Market Update

Quiet session overnite with tsy ten year futs trading at the low end of the range after selling since Europe on avg volume (>280k), 10Y 2.39% (+1.8bps). Gilts trading higher, led by longs on Brexit progress, weaker UK service PMI (53.8 in Nov from 55.6). GOCs lower in line with tsys, spds narrower vs tsys (~1bp) since Oct  trade deficit came in lower than exp. IGM Financial (A/AH+) in the mkt with $250mln (no grow) longs at 192, looks like a 2-3bps conc, should go quite well given exisiting longs trade closer to 185.

News headlines 

U.S. Stock Rally Fizzles as Tech Drops, Oil Slumps: Markets Wrap (Bloomberg) U.S. stocks edged lower as selling in technology shares overwhelmed an advance by companies poised to benefit from proposed cuts to corporate taxes. The dollar strengthened and oil slumped.

Trump’s Stock Forecast Fails After Senate Tax Bill’s ‘Bombshell’ (Bloomberg) President Donald Trump’s prediction of “a very big day” for the stock market didn’t exactly hold true Monday, and tax experts say it’s probably because Senate Republicans unwittingly passed a bill that would mean higher-than-intended taxes for technology firms and other corporations.

Trump Lawyers Try to Take Obstruction Charges Off the Table (Bloomberg) Just six weeks ago, Donald Trump’s lawyers insisted they hadn’t spent much time researching whether laws on obstruction of justice apply to the president.  After the guilty plea by Trump’s former national security adviser, Michael Flynn, the explanation shifted. Now, Trump’s legal team says it’s no longer a question of whether Trump’s firing of FBI director James Comey could be considered obstruction of justice. They now say it’s impossible for the president to be charged with that crime at all.

Eleventh Hour Brexit Upset Sets New Deadline for Theresa May (Bloomberg) Theresa May came closer than ever on Monday to the Brexit deal she’s been working on for months. A last-minute upset over the Irish border left all parties embarrassed and doesn’t bode well for a second run at a breakthrough.

Euro-Area Growth Heads for Strong Finale in Year of Uncertainty (Bloomberg) Euro-area economic momentum accelerated to its fastest pace in over six years in November, setting the scene for a buoyant end to a year that saw political wobbling across much of the region.

U.S. Supreme Court Lets Trump’s Travel Ban Take Full Effect for Now (Bloomberg) A divided Supreme Court let President Donald Trump’s ban on travel to the U.S. from six mostly Muslim countries take full effect while legal challenges go forward, handing him a major victory and suggesting the court ultimately will uphold the restrictions.

Toronto home prices are down 8.8% since May, but the biggest decline in 17 years lures new buyers (Financial Post) Canada’s largest housing market continues to see prices fall amid a widening pool of homes for sale, though there are signs the correction is beginning to lure in some new buyers. The Toronto Real Estate Board’s benchmark home price index fell for the sixth consecutive month, down another 0.4 per cent from October. The index has fallen 8.8 per cent since May — the largest six-month decline in the history of data back to 2000. For the first time since 2009, the average price of a home sold in Toronto — at $761,757 in November — failed to surpass levels from a year earlier.

Canadian auto sales could hit 2 million in 2017: industry group (Reuters) Canadian auto sales dipped 1.2 percent in November from last year but could hit the two million milestone for the first time, according to data released by an automotive industry research firm.

Futures little changed as oil prices slip (Reuters) Canadian stock index futures were little changed on Tuesday amid a slight fall in oil prices and ahead of Canada’s international trade report for October.

Overnight markets

Overview: US 10yr note futures are down -0.075% at 124-05, S&P 500 futures are up 0.2% at 2643.5, Crude oil futures are down -0.56% at $57.15, Gold futures are down -0.11% at $1276.3, DXY is up 0.03% at 93.218, CAD/USD is down -0.24% at 0.7909. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.557% 2 Year 1.822%
5 Year 1.739% 5 Year 2.161%
10 Year 1.943% 10 Year 2.39%
30 Year 2.234% 30 Year 2.783%

US Economic Data

8:30 AM Trade Balance, Oct -48.7b est -47.5b (-43.5b prior)
9:45 AM Markit US Services PMI, Nov est 55.2 (54.7 prior)
  Markit US Composite PMI, Nov (54.6 prior)
10:00 AM ISM Non-manf. Composite, Nov est 59.0 (60.1 prior)

Canadian Economic Data

8:30 AM Int’l Merchandise Trade, Oct -1.47b  est -2.70b (-3.18b prior)


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