Market Update
Trading mixed, long end firmer/off early European highs, yld curves mildly flatter, US10Y 1/53% (unch), average volume in TY before non farm payrolls. Sep employment expected +146, vs Aug. +130k despite ongoing trade dispute with China that has impacted manufacturing and investment. Private and service sector jobs projected +130k following +96k in August. Service employment growth expected +25k (temp for the 2020 census). Background: Final Sep IHS Markit Services Business Activity Index registered a 50.9 reading, virtually unchanged from the 50.7 est, but the employment sub index signaled the first contraction since 2010. September ISM Non-Manufacturing Index -3.8pp to 52.6, indicating slower services expansion. Weakness in manufacturing expected to hold down Sep headline number. ISM Manufacturing fell to a 10-yr low 47.3 in Sep and the employment sub index -1.1pp to 47.4.
News headlines
U.S. Stock Futures Slip, Bonds Steady Before Jobs: Markets Wrap (Bloomberg) U.S. equity futures declined and European stocks drifted as investors awaited jobs numbers for clues on whether the Federal Reserve will cut rates this month to bolster the world’s largest economy. Government bonds were mixed, with Treasuries little changed.
TSX futures edge lower ahead of U.S. jobs report (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday ahead of a key U.S. payrolls report, which will shed light on the health of the world’s largest economy.
Oil Set for Biggest Weekly Drop Since July on Demand Pessimism (Bloomberg) Oil headed for its biggest weekly decline since the middle of July as a streak of disappointing economic data added to fears a global recession is coming.
‘Sahm Rule’ enters Fed lexicon as fast, real-time recession flag (Reuters) Astronomers get to name comets and biologists get to name species, but come up with something cool in economics and you might be memorialized with a law or a rule or a “curve.”
Bordeaux wine barons bemoan Trump tariffs (Reuters) A U.S. move to impose 25% duties on their wares has brought little cheer to the wine barons of Bordeaux, who fear a possible hit to their business at a time of other problems.
EU to keep U.S. islands on tax blacklist, drop UAE, Switzerland (Reuters) European Union finance ministers are set to remove the United Arab Emirates (UAE) and Switzerland next week from the bloc’s lists of countries deemed to be acting as tax havens, an EU document said.
PRECIOUS-Gold gains on global growth fears, eyes on U.S. jobs data (Reuters) Gold rose on Friday on growing fears of a global economic slowdown and rising expectations of more U.S. interest rate cuts, with investors now looking for cues from U.S. jobs data.
Dollar set for first weekly drop in a month before U.S. jobs data (Reuters) The dollar steadied on Friday but was on track to post its first weekly drop in a month before monthly U.S. jobs data as weak data this week raised concerns the U.S. economy was losing momentum and could potentially undercut the greenback’s rally.
Market Overview: US 10yr note futures are down 0% at 131-24, S&P 500 futures are down -0.34% at 2901.75, Crude oil futures are up 0.4% at $52.66, Gold futures are down -0.02% at $1513.5, DXY is down -0.07% at 98.796, CAD/USD is down -0.19% at 0.7512.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.417% | 2 Year | 1.388% |
| 5 Year | 1.252% | 5 Year | 1.345% |
| 10 Year | 1.244% | 10 Year | 1.529% |
| 30 Year | 1.433% | 30 Year | 2.027% |
US Economic Data
| 08:30 AM | Change in Nonfarm Payrolls, Sep Survey: 145k Prior: 130k |
| Change in Private Payrolls, Sep Survey: 130k Prior: 96k | |
| Change in Manufact. Payrolls, Sep Survey: 3k Prior: 3k | |
| Unemployment Rate, Sep Survey: 3.70% Prior: 3.70% | |
| Average Hourly Earnings MoM, Sep Survey: 0.20% Prior: 0.40% | |
| Average Hourly Earnings YoY, Sep Survey: 3.20% Prior: 3.20% | |
| Average Weekly Hours All Employees, Sep Survey: 34.4 Prior: 34.4 | |
| Labor Force Participation Rate, Sep Survey: 63.20% Prior: 63.20% | |
| Underemployment Rate, Sep Survey: — Prior: 7.20% | |
| Trade Balance, Aug Survey: -$54.5b Prior: -$54.0b |
Canadian Economic Data
| 08:30 AM | Int’l Merchandise Trade, Aug Survey: -1.20b Prior: -1.12b |
| 10:00 AM | Ivey Purchasing Managers Index SA, Sep Survey: — Prior: 60.6 |
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