $58.5, Gold futures are down -0.5% at $1542.9, DXY is up 0.13% at 97.468, CAD/USD is up 0.1% at 0.7651.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.666%	2 Year	1.586%
5 Year	1.616%	5 Year	1.646%
10 Year	1.61%	10 Year	1.842%
30 Year	1.712%	30 Year	2.3%

US Economic Data

06:00 AM	NFIB Small Business Optimism, Dec  Survey: 104.6  Actual: 102.7 Prior: 104.7
08:30 AM	CPI MoM, Dec  Survey: 0.30%  Prior: 0.30%
	CPI Ex Food and Energy MoM, Dec  Survey: 0.20%  Prior: 0.20%
	CPI YoY, Dec  Survey: 2.40%  Prior: 2.10%
	CPI Ex Food and Energy YoY, Dec  Survey: 2.30%  Prior: 2.30%
	CPI Core Index SA, Dec  Survey: 266.111  Prior: 265.620
	CPI Index NSA, Dec  Survey: 257.169  Prior: 257.208
	Real Avg Weekly Earnings YoY, Dec  Survey: —  Prior: 1.10%
	Real Avg Hourly Earning YoY, Dec  Survey: —  Prior: 1.10%

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 trading lower, yields 2- 2.5bps higher led by the long end with the 10Y 1.84%, curve 2bps steeper. US equity futures higher, S&P +12, Nasdaq +44, crude unch. Risk-on tone with US-Iran conflict fading and Wednesday’s signing of the US-China ‘phase one’ deal. Core EGBs mixed, gilts higher on dovish comments from BOE member Vlieghe and poor UK data (Nov GDP -0.3% vs 0.0 exp). GOCs lower in line with tsys – Can/US close to cheapest levels since Friday’s solid Dec employment figures, 10Y ~5bps wider from Thursday’s close.  Quebec 10Y  unch from Friday’s new issue level (69.5).

News headlines

U.S. Futures Gain, Europe Shares Drop; Bonds Slip: Markets Wrap (Bloomberg) U.S. equity futures advanced with Asian shares on Monday while Europe stocks turned lower at the beginning of a busy week likely to be dominated by the start of earnings season and the signing of a partial China trade deal. Bonds, the yen and gold retreated.

CANADA STOCKS-TSX futures flat ahead of Phase 1 Sino-U.S. trade deal (Reuters) Canada’s main stock index futures stayed flat on Monday, ahead of the imminent signing of a preliminary Sino-U.S. trade deal.

The World’s Most Precious Metal Leaves Everything Else in the Dust (Bloomberg) Palladium’s great start to the year pales in comparison to its lesser known, but much more expensive sister metal, rhodium.

As businesses hold back, U.S. consumers seen boosting big banks’ profits (Reuters) Consumer lending is expected to propel profits for big U.S. banks when they unveil fourth-quarter results this week, though stress in corporate lending and uneven capital markets may cast a shadow over results.

U.S. Champagne drinkers should expect costs to pop with new tariffs (Reuters) Lovers of Champagne and other French sparkling wines should brace for big cost increases if the United States makes good on a threat to impose 100% tariffs on French goods in a dispute over the country’s planned digital services tax.

Auto industry cautious as China starts 2020 with forecast of a 2% sales decline (Reuters) Automakers in China need to get used to a new normal of “low speed growth” in the world’s largest car market, the country’s top auto body said on Monday, as it reiterated predictions that sales will likely shrink for the third consecutive year in 2020.

Deadline to end use of Libor in doubt as banks stall on software changes (Reuters) Many banks in Britain are unlikely to hit an October deadline to stop writing loans tied to the discredited Libor benchmark as they grapple with upgrading to crucial new software that allows them to use replacement reference rates, industry sources said.

Canadian gas gains after drilling cutbacks, pipeline rule change (BNN) Canadian natural gas is trading at the highest price relative to U.S. benchmarks in about 10 months after producers cut back on drilling and a rule change on a key Alberta pipeline system last year helped better manage flows of the fuel.

Market Overview: US 10yr note futures are down -0.073% at 128-32, S&P 500 futures are up 0.34% at 3275.75, Crude oil futures are down -0.05% at $59.01, Gold futures are down -0.28% at $1555.8, DXY is up 0.09% at 97.444, CAD/USD is down -0.05% at 0.7666.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.661%	2 Year	1.574%
5 Year	1.617%	5 Year	1.643%
10 Year	1.611%	10 Year	1.835%
30 Year	1.713%	30 Year	2.297%

US Economic Data

02:00 PM

Monthly Budget Statement, Dec  Survey: -$15.0b  Prior: -$13.5b

Canadian Economic Data

10:00 AM	Bloomberg Nanos Confidence, Jan 10  Survey: —  Prior: 56.5
	Bloomberg Jan. Canada Economic Survey
10:30 AM	BoC Overall Business Outlook Survey, 4Q  Survey: —  Prior: 0.4
	BoC Business Outlook Future Sales, 4Q  Survey: —  Prior: 23.00

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