Comments

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

Market Update

US tsys trading higher, near top of range on moderate futures volume (365k TY), with the 10Y 2.69% (-1.3bps) as mkts await critical vote on Brexit this aft, bonds moving higher on weaker than exp PPI (-0.2% vs -0.1%). Bunds/gilts higher as German GDP rose 1.5% last yr, from 2.2% in 2016 & 17. Equity futures only slightly higher after giving up gains on the back of China’s pledge to add more stimulus.   GOCs higher, in line with tsys after PPI., 10Y 1.94%

News headlines

Canadian dollar slips to a six-day low amid concerns for global economy (TheGlobeAndMail) The Canadian dollar weakened to a six-day low against its U.S. counterpart on Monday, reducing gains since the start of the year as oil prices fell and weak Chinese trade data raised concerns about prospects for the global economy.

JPMorgan cuts loonie forecast as new NAFTA faces turbulence (BNNBloomberg) The bank now expects the Canadian currency to weaken to $1.35 per dollar by the middle of 2019, having previously forecast that it would be around $1.30. A key reason for the pessimism is the fraught outlook for the passage this year of the U.S.-Mexico-Canada Agreement, according to analysts Daniel Hui and Patrick Locke. Ratifying the pact will be “bumpier” than most investors realize given the deep fissures within a split U.S. Congress, as well as an ongoing partial government shutdown.

Stocks Pare Gains as Bonds Advance; Pound Swings: Markets Wrap (BNN) U.S. equity futures and European stocks trimmed gains on Tuesday as the boost from potential China stimulus that spurred Asian shares proved hard to sustain. The pound fluctuated as U.K. politicians prepared for a crunch vote on Brexit.

First U.S. crude cargoes head to China since trade breakthrough (Reuters) Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September and a 90-day pause in the two countries’ trade war that began last month.

China signals more stimulus as economic slowdown deepens (Reuters) China on Tuesday signaled more stimulus measures in the near term as a tariff war with the United States took a heavy toll on its trade sector and raised the risk of a sharper economic slowdown.

Pound could flop if May loses by more than 100 votes, analysts say (BNN) The pound may manage to hold its ground if Theresa May’s Brexit deal is defeated in Parliament by 100 votes or less, as the market would then eye the odds of the prime minister seeking a second vote, analysts say.

May faces defeat in parliament over Brexit plan (Reuters) Prime Minister Theresa May faced the prospect of defeat in a historic vote on her Brexit deal in parliament on Tuesday, potentially leaving Britain in limbo about the biggest political and economic change for the country in decades.

OPEC leaves market guessing as it struggles to set meeting date (BNN) OPEC and its allies are still struggling to set the date for their next meeting, a sign that the coalition’s increased influence comes at a cost of slower decision-making.

Overnight markets

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.881%	2 Year	2.531%
5 Year	1.89%	5 Year	2.514%
10 Year	1.949%	10 Year	2.693%
30 Year	2.158%	30 Year	3.044%

US Economic Data

8:30 AM	Empire Manufactuting, Jan Est 10.0 Actual 3.9 Prior 10.9
	PPI Final Demand MoM, Dec Est -0.1% Actual -0.2% Prior 0.1%
	PPI Ex Food and Energy MoM, Dec Est 0.2% Actual -0.1% Prior 0.3%
	PPI Final Demand YoY, Dec Est 2.5% Actual 2.5% Prior 2.5%
	PPI Ex Food and Energy YoY, Dec Est 2.9% Actual 2.7% Prior 2.7%

Canadian Economic Data

9:00 AM

Existing Home Sales MoM, Dec Est -1.0% Prior -2.3%

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