US tsys opening lower, US 10Y 2.27 (+2bps), well off the lows of the session as US stock futs turn lower. Euro stocks mixed – DAX lower on 3.8% decline in materials, FTSE up 0.58% on solid results from stress tests. German 10Y bunds lower above 0.505 on drop in Eurozone unemployment rate, curve 3bps steeper ahead of ECB meeting where the Eonia futures are pricing in ~13bps of easing at Thursday’s meeting. GOCs are mixed after disappointing Q3 GDP data – curve ~3bps steeper as Q3 GDP rose 2.3% but Sep GDP fell 0.5% vs 0.0% exp as mining fell 5.1% m/m ). Provis ~0.5bps tighter after widening ~1bp yest. Supply is topical with Dec 1st cpn money the focus, 20Y Toronto deal rumoured at Onts +37.
- Global Stocks Edge Higher on Expected ECB Stimulus (WSJ) Global stocks edged higher on Tuesday as investors anticipated further stimulus from the European Central Bank later in the week.
- European Bonds Fall as Unemployment Rate Drops to Four-Year Low (Bloomberg) Government bonds from Germany to Italy dropped as a report showed the euro-area unemployment rate unexpectedly fell to the lowest level in nearly four years in October, damping demand for the relative safety of fixed-income assets.
- Companies Shy Away From Spending (WSJ) Business investment across the U.S. is fizzling out. Companies appear reluctant to step up spending on the basic building blocks of the economy, such as machines, computers and new buildings.
- Oil at $35 Would Trigger 26% Canada Home Price Drop, CMHC Says (Bloomberg) Oil at $35 a barrel for a period of five years would trigger a 26 percent collapse in Canadian home prices, according to stress tests run by Canada’s housing agency.
- Today may be as good as it gets for Canada’s economy (G&M) Savour this morning’s GDP report from Statistics Canada because it may be as good as it gets. Economists expect the federal agency will report that gross domestic product expanded at an annual pace of 2 to 2.5 per cent in the third quarter, rebounding from the mild economic contraction of the first half of the year.
- Overview: IG24 5Y 78.989/79.723 (-0.920), US 10yr note futures are down -0.06% at 126-11+, S&P 500 futures are up +0.35% at 2087.0, Crude oil futures are down -0.43% at 41.47$, Gold futures are up +0.59% at $1071.6, DXY is down -0.23% at 99.942.
US Economic Data
- Markit US Manufacturing PMI (Final) is forecast at 52.6 in November, equal to preliminary report.
- ISM Manufacturing is forecast at 50.5 in November versus October 50.1.
- Total vehicle sales are expected at 18.10M in November slightly lower than October 18.12M.
Canadian Economic Data
- GDP MoM in September decreased -0.5% MoM (0.0% YoY) compared to 0.1% MoM (+0.9% YoY) in August.
- RBC Canadian Manufacturing PMI will be released at 9h30am.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240