US tsys opening lower, curve steeper, US 10Y 2.173 (+2.8bps), Euro stocks higher, USD lower for a third day. Tsys rose initially on weak China Oct PMI which came in below forecast at 49.8 (see above). Tsys slid in Europe on ECB Draghi & Nowotny QE comments. GOCs are trading lower, curve ~1bp steeper led by 10s. RBC Man PMI scheduled for 9:30 before key US ISM Man PMI. Provi spreads maintaining positive tone on ‘risk on’ to start the week, Ont 46s 102.5, 25s trading up @ 92 earlier this morn, QC lagging a bit 48s 108.5/107.5, 25s 98.5/97.5
- China factory activity contracts for third straight month (FT) Manufacturing activity in China contracted for the third consecutive month in October, in the latest sign of the country’s economic slowdown.
- German Bonds Decline Along With Peers as Draghi Cools QE Talk (Bloomberg) German bonds fell with their euro-zone peers after European Central Bank President Mario Draghi said further stimulus may not be necessary in December, little more than a week after he signaled a boost to quantitative easing.
- ECB says Greece’s banks need more than €14bn in fresh capital (FT) The European Central Bank has said Greece’s troubled banks need more than €14bn in fresh capital to survive.
- Pound jumps as UK manufacturing hauls itself out of doldrums (Telegraph) Britain’s manufacturers bounced back in October, as a rise in new orders and “surging growth” at larger companies pushed up activity at one of the fastest rates on record.
- Bonds Send Same Ominous Signs No Matter Where in World You Look (Bloomberg) Ask any bond trader in Tokyo, London or New York what their view on the global economy is, and you’re likely to get a similar, decidedly downbeat answer.
- Overview: IG24 5Y 74.240/74.957 (-0.351), US 10yr note futures are down -0.15% at 127-16, S&P 500 futures are up +0.16% at 2077.0, Crude oil futures are down -1.52% at 45.88$, Gold futures are down -0.45% at $1136.3, DXY is down -0.24% at 96.712.
US Economic Data
- Markit US Manufacturing PMI (Final) is forecast at 54.0 in October, equal to preliminary report.
- ISM Manufacturing is forecast at 50.0 in October versus September 50.2.
- Construction spending is forecast at 0.5% MoM in September versus 0.7% in August.
Canadian Economic Data
- RBC Canadian Manufacturing PMI will be released at 9h30am.
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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