Market Update

US Treasuries opened NY higher, flatter after US Senate Thursday night postponed GOP tax bill vote to 11am ET Fri, amid need for compromise as various GOP sides want different bill contents.Bloomberg reports various GOP factions appeared to have made “a lot of progress” overnight in addressing “deficit concerns,” but more work to be done, citing a Senate aide. Canada November Employment +79.5k, above +10k expected and largest gain since Apr’12. Unemployment rate 5.9%, lowest since Feb’08 vs 6.2% expected. Full-time +29.6k. Part-time +49.9k. Particiption rate unch at 65.7%. Hourly wages of permanent workers +2.7% y/y,largest gain since Apr’16. 3Q real GDP +1.7% ann., as expected. 2Q rev to +4.3% from +4.5%. 3Q slowdown mainly on weak exports and residential investment (weaker housing resale mkt). Largst positive contribution was household consumption while exports trimmed GDP by 3.4pts. invent build up added 1.1 pt.

News headlines 

Senate Suspends Bill Votes to Friday Morning: Tax Debate Update (Bloomberg) The Senate tax bill is headed for a marathon debate this week after Republican leaders brought the measure to the floor Wednesday with the goal of holding a final vote by the end of the week. Here are the latest developments, updated throughout the day

May’s Brexit Breakthrough at Risk as Irish Parties Dig In (Bloomberg) The breakthrough in Brexit talks that Theresa May has been working to clinch next week was at risk Friday as the Northern Irish party that props up her government threatened to bring her down if she makes anything like the concessions that Europe is demanding.

Booming Euro-Area Factories Expand at Fastest Pace Since 2000 (Bloomberg) Euro-area factories haven’t done this well since the height of the dot-com boom 17 years ago. A Purchasing Managers’ Index for manufacturing rose to 60.1 in November from 58.5 the previous month, IHS Markit said on Friday. That beats a preliminary reading of 60 and is the second-highest reading since the survey began in June 1997.

Stocks Drop as Tech Selloff Resumes; Dollar Steady: Markets Wrap (Bloomberg) European stocks dropped at the start of the last month of 2017 as a selloff in technology shares resumed. The dollar edged lower and Treasuries gained after tax reform efforts in the U.S. stumbled.

Tillerson Faces ‘Death Blow’ After Repeated Clashes With Trump (Bloomberg) Time is quickly running out for U.S. Secretary of State Rex Tillerson. America’s top diplomat heads to Europe next week hobbled by reports that the White House is preparing to oust him. On stops in Brussels, Vienna and Paris, he’ll face foreign leaders who will do their best to express comity but also wonder how much longer he’ll remain in the job.

National Bank boosts dividend as quarterly profit jumps (Globe and Mail) National Bank of Canada raised its dividend as it reported stronger fourth-quarter profit driven by gains in personal and commercial banking as well as wealth management.

Canada stock futures little changed ahead of economic data (Reuters) The gross domestic product report, due at 8:30 a.m. ET, is expected to show growth of 1.6 percent on an annualized basis for the third quarter. The employment change data, also due at 8:30 a.m. ET, is likely to show an addition of 10,000 jobs in November, bringing the unemployment rate down to 6.2 percent.

Global manufacturing buoyed as focus shifts to rate hikes (Reuters) Global manufacturing expanded at the fastest pace in years last month and the second-best in two decades in the euro zone, driven by robust demand and bolstering the case for central banks to shift to tighter monetary policy.

Overnight markets

Overview: US 10yr note futures are up 0.239% at 124-11, S&P 500 futures are down -0.12% at 2644.75, Crude oil futures are up 0.82% at $57.87, Gold futures are up 0.07% at $1277.6, DXY is up 0.06% at 93.101, CAD/USD is down -0.12% at 0.7763. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.418% 2 Year 1.778%
5 Year 1.6% 5 Year 2.119%
10 Year 1.842% 10 Year 2.376%
30 Year 2.191% 30 Year 2.78%

US Economic Data

9:45 AM Markit Manufacturing PMI, Nov est 54.0  (53.8 prior)
10:00 AM ISM Manufacturing, Nov est 58.3 (58.7 prior)
ISM Prices Paid, Nov est 67.0 (68.5 prior)
ISM New Orders, Nov (63.4 prior)
ISM Employment, Nov (59.8 prior)
Construction Spending MoM, Oct est 0.5% (0.3% prior)
12/01 Wards Total Vehicle Sales, Nov est 17.50m (18.00m prior)
Wards Domestic Vehicle Sales, Nov est 13.40m (14.02m prior)

Canadian Economic Data

7:00 AM MLI Leading Indicator MoM, Oct 0.4% (0.1% prior)
8:30 AM GDP MoM, Sep est 0.1% (-0.1% prior)
GDP YoY, Sep est 3.3% (3.5% prior)
Quarterly GDP Annualized, 3Q est 1.6% (4.5% prior)
Net Change in Employment, Nov est 10k (35.3k  prior)
Unemployment Rate, Nov est 6.2% (6.3% prior)
Full Time Employment Change, Nov (88.7 prior)
Part Time Employment Change, Nov (-53.4 prior)
Participation Rate, Nov (65.7 prior)
9:30 AM Markit Canada Manufacturing PMI, Nov (54.3 prior)


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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230