Market Update

Tsys selloff continues on heavy volume, 10Y approaching 2.50% , eclipsing the intra day high from October 27th  on US tax cut overhaul, with the Senate slated to vote on the bill later this morning. Core European bonds in catchup mode, 10Y bund 0.403% 9+3bps), gilts +5bps 1.25%. GOCs lower, underperforming tsys 2-3bps with the 10Y closing in on 2.0%. Provis trading up 0.5bp with all in yields 2-3bps  higher, Ont 27s @57.5, Ont 48s @ 68. 

News headlines 

Senate Passes U.S. Tax Overhaul Putting Trump on Brink of Big Win (Bloomberg) Senate Republicans passed the most extensive rewrite of the U.S. tax code in more than 30 years, a bill that delivers a deep, permanent tax cut for corporations and shorter-term relief for individuals.

Congress Dives Into Shutdown Drama Hours After GOP Win on Taxes (Bloomberg) Congressional leaders are trying to to jam as many extras as possible into a must-pass spending bill that may end up ricocheting between the House and Senate right up to the deadline three days from now.

Uber Loses Bid to Lock Taxi Drivers Out of London License Appeal (Bloomberg) Uber Technologies Inc. lost a bid to prevent two unions representing taxi drivers from taking part in the appeal of Transport for London’s decision to ban the company from operating in the city.

Catalan Vote Lures Value Hunters Eyeing Spanish Stock Bounce (Bloomberg) For bargain hunters, it’s the catalyst that’s drawing them to Spanish shares. The IBEX 35 Index, having lost 8 percent since a May peak, is trading near its cheapest relative to the Euro Stoxx 50 Index in more than seven years. With elections in Catalonia on Thursday seen unlikely to give a clear majority to the separatist bloc demanding the region’s secession, bulls say it’s time to buy.

Europe Stocks Drop as Tax Vote Spurs S&P Futures: Markets Wrap (Bloomberg) Stocks in Europe retreated on Wednesday after a mixed session in Asia, even as S&P 500 futures advanced as U.S. lawmakers moved closer to a tax overhaul. The dollar was little changed and Treasuries were steady, but core European bonds resumed a selloff.

Oil Prices in 2018: Once Again It’s All About U.S. Shale Output (Bloomberg) Crude oil production out of the U.S. is expected to hit record levels next year, buoyed in part by OPEC supply curbs that have put a floor under prices. For analysts forecasting prices next year, there are two key questions: exactly how far American production grows and whether the global economy is strong enough to swallow those extra barrels?

Canada home prices to cool in 2018 as rates rise, mortgage rules hit (Reuters) Canadian home prices are expected to cool significantly next year as tighter mortgage rules come into effect and as further expected interest rate hikes are likely to dampen a market that has been stoked by cheap borrowing, a Reuters poll found.

Overnight markets

Overview: US 10yr note futures are down -0.038% at 123-21, S&P 500 futures are up 0.33% at 2692.75, Crude oil futures are up 0.38% at $57.78, Gold futures are up 0.4% at $1269.2, DXY is down -0.01% at 93.435, CAD/USD is down -0.23% at 0.7782. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.612% 2 Year 1.853%
5 Year 1.775% 5 Year 2.22%
10 Year 1.959% 10 Year 2.47%
30 Year 2.223% 30 Year 2.84%

US Economic Data

7:00 AM MBA Mortgage Applications, Dec 15th -4.9% (-2.3% prior)
10:00 AM Existing Home Sales, Nov est 5.53m (5.48m prior)
  Existing Home Sales MoM, Nov est 0.9% (2.0%)

Canadian Economic Data

8:30 AM Wholesale Trade Sales MoM, Oct 1.5% est 0.5% (-1.2% 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