Market Update

Tsys higher, yields 1-2bps lower, US 10Y 2.30 (-2bps). ADP employment rose 135k as expected last month. Fed Fischer said on BBG that low rates have been less successful than expected, while he still expects higher inflation.  Trump close to picking Fed chair, with a short list of four candidates and Powell – a noted dove said to be favored. EGBs higher led by German bunds, bund futures at week highs as the 10Y part of the curve leads move higher after successful 10Y auction, risk-off as Spain widens further. In Canada, GOCs higher in line with tsys, curve maintain steeper bias since GDP/Poloz last week.  The BOC auctions new 5Y bonds at noon, $3.9bln March 1 23s with the WI roll 1bp tighter 6.2/6.0 vs 7.0 yest , a big move considering the 5Y roll (Sep 22/Mar 22) is unch 3.9/3.8 and the June 23/5Y roll unch as well (7.8).  Walt Disney in the mkt yest with a 7Y Maple @ 81, bonds unch on the break (guidance was 84 +/- 3)

News headlines 

Trump Aides Deliver Him a Shortlist of Fed Candidates (Bloomberg) President Donald Trump’s advisers have given him a final list of people they’re recommending as candidates to lead the Federal Reserve and have ended the search, according to seven people familiar with the matter.

U.K. Services Growth Picks Up Though Warning Signs Cloud Outlook (Bloomberg) U.K. services activity unexpectedly accelerated in September and price pressures increased, according to a report by IHS Markit

Amazon Hit With $294 Million Bill in EU Tax Crackdown (Bloomberg) Amazon.com Inc. was hit by a European Union order to pay 250 million euros ($294 million) plus interest in back taxes to Luxembourg as the world’s biggest online retailer became the latest U.S. giant to fall foul of the bloc’s state-aid rules.

U.S. Stocks Add to Records as Treasuries Advance: Markets Wrap (Bloomberg) U.S. equities added to records as car sales boosted industrial shares, while Treasury yields turned lower and the dollar erased gains after touching a two-month high.

Toronto home sales fall again, prices down 15.5 percent from peak (Reuters) Toronto home sales plunged in September from a year earlier and prices were down 15.5 percent from their April peak, but sales and prices inched up from August, suggesting housing in Canada’s largest city may be stabilizing, data showed on Wednesday.

Canada growth to surpass potential output -BoC’s Leduc (Daily Mail) Canada’s economic growth is expected to decline over the next few quarters but continue to exceed the rate of potential output, a top official at the Bank of Canada said on Tuesday in a speech that added another dovish tone to the bank’s message.

Hurricane recovery helps boost U.S. September new auto sales (Reuters) Major automakers on Tuesday posted higher U.S. new vehicle sales in September as consumers in hurricane-hit parts of the country replaced flood-damaged cars, extending a rally in their shares that began when Hurricane Harvey hit southeast Texas in late August.

Overnight markets 

Overview: US 10yr note futures are up 0.199% at 125-19, S&P 500 futures are down -0.08% at 2530.75, Crude oil futures are down -0.26% at $50.29, Gold futures are up 0.71% at $1283.6, DXY is down -0.27% at 93.315, CAD/USD is down -0.22% at 0.8026

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.507% 2 Year 1.455%
5 Year 1.742% 5 Year 1.892%
10 Year 2.09% 10 Year 2.3%
30 Year 2.478% 30 Year 2.848%

US Economic Data

7:00 AM MBA Mortgage Applications, Sep -0.4% (-0.5% prior)
8:15 AM ADP Employment Change, Sep 135k est 135K (237K prior)
9:45 AM Markit US Services PMI, Sep est 55.1 (55.1 prior)
Markit US Composite PMI, Sep (54.6 prior)
10:00 AM ISM Non-Manf. Composite, Sep est 55.5 (55.3 prior)

Canadian Economic Data

There is no Canadian economic data for 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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230