Market Update

Tsys slight bid in wake of  NY subway explosion, TY futures making new highs ~7:45am , equities briefly fell into the red now are positive with S&P futures +1.00, 10Y tsy  2.355% (-2bps). Tsys bid in Asia & Europe led by long end, strong rally in UK gilts (10Y ~6bps) after Brexit Secretary comments that Brexit deal reached Friday regarding Irish border issue was not legally binding. Latest CFTC COT report  showed dealer Eurodollar longs at all-time highs, ~$167bln in 10Y equivalents, while specs are close to record short ten year futures. In Canada, GOCs  slightly wider vs tsys in the tsy rally, 10Y 1.84% (-1.2bps), curve 0.5bps flatter. In wake of BOC cautious statement last week, Can/US spreads 4-6bps tighter led by the 10Y. Provincials ended the week ~1.5bps tigther, yields out the curve at new lows with credit curves flatter as well . Honda Canada FInance in the mkt with $300mln  5Y fixed at ~83bps  and $300mln  3Y FRN @ ~ CDOR +30 –   15-17 over bank FRN, and cheap vs Aug 2020 FRN, which we see closer to CDOR +22 – so basically we would skip the 5Y and put in for 3Y FRN..

News headlines 

Explosion Reported Near Port Authority in New York City (NBC) Officials are responding to an explosion in Midtown Manhattan in the Port Authority area Monday morning, New York City officials confirmed to NBC News. The explosion took place near 42nd Street and 8th Avenue, according to the officials. Multiple ambulances have been requested.

U.S. Growth Pickup to Spur Earlier Fed Hike in ‘18, Survey Shows (Bloomberg) A strengthening U.S. economy may spur the Federal Reserve to raise interest rates twice in the next 3 1/2 months as a tight labor market pushes risks to the upside, a Bloomberg survey showed.

Investors Told to Brace for Steepest Rate Hikes Since 2006 (Bloomberg) Wall Street economists are telling investors to brace for the biggest tightening of monetary policy in more than a decade. With the world economy heading into its strongest period since 2011, Citigroup Inc. and JPMorgan Chase & Co. predict average interest rates across advanced economies will climb to at least 1 percent next year in what would be the largest increase since 2006.

Inside May’s Race to a Late-Night Brexit Deal (Bloomberg) It was 11 p.m. Thursday night and the staff Christmas party at 10 Downing St. was in full swing, with karaoke blasting and wine washing down the samosas and sausage rolls. Downstairs, Prime Minister Theresa May shut herself in her private office with her closest aides. It was time to talk to Arlene Foster again.

U.S. Stock Futures Erase Gain, Gold Advances: Markets Wrap (Bloomberg) U.S. stock futures erased gains on reports of an explosion in midtown Manhattan. The dollar fell and Treasuries rose. Contracts on the S&P 500 Index wiped out a small advance after the New York Police Department tweeted that it was responding to reports of an explosion at the Port Authority bus terminal on 42nd St. The dollar extended a loss and gold advanced.

U.A.E., Kuwait Target June for Talks on Phasing Out Oil Cuts (Bloomberg) OPEC and allied oil producers can draft a strategy in June to end global output cuts if the market is no longer oversupplied by then, the U.A.E.’s energy minister said. Kuwait said the cuts may end before 2019 if the market is re-balanced by June.

Canada third-quarter industrial capacity rises for fifth consecutive quarter (Reuters) Canada’s industrial capacity rose in the third quarter for a fifth straight quarter as gains in the construction sector offset lower extraction volumes in the oil and gas industry, data from Statistics Canada showed on Friday.

Futures little changed as oil prices edge lower (Reuters) Futures for Canada’s main stock index were little changed on Monday amid a fall in oil prices on signs of an increase in U.S. drilling activity.

Overnight markets

Overview: US 10yr note futures are up 0.126% at 124-14, S&P 500 futures are up 0.05% at 2655.25, Crude oil futures are up 0.26% at $57.51, Gold futures are up 0.17% at $1250.5, DXY is down -0.07% at 93.836, CAD/USD is up 0.09% at 0.7775. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.495% 2 Year 1.795%
5 Year 1.659% 5 Year 2.135%
10 Year 1.849% 10 Year 2.364%
30 Year 2.157% 30 Year 2.747%

US Economic Data

10:00 AM JOLTS Job Openings, Oct est 6100 (6093 prior)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Dec 8th (58.7 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