Market update
US tsys sharply higher, curve 5bps steeper, US 10Y below 1.95% (-9bps) with Fed fund futures pushing out the first rate hike to March 16 at the earliest. Payrolls were weak all around, except for the unemployment rate which was unch at 5.1%. Payrolls were well shy of expectations, the workweek declined and AHE were flat. GOCs are higher, lagging tsys by 2-4bps mostly in the short end as Fed fund futures reprice rapidly, longs underperforming by ~3bps, 10s/30s above 80.Provis 0.5bps- 1 bp wider since payrolls, 3 bps since yest, Ont 46s 114/113.5, Ont 25s 105/104.
News headlines
- S. gains 142,000 new jobs in September; unemployment 5.1% (Maketwatch) The U.S. economy created just 142,000 new jobs in September and the number of new hires in August and July was also revised lower, suggesting the labor market cooled off toward the end of summer.
- US earnings pose test for bullish views (FT) Having endured the worst quarterly performance in four years, US equity investors have priced in plenty of bad news for the global heavyweight of share markets. Or have they?
- The credit bubble, the bears and the central bankers (FT) When officials at the International Monetary Fund and World Bank first decided to hold this year’s annual meeting in Peru, some hoped that the location would offer a celebratory backdrop.
- US swap dealers return to negative quotes (FT) A dislocation between the two interest rate markets shows little sign of easing, with US derivative traders quoting negative figures for benchmark swaps over Treasury yields.
- Glencore Isn’t Out of the Woods Yet (NYT) Shares of Glencore, the giant Swiss-based mining and trading company, may have recovered from a panic sell-off this week, but few analysts consider the company out of danger.
Overnight markets
- Overview: IG24 5Y 92.470/93.187 (+2.985), US 10yr note futures are up +0.66% at 129-19, S&P 500 futures are down -1.1% at 1895.75, Crude oil futures are up +0.63% at 45.02, Gold futures are up +1.25% at $1127.6, DXY is down -0.87% at 95.344.
US Economic Data
- Change in nonfarm payrolls was 142K MoM in September compared to August 136K and 201K was expected.
- Unemployment came in at 5.1% in September equal to 5.1% in August and was expected at 5.1%.
- Participation rate came in at 62.4 in September versus 62.6% for previous month.
- Avg hourly earnings increase 0.0% MoM (2.2% YoY) in September versus 0.3% MoM (2.2% YoY) for August.
- Avg weekly hours came in at 34.5 in September 0.1 hour lower than previous month.
- ISM New York (September) will be release at 9:45 (last report: 51.1).
- Factory orders are expected at -1.2% MoM in August fallowing +0.4% in July.
Canadian Economic Data
- There is no major economic data today.
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
Fax: (514)-861-3230