Market Update
US tsys trading broadly lower on heavy volume (480k TY), yields 3-6bps higher, 10Y 1.73% (+6bps), yield curve bear steepening. me in TY futures (~330k). Weakest Japanese 10Y auction in three years pressuring global bonds, JGB futures largest one-day decline since July 2016. Chicago Fed Evans reiterated he is not in favor of a third rate cut , while mon policy is ‘appropriate’. GOCs lower, steeper out to 10s, with 10s30s flattening for a second day, ~3bps since Friday consistent with m/e buying in longs which showed up mid aft yesterday. July GDP on deck (0.1% exp after 0.2% June)
News headlines
Bonds Sink on Weak Japan Sale; U.S. Futures Rise: Markets Wrap (Bloomberg) Treasuries joined a retreat across sovereign bonds on Tuesday after a weak debt auction in Japan triggered a sell-off that gradually spread across the world. U.S. equity futures advanced with shares in Asia, while European stocks slipped amid disappointing factory and inflation data.
TSX futures gain as oil prices recover (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday, as oil prices rebounded on reports of lower output from the world’s largest oil producers.
Oil Rebounds After Worst Quarter of 2019, Yet Demand Fears Weigh (Bloomberg) Oil rose after its biggest quarterly slump of the year, yet ongoing concerns that a faltering global economy will erode demand continued to weigh on the market.
WTO sees sharp drop in global trade growth amid tariff wars (BNN) The World Trade Organization cut its global trade growth forecast for this year to the weakest level in a decade, warning that further rounds of tariffs in an environment of heightened uncertainty could spark a “destructive cycle of recrimination.”
Fed can keep rates on hold for now, raise them later: Evans (Reuters) The Federal Reserve has set monetary policy to where it can deliver on its 2% inflation goal and there is scope to raise rates slightly over the next few years if the economy continues to grow, Chicago Fed President Charles Evans said on Tuesday.
Major U.S. investors have billions at risk in Chinese stocks (Reuters) Major U.S. fund managers have tens of billions of dollars at stake in some of the most popular Chinese stocks on Wall Street, exposing them to potential losses should the White House move to delist Chinese firms from U.S. exchanges.
Brexit vote reprise? Money flows out of UK property funds (Reuters) Britain’s top property investment funds have shed almost 10% of their combined assets this year as investors fret about the impact of Britain’s exit from the European Union.
Market Overview: US 10yr note futures are down -0.348% at 129-28, S&P 500 futures are up 0.18% at 2983.75, Crude oil futures are up 0.67% at $54.43, Gold futures are up 0.05% at $1473.7, DXY is up 0.13% at 99.503, CAD/USD is up 0.27% at 0.7533.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.604% | 2 Year | 1.656% |
| 5 Year | 1.438% | 5 Year | 1.596% |
| 10 Year | 1.416% | 10 Year | 1.727% |
| 30 Year | 1.576% | 30 Year | 2.175% |
US Economic Data
| 09:45 AM | Markit US Manufacturing PMI, Sep F Survey: 51.0 Prior: 51.0 |
| 10:00 AM | ISM Manufacturing, Sep Survey: 50.0 Prior: 49.1 |
| ISM Employment, Sep Survey: — Prior: 47.4 | |
| ISM Prices Paid, Sep Survey: 50.5 Prior: 46.0 | |
| ISM New Orders, Sep Survey: — Prior: 47.2 | |
| Construction Spending MoM, Aug Survey: 0.50% Prior: 0.10% |
Canadian Economic Data
| 08:30 AM | GDP MoM, Jul Survey: 0.10% Prior: 0.20% |
| GDP YoY, Jul Survey: 1.40% Prior: 1.50% | |
| 09:30 AM | Markit Canada Manufacturing PMI, Sep Survey: — Prior: 49.1 |
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, Émile Bordeleau
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230