Market Update

Tsys trading higher before 8:30 data (Phil Fed, GDP), 10Y 2.48% (-1.6bps) after three day selloff. Current levels on TY near highs of overnite range on moderate volume (288k). Equities firmer (S&P fut +5.25), crude slightly weaker. Core EGBs lower,  gilts trading lower led by 5-10Y sector, EU peripheral spreads at recent tights vs Germany before Catalan regional vote today. In Canada, GOCs lower & 1-2 bps wider vs tsys before CPI & retail sales. Provis opening unch after closing yest another 0.5bps tighter, Ont 48/27 curve trading below 10bps as longs outperform and despite continued narrowing in GOC 10s30s recently to ~25bps

News headlines 

House Republican Leaders Push Bare-Bones Temporary Funding (Bloomberg) The House is set to vote on a bare-bones stopgap funding plan that would avert a government shutdown on Saturday and likely force the Senate to abandon attempts to add other provisions.

Ryan Pushes Trump to Follow Tax Win With U.S. Welfare Revamp (Bloomberg) Republicans want to channel momentum from the GOP’s victory on taxes into a push to overhaul the nation’s welfare programs, though some of President Donald Trump’s advisers prefer a less controversial infrastructure plan at the top of his agenda.

May’s Top Cabinet Ally Damian Green Quits After Porn Claims (Bloomberg) U.K. Prime Minister Theresa May’s effective deputy, Damian Green, resigned after an official investigation found that he’d made misleading statements about pornography on one of his parliamentary office computers, and left questions unanswered about his behavior toward a female activist.

Bonds Tumble, Equities Mixed as Tax Bill Passes: Markets Wrap (Bloomberg)  U.S. stocks fluctuated while Treasury yields climbed to a nine-month peak as the Republican tax overhaul passed its final vote before going to President Donald Trump for his signature.

What Catalonia’s Vote Can, and Can’t, Accomplish (Bloomberg) An election in Catalonia Dec. 21 gives voters another chance to express their view on whether the region should press ahead with its fight to break away or remain within Spain. The vote was called in October, when Spanish Prime Minister Mariano Rajoy fired the Catalan government and dissolved the regional parliament in a bid to snuff out the secession movement. With ousted Regional President Carles Puigdemont in self-imposed exile in Brussels, the ballot may do little to settle the bitter division over Catalonia’s bid for independence — and Rajoy’s efforts to stop it.

Domestic wholesale trade data, oil lift Canadian dollar (Reuters) The Canadian dollar strengthened against its U.S. counterpart on Wednesday after domestic data showed wholesale trade rose more than expected in October, which could bode well for economic growth at the start of the fourth quarter.

Trump administration sides with Boeing in Bombardier dispute (Reuters) The Trump administration on Wednesday recommended steep anti-subsidy duties on Bombardier Inc’s CSeries jets, setting up the next round of a fierce international trade dispute between the United States and Canada.

Overnight markets

Overview: US 10yr note futures are up 0.076% at 123-18, S&P 500 futures are up 0.2% at 2686.75, Crude oil futures are down -0.55% at $57.77, Gold futures are down -0.13% at $1268, DXY is up 0.14% at 93.443, CAD/USD is down -0.27% at 0.7812. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.639% 2 Year 1.853%
5 Year 1.822% 5 Year 2.232%
10 Year 2.002% 10 Year 2.486%
30 Year 2.253% 30 Year 2.866%

US Economic Data

8:30 AM Philadelphia Fed Business Outlook, Dec est 21.0 (22.7 prior)
  GDP Annualized QoQ, 3Q est 3.3% (3.3% prior)
  Personal Consumption, 3Q est 2.3% (2.3% prior)
  GDP Price Index, 3Q est 2.1% (2.1% prior)
  Core PCE QoQ, 3Q est 1.4% (1.4% prior)
  Initial Jobless Claims, Dec 16th est 233k (225k prior)
  Continuing Claims, Dec 9th est 1898k (1886k prior)
  Chicago Fed Nat Activity Index, Nov est 0.50 (0.65 prior)
9:00 AM FHFA House Price Index MoM, Oct est 0.4% (0.3% prior)
9:45 AM Bloomberg Consumer Comfort, Dec 17th (51.3 prior)
  Bloomberg Economic Expectations, Dec (53.0 prior)
10:00 AM Leading Index, Nov est 0.4% (1.2% prior)

Canadian Economic Data

8:30 AM CPI NSA MoM, Nov est 0.2% (0.1% prior)
  CPI YoY, Nov est 2.0% (1.4% prior)
  Consumer Price Index, Nov est 131.1 (130.9 prior)
  CPI Core – Common YoY%, Nov est 1.7% (1.6% prior)
  CPI Core – Trim YoY%, Nov (1.5% prior)
  CPI Core- Median YoY% (1.7% prior)
  Retail Sales MoM, Oct est 0.3% (0.1% prior)
  Retail Sales Ex Auto MoM, Oct est 0.4% (0.3% 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