Market Update TY futures overnite as midterm election voting begins, equity futures slightly negative (S&P -6.25), USD index unch – midterms also expected to dampen IG issuance. Gilts underperforming, 10Y +2.4bps @1.53%, prices giving back earlier gains after spiking on comments from Northern Ireland DUP member saying no-deal Brexit likely, yet a more positive outcome was signaled from Brexit secretary Raab at today’s cabinet meeting. Quiet day in terms of data with only Redbook sales, the US tsy auctions $27bln in 10Y notes at 1:00ET. GOCs unch, 10Y 2.51%. Provi spds continue to grind inward on lack of issuance and higher GOC yields, 10Y Ont 63.5/63 close to the Oct lows @62bps.
News headlines
Poloz Says Markets Showing ‘Welcome Symptoms’ of Normalization (Bloomberg) Recent developments in global financial markets — particularly rising long-term bond yields and volatile stock markets — are a reflection of strong global economic fundamentals, not weak ones, according to Bank of Canada Governor Stephen Poloz. In a speech on how to read recent signals from financial markets, Poloz played down recent movements — such as a flattening yield curve — as evidence of deterioration. Instead, the focus should be on a recent increase in yields signaling the market expects monetary policy normalization to continue in response to a world economy running close to capacity.
Canadian Consumers Shake Off Months of Nafta-Negotiation Anxiety (Bloomberg) Those summertime trade blues are over for Canada’s consumer. Polling by Nanos Research for Bloomberg News shows household sentiment gauges have fully recovered from a four-month lull that coincided with often testy negotiations to update the North American Free Trade Agreement. Prime Minister Justin Trudeau and President Donald Trump agreed to terms on a new deal in late September.
Carney Says BOE Not Bluffing on No-Deal Brexit Rate Hike Warning (Bloomberg) The Bank of England wasn’t kidding when it warned of possible interest rate increases if the U.K. crashes out of the European Union without a deal, Governor Mark Carney said on Friday. Carney said on Thursday that a no-deal, no-transition Brexit could trigger a supply side shock of a rare, once-in-a-generation magnitude, pushing up inflation and prompting tighter monetary policy. His comments were received with skepticism, with economists saying the chaos of a no-deal Brexit would make raising interest rates near impossible.
U.S. Futures Slip With European Stocks; Oil Drops: Markets Wrap (Bloomberg) It was a mixed picture across global stock markets on Tuesday, with investors showing some caution as they await the U.S. midterm elections. European equities turned lower alongside American futures while Asian shares advanced. Treasury yields edged up and the dollar was steady. The Stoxx Europe 600 Index quickly erased a positive start and technology, retail and construction were among the sectors leading the gauge down. Contracts on the S&P 500, Dow Jones and Nasdaq also all retreated. The mood in Asia was more upbeat and equities climbed in Japan, Australia, South Korea and Hong Kong, but underperformed in China even as the country’s vice president said Beijing remained ready to discuss a trade solution with Washington. European government bonds were mixed and range-bound. The euro recovered from disappointing manufacturing data to eke out a gain.
Boeing, Airbus fret over trade war as China displays aviation ambitions (Reuters) The world’s two largest planemakers signaled on Tuesday that they were keen to see an end to a bruising trade war between Washington and Beijing, as China opened its largest airshow with a display that showcased its aviation ambitions. Boeing (BA.N) and Airbus (AIR.PA) made their comments on the opening day of the biennial Airshow China, being held in the coastal city of Zhuhai from Nov. 6-11, that is traditionally an event for Beijing to parade its growing aviation prowess.
EU states divided over digital tax, fear U.S. retaliation (Reuters) EU governments are divided over a plan to tax big internet firms like Google and Facebook on their turnover, fearing retaliation from the United States, and could delay its application until a global deal is reached, top officials said on Tuesday. Under a proposal from the EU’s executive Commission in March, EU states would charge a 3 percent levy on the digital revenues of large firms that are accused of averting tax by routing their profits to the bloc’s low-tax states.
Thomson Reuters Q3 profit down from year ago; revenue edges higher (BNN) Thomson Reuters Corp. reported its third-quarter profit fell compared with a year ago, as its revenue edged higher. The news and information company, which keeps its books in U.S. dollars, earned a profit attributable to shareholders of US$261 million or 37 cents per share for the quarter ended Sept. 30. The result compared with a profit attributable to shareholders of $330 million or 46 cents per share in the same quarter last year.
Atlantic Canada trade mission hopes to bolster region’s trade links to China (BNN) A federal-provincial trade mission is heading to China this week with hopes of bolstering Atlantic Canada’s presence in one of the world’s largest consumer markets. Federal Agriculture Minister Lawrence McAulay, Treasury Board president Scott Brison, and the premiers of Nova Scotia, Prince Edward Island and Newfoundland and Labrador, will join more than 70 businesses, universities, and organizations participating in trade shows and business-to-business meetings. The aim is to promote Atlantic Canada’s food, education, clean growth, and tourism sectors.
Overnight markets
Overview: US 10yr note futures are up 0.026% at 118-06, S&P 500 futures are down -0.15% at 2735.5, Crude oil futures are down -0.32% at $62.9, Gold futures are up 0.34% at $1236.5, DXY is down -0.03% at 96.253, CAD/USD is up 0.08% at 0.7621.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.339% | 2 Year | 2.903% |
| 5 Year | 2.432% | 5 Year | 3.023% |
| 10 Year | 2.514% | 10 Year | 3.193% |
| 30 Year | 2.544% | 30 Year | 3.42% |
US Economic Data
| 10:00 AM | JOLTS Job Opening, Sep est 7085 (7136 prior) |
| 11/06-11/09 | Mortgage Delinquencies, 3Q (4.36% prior) |
| 11/06-11/09 | MBA Mortgage Foreclosures, 3Q (1.05% prior) |
Canadian Economic Data
| 8:30 AM | Building Permits MoM, Sep est 0.3% (0.4% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230