Market Update

Tsys slightly weaker on moderate volume (293k TY futs), 10Y 2.342% (+0.5bps).  Mkt focus turns to payrolls tomorrow with only initial claims on the calendar today.  Tsys lagging the declines in EGBs – gilt/oat yields 2-3bps higher, bunds ~1bp.  Gilts weaker on lack of progress in Brexit talks, weak 30Y gilt reopening with a huge rise in tail to 1bp from 0.4 in Sep.  Large gilt future block 5,539 GH8 at 6:12am. France sold three off the run long bonds which put additional pressure on yields as results were mixed. GOCs unch after Oct Building Permits rose 3.5% in Oct vs 1.0% exp. Curve slightly flatter overnite, yet 1.5bps steeper after cautious BOC yest.  CAD weaker for second day, 0.4% this morning on top of 0.77% decline yest. Provis/CMBs unch yest,  5Y CMB reopening coming up with Ont/CMB spd at the tighter end of the range over th elast six months @ 13.5bps (12-19bps).  BAC maples better bid after Moodys upgrade to A3 from Baa1, BAC  2022 FRNS still look like great value at CDOR+22.

News headlines 

Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) House and Senate Republicans are working this week on compromise tax-overhaul legislation in an effort to send it to President Donald Trump by the end of the year. Here are the latest developments.

Trump to Meet Democrats With Congress on Track to Avoid Shutdown (Bloomberg) President Donald Trump will meet with congressional leaders from both parties Thursday to negotiate on a long-term budget deal as Congress prepares to pass a stopgap spending measure to avoid a U.S. government shutdown Saturday.

May Is Preparing Another Brexit Proposal for Ireland (Bloomberg) Prime Minister Theresa May is not giving up. In the latest twist to the Brexit saga, she is preparing another proposal to submit to Ireland within 24 hours in a dash to meet the European Union’s cutoff.

World Leaders Condemn Trump Jerusalem Move, Warn of Violence (Bloomberg) World leaders reacted with dismay after President Donald Trump decided to recognize Jerusalem as Israel’s capital and relocate the U.S. embassy there, amid concern the moves could ignite new violence and bury any hope for resolving the Israeli-Palestinian conflict.

Dollar Rises to Two-Week High; Stocks Pare Gains: Markets Wrap (Bloomberg) The dollar advanced a fourth day and Treasuries ticked lower as progress continued toward a final U.S. tax bill. European stocks pared earlier gains to trade little changed after two days of declines, and the British pound extended a retreat.

Consumption and Investment Propel Euro-Area Economic Growth (Bloomberg) Private consumption and investment drove euro-area economic growth in the third quarter, underpinning a recovery that has spread across the 19-nation bloc. Consumer spending contributed 0.2 percentage point to gross domestic product, with gross fixed capital formation adding another 0.2 point, the European Union’s statistics office said on Thursday. The economy expanded 0.6 percent from the second quarter, unrevised from an earlier estimate.

Bank of Canada holds interest rate at 1%, and signals more caution to come (Financial Post) The Bank of Canada on Wednesday maintained its key interest rate at one per cent, confirming expectations that the bank would hold off on further rate hikes amid slackening economic data.

Canada’s Desjardins lifts temporary halt on pipeline lending (Reuters)  Canadian lender Desjardins Group has lifted a moratorium on loans for energy pipeline projects, CBC News reported on Wednesday, citing Canadian Press.

General Electric to cut 12,000 jobs in power business revamp (Reuters) General Electric Co (GE.N) announced on Thursday it was axing 12,000 jobs at its global power business as the struggling industrial conglomerate responds to dwindling demand for fossil fuel power plants.

Overnight markets

Overview: US 10yr note futures are down -0.063% at 124-17, S&P 500 futures are down -0.03% at 2628.5, Crude oil futures are up 0.34% at $56.15, Gold futures are down -0.64% at $1258, DXY is up 0.12% at 93.72, CAD/USD is up 0.39% at 0.7791. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.495% 2 Year 1.809%
5 Year 1.663% 5 Year 2.128%
10 Year 1.857% 10 Year 2.337%
30 Year 2.168% 30 Year 2.721%

US Economic Data

7:30 AM Challenger Job Cuts YoY, Nov 30.1% (-3.0% prior)
8:30 AM Initial Jobless Claims, Dec 2nd 236k est 240k (238k prior)
  Continuing Claims, Nov 25th 1908k est 1919k (1957k prior)
9:45 AM Bloomberg Consumer Comfort, Dec 3rd (51.6 prior)
12:00 PM Household Change in Net Worth, 3Q (1698b prior)
15:00 PM Consumer Credit, Oct est 17.000b (20.830b prior)

Canadian Economic Data

8:30 AM Building Permits MoM, Oct 3.5k est 1.0% (3.8% prior)
10:00 AM Ivey Purchasing Managers Index SA, Nov est 62.5 (63.8 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