Comments

Market Update

Tsys slightly lower, 10Y 2.76% (+1bp), above avg volume in TY futures (420k), core EGBs also lower on ‘risk on’ flows while EU peripheral spreads are tighter. Stocks trading well on optimistic outlook for US-China trade after WSJ mentioned US officials were discussing lifting tariffs, S&P futures +11, crude 52.80 (+1.3%). GOCs lower, 0.5bps tighter vs tsys, 10y Can/US -76bps three-week narrows.  Dec CPI on deck, -0.4% m/m or 1.7% y/y exp with the core +1.9%. A monthly decline would follow the 0.4% pullback in Nov, the weakest since last Dec- thou seasonality is definitely at play with seven of the last eight yrs showing declines in Dec –  the drop in gasoline prices a prime contributor, along with seasonal weakness in other categories.

News headlines

Global stocks advance as trade hopes aid rally; oil rises (BNN) Stocks rose in Europe and Asia on Friday alongside U.S. equity futures, building on the recent rally in risk assets amid further optimism for trade talks between America and China. Treasuries and the yen edged lower, while crude climbed.

TSX futures rise as oil prices gain on OPEC’s production cut (Reuters) Futures for Canada’s main stock index rose on Friday, as oil prices gained after a report from the Organisation of the Petroleum Exporting Countries (OPEC) showed its production fell sharply last month.

Pound set for biggest weekly gain vs euro in more than a year on Brexit hopes (Reuters) The pound weakened on Friday as investors took profits after a stellar rally this week that set the currency up for its biggest weekly gain against the euro in more than a year on growing confidence that a no-deal Brexit can be avoided.

Canada’s Huawei 5G Decision Is Months Away, Sources Say (Bloomberg) Canada is still conducting its security review of 5G telecommunications technology, and a decision on whether to restrict Huawei Technologies Co. is still at least months away, people familiar with the plans say.

Trump meets with Cabinet officials to revive infrastructure push (Reuters) U.S. President Donald Trump is reviving efforts to win approval for a significant infrastructure plan lasting up to 13 years, two people briefed on the matter said, as the administration seeks to bring a long-stalled campaign promise back to life.

Shutdown clouds outlook for consumer-driven U.S. economic growth (Reuters) After tax cuts, rising incomes and buoyant stock markets set off a consumer boom in 2018, signs are emerging that the main engine of U.S. economic growth could sputter, and a record-long government shutdown further muddies the waters.

Greece plans five-year bond once Macedonia accord has passed (Reuters) Greece plans to return to bond markets with a five-year syndicated issue once a parliamentary vote on a long-running dispute with neighbouring Macedonia is out of the way, two sources told Reuters on Friday.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.909%	2 Year	2.576%
5 Year	1.93%	5 Year	2.588%
10 Year	2.002%	10 Year	2.761%
30 Year	2.234%	30 Year	3.083%

US Economic Data

8:30 AM	Industrial Production MoM, Dec Surv 0.2% Prior 0.6%
9:15 AM	Capacity Utilization, Dec Surv 78.5% Prior 78.5%
10:00 AM	U. of Mich Sentiment, Jan P Surv 96.8 Prior 98.3

Canadian Economic Data

8:30 AM	CPI NSA MoM, Dec -0.1% Surv -0.4% Prior -0.4%
	CPI YoY, Dec 2.0% Surv 1.7% Prior 1.7%

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 moving higher on avg volume (350k TY), 10Y 2.71% (-0.5bps), tsy curve 0.5bps flatter 2s30s, ‘risk off’ after Morgan Stanley Q4 earning miss, shares down 4% pre-mkt equities lower. Tsys off the highs after strong Jan Phili Fed – 17 vs 9.5 exp.  Equity futures paring earlier losses S&P -5 from -15 pre data,  Euro stocks  down ~0.50%. GOCs higher, outperforming tsys  by 0.5-1.5bps, 10Y 1.975 (-2bps), Mar24/5Y roll unch 0.7bps after yesterday’s 5Y auction.  Provis opening 0.5bps wider, Ont 28 83.5 , Ont 48/28 roll unch 13.5/13.

News headlines

Trudeau’s U.S. envoy confident on new NAFTA passage, tariff relief (BNN) Canada’s ambassador to Washington is confident that the U.S. will both pass the revised North American trade deal and lift tariffs on steel and aluminum.

Shutdown is starting to hurt Trump’s financial deregulation agenda (Reuters) The U.S. government shutdown over President Donald Trump’s call for Congress to fund a wall he promised to build on the U.S.- Mexican border is threatening another campaign pledge to make rules easier to navigate for banks and corporations.

Stocks turn red, pound finds some peace (Reuters) Concern over China’s economic outlook and possible U.S. tariffs on European cars dragged stocks lower on Thursday, while an anti-climactic end to the latest chapter in the Brexit saga offered sterling a moment’s peace.

