Market Update
US tsys higher this morning, yields 1-1.5bps lower with the 10Y 1.48%, heavy volume in TY futures (~715k). Core EGBs leading tsys , UK 10Y gilts 4bps lower at 0.37% new record low with the GBP sliding to the lowest since 2016 – Boris Johnson faces a vote in Parliament today which could force a snap election, as the PM sticks to plans for the UK to leave the EU on Oct 31 with or without a deal. S&P futures -0.7%, crude two decline now 5% at 53.70. August ISM Manuf the focus for US session, the index having fallen to a three year low in July, the fourth straight decline. In Canada, GOCs 4bps lower across the curve – 3bps tighter vs tsys, 10Y 1.11%, BOC rate decision tomorrow with no cut expected (10%) thou October is prices at 60%.
News headlines
Stocks Slide; Pound Whipsawed on Brexit Turmoil: Markets Wrap (Bloomberg) U.S. stocks were poised to drop at the open as Wall Street resumes trading after the long weekend, while equities in Europe and Asia also declined as investors weighed receding chances for fresh China talks this month. Treasuries edged up, while the pound slipped against the dollar as Brexit brinkmanship raised the possibility of an early election in the U.K.
TSX futures down on lower oil prices (Reuters) Futures for Canada’s main stock index were down on Tuesday, as oil prices fell due to the ongoing U.S.-China trade dispute as well as rising OPEC and Russian oil output.
Oil drops 2% as trade war rumbles on and output swells (Reuters) Oil prices fell by 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy.
China, U.S. Struggle to Set Meeting as Tariffs Erode Trust (Bloomberg) Chinese and U.S. officials are struggling to agree on the schedule for a planned meeting this month to continue trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend, according to people familiar with the discussions.
Singapore hotels see best month in years amid Hong Kong turmoil (Reuters) Singapore’s hotel occupancy rates have climbed to their highest in over a decade as travelers and business events switched from Hong Kong, where pro-democracy protests have slammed tourist numbers and wider business sentiment.
PRECIOUS-Gold steady on trade war, Brexit jitters; dollar limits upside (Reuters) Gold prices held steady on Tuesday as uncertainties surrounding U.S.-China trade relations and Britain’s departure from the European Union offset pressure from a stronger dollar.
Trump heaps more tariffs on China, still no deal in sight (BNN) The Trump administration slapped tariffs on roughly US$110 billion in Chinese imports on Sunday, marking the latest escalation in a trade war that’s inflicting damage across the world economy. China retaliated.
As Poloz takes the spotlight, Bay Street eyes rate cut clues (BNN) Bank of Canada Governor Stephen Poloz will have to be extra careful with the words he chooses when he reveals the central bank’s rate decision on Sept. 4.
Market Overview: US 10yr note futures are up 0.119% at 131-28, S&P 500 futures are down -0.74% at 2903.25, Crude oil futures are down -2.12% at $53.93, Gold futures are up 0.74% at $1540.7, DXY is up 0.37% at 99.282, CAD/USD is up 0.35% at 0.7479.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.319% | 2 Year | 1.496% |
| 5 Year | 1.146% | 5 Year | 1.375% |
| 10 Year | 1.12% | 10 Year | 1.483% |
| 30 Year | 1.387% | 30 Year | 1.945% |
US Economic Data
| 09:45 AM | Markit US Manufacturing PMI, Aug F Survey: 50.0 Prior: 49.9 |
| 10:00 AM | ISM Manufacturing, Aug Survey: 51.3 Prior: 51.2 |
| ISM Prices Paid, Aug Survey: 46.8 Prior: 45.1 | |
| Construction Spending MoM, Jul Survey: 0.30% Prior: -1.30% |
Canadian Economic Data
| 08:30 AM | MLI Leading Indicator MoM, Jul Survey: 0.30% Prior: 0.30% |
| 09:30 AM | Markit Canada Manufacturing PMI, Aug Survey: — Prior: 50.2 |
| 10:00 AM | Bloomberg Nanos Confidence, Aug 30 Survey: — Prior: 57.0 |
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