04/10/2018

Market Update

US tsys trading lower, US 10Y traded above 3.20% for the first time since 2011, curve bear steepening with 2s30s 2bps steeper @ 48.5, 3month wides. Prices off the lows as equities come under pressure Very heavy volume in TY futures- 1.1mln vs 400k avg this week, also heavy option volume o/n including several block trades in TY puts – 45k TYX 117 puts. Fed chairman Powell sounding a very positive note in comments yest, saying “we are still a long way from neutral rates”. GOCs lower, in line with tsys, 10Y above 2.55%, high since Jan 2014. Provis trading down in risk off despite higher GOC yields, Ontarios 0.5bps wider -fairly mild move considering the province has piced 5 deals in the past week (over $5bln).

News headlines

Global bond yields just exploded (Business Insider) US bond yields rose across the curve on Wednesday, hitting multi-year highs in the process. Strong US economic data was the catalyst with service sector activity improving at the second-fastest pace on record while hiring in the private sector surged in September.

Canada Post raises wage, benefit proposals in new contract offer (BNN) Canada Post issued wide-ranging new contract offers to its employees Wednesday in the hope of preventing a work stoppage at the Crown corporation ahead of the busy holiday online shopping season, The Canadian Press has learned. The offers included “improvements to pay and benefits, adding job security for rural and suburban employees and no changes to the existing defined benefit pension plan,” the agency confirmed in an emailed statement.

Amazon Warehouse Workers Lose Bonuses, Stock Awards for Raises (Bloomberg) Amazon.com Inc. is eliminating monthly bonuses and stock awards for warehouse workers and other hourly employees after the company pledged this week to raise pay to at least $15 an hour. Warehouse workers for the e-commerce giant in the U.S. were eligible in the past for monthly bonuses that could total hundreds of dollars per month as well as stock awards, said two people familiar with Amazon’s pay policies. The company informed those employees Wednesday that it’s eliminating both of those compensation categories to help pay for the raises, the people said.

Honda to invest $2.75 billion in GM’s self-driving car unit (Reuters) Honda Motor Co Ltd (7267.T) will invest $2.75 billion and take a 5.7 percent stake in General Motors Co’s (GM.N) Cruise self-driving vehicle unit, to jointly develop autonomous vehicles for deployment in ride services fleets around the world. This comes months after Japan’s SoftBank Group (9984.T) made a multibillion-dollar commitment to Cruise. That puts Cruise in a league with Alphabet Inc’s (GOOGL.O) Waymo unit in terms of resources and aggressive plans to launch commercial services.  Moscow denied what its Foreign Ministry spokeswoman called a “diabolical perfume cocktail” of allegations by someone with a “rich imagination”. But the accusations will deepen Moscow’s isolation at a time when its diplomatic ties with the West have been downgraded over the poisoning of a spy in England and it is under U.S. and European sanctions over its actions in Ukraine.

UK, Netherlands accuse Russia of hacking, including chemical weapons watchdog (Reuters) Britain and the Netherlands accused Russia of running a global campaign of cyber attacks to undermine Western democracies, including what the Dutch government described as an attempt to hack into the U.N. chemical weapons watchdog. Dutch authorities said they had disrupted an attempt to hack into the Hague-based Organization for the Prohibition of Chemical Weapons (OPCW) in April. At the time, the U.N. watchdog was investigating the poison used to attack an ex-spy in Britain and chemical weapons which the West says were used in Syria by Russia’s ally President Bashar al-Assad.

Overnight markets

Overview: US 10yr note futures are down -0.146% at 117-31, S&P 500 futures are down -0.36% at 2921, Crude oil futures are down -0.76% at $75.83, Gold futures are up 0.35% at $1207.1, DXY is up 0.04% at 95.804, CAD/USD is up 0.04% at 0.7769. 

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.307%	2 Year	2.868%
5 Year	2.448%	5 Year	3.042%
10 Year	2.55%	10 Year	3.183%
30 Year	2.539%	30 Year	3.341%

US Economic Data

8:30 AM	Initial Jobless Claims, Sep 29th 207k est 215k (20k5 prior)
	Continuing Claims, Sep 22nd 1650k est 1665k (1663k prior)
9:45 AM	Bloomberg Consumer Comfort, Sep 30th (61.2 prior)
10:00 AM	Factory Orders, Aug est 2.1% (-0.8% prior)
	Factory Orders Ex Trans, Aug (0.2% prior)
	Durable Goods Orders, Aug F est 4.5% (4.5% prior)
	Durables Ex Transportation, Aug (0.1% prior)

Canadian Economic Data

10:00 AM

Ivey Purchasing Managers Index SA, Sep (61.9 prior)