‘Pretty impressive’: TSX bounces back amid nine-day winning streak (BNN) All of a sudden, Canada is sporting one of the best-performing stock exchanges in the world. The S&P/TSX Composite Index heads into Thursday’s trading session riding a nine-day winning streak. Over that period, Canadian stocks have climbed more than six per cent.

Riven by crisis, UK searches for Brexit emergency ‘plan B’ (Reuters) Prime Minister Theresa May will try on Thursday to break the impasse in Britain’s political elite over how to leave the European Union by searching for an emergency exit deal, though there is so far little sign of compromise.

U.S. Futures Slip With European Stocks; Oil Drops: Markets Wrap (Bloomberg) U.S. equity futures and European shares fell on Thursday following a mixed session in Asia amid concerns about rising tension between America and China and after weak bank earnings. The dollar was steady and Treasuries edged higher.

Feud with Canada ‘not good’ for corporate China: Ambassador (BNN) Canada’s ambassador to China warned that the spiraling diplomatic feud between the nations was damaging Beijing’s reputation, as the U.S. joined countries criticizing a Canadian citizen’s death sentence as “politically motivated.”

China Quietly Cuts Borrowing Costs While Keeping Rates on Hold (Bloomberg) The People’s Bank of China has been quietly guiding interbank borrowing costs down without actually cutting official interest rates, with the latest move a record one-day injection of cash into the market.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.908%	2 Year	2.529%
5 Year	1.922%	5 Year	2.529%
10 Year	1.985%	10 Year	2.711%
30 Year	2.209%	30 Year	3.056%

US Economic Data

8:30 AM	Philadelphia Fed Business Outlook, Jan surv 9.5 actual 17.0 prior 9.4
	Initial Jobless Claims, Jan 12 surv 220K actual 213K prior 216K
	Continuing claims, Jan 5 surv 1734K actual 1737K prior 1722K
	Bloomberg Consumer Comfort, Jan 13 Prior 58.5

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, 10y 2.74% (+2.5bps), risk on with S&P futures higher (+6) as well as European stocks.  Positive earnings from Goldman and BOA after disappointment from JPM yest. Core Euro bonds lower, wider vs tsys led by  UK gilts as PM May faces no-confidence vote, pressure at the long end of the curve with 2s10s curve 3bps steeper, 10Y gilt yield +7bps, highest since Nov 30th. In Canada, GOCs lower in line with tsys, 10Y 1.99% – two week high, while spd vs tsys basically sideways over the last week.

News headlines

World stocks hold nerve after May’s Brexit defeat, pound steady (Reuters) World equity markets on Wednesday held their nerve after the heavy parliamentary defeat of British Prime Minister Theresa May’s Brexit deal as investors saw potential for legislative deadlock forcing London to delay its departure from the EU.

Search on for Brexit consensus after May’s crushing defeat (Reuters) Prime Minister Theresa May on Wednesday will try to forge consensus in parliament on a Brexit divorce agreement after the crushing defeat of her own deal left Britain’s exit from the European Union in disarray 10 weeks before it is due to leave.

Trump orders thousands back to work without pay to blunt shutdown disruption (BNN) The Trump administration has ordered thousands of furloughed federal employees back to work without pay to inspect planes, issue tax refunds, monitor food safety and facilitate the sale of offshore oil drilling rights.

Canadians Back Trudeau’s Pipeline, But His Own Voters Are Wary (Bloomberg) A wide margin of Canadians support an oil pipeline that Prime Minister Justin Trudeau’s government is pushing to build — though it remains unpopular among some voting blocs key to his reelection, a poll has found.

TSX futures down on falling oil prices (Reuters) Futures for Canada’s main stock index fell on Wednesday, as oil prices slipped on concerns over slowing global economic growth.

Oil edges down on worries over global economy, supply glut (Reuters) Oil prices edged down on Wednesday having climbed about 3 percent in the previous session, with worries about the global economy and forecasts of swelling U.S. production hurting sentiment.

China central bank’s record $83 billion injection heightens worries over ailing economy (Reuters) China’s central bank injected a record $83 billion into the country’s financial system on Wednesday, seeking to avoid a cash crunch that would put further pressure on the weakening economy.

Canada investment intentions flat as economy plateaus: BDC (BNN) Canada’s small business managers plan to keep their investment spending flat this year, according to a new survey that mirrors a crucial question asked by the central bank.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.911%	2 Year	2.549%
5 Year	1.929%	5 Year	2.552%
10 Year	1.992%	10 Year	2.738%
30 Year	2.217%	30 Year	3.102%

US Economic Data

7:00 AM	MBA Mortgage Applications, Jan 11 Actual 13.5% Prior 23.5%
8:30 AM	Import Price Index MoM, Dec surv -1.3% Prior -1.6%
	Import Price Index YoY, Dec surv -0.8% Prior 0.7%
10:00 AM	NAHB Housing Market Index, Jan Surv 56 Prior 56

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