Market Update
Tsys trading higher close to session highs after ADP +190k as expected. Heavy volume in TY futures overnite (>480k) tsy curve steeper, 10Y 2.33(-2bps). FTQ bid on news Trump admin to recognize Jerusalem as capital of Israel. Equities weaker – S&P futures -2.5, Europe -0.70%, crude at two week low 56.90 on API data showing build in gasoline inventories. Core EGBs higher led by 10Y gilts, curve 2bps flatter (narrowest in 14 months), 10Y gilt yield one month low 1.226%. Bunds lagging following uncovered 10Y reopening, stronger Oct factory orders. In Canada, focus on BOC decision at 10:00, GOCs unch, 10Y 1.89%. BOC expected to hold rates unch at 1.0% at this morning’s meeting – market pricing based on BA futures 16% hasn’t changed much since last Friday’s blowout jobs report. No MPR/press conference, statement expected to be slightly more hawkish than in Oct, reflecting a tighter labor market in terms of both employment levels and wages which have surged from a low of 0.66% in April to a nineteen-month high of 2.80%.
News headlines
Debt-Limit Tracker: What to Watch in Markets as Suspension Ends (Bloomberg) The three-month U.S. debt-ceiling reprieve is about to end, putting investors in Treasury bills and other short-term debt on notice. The September legislation that suspended the limit and funded the government is set to expire Dec. 8. House Republicans have a plan to pass a two-week extension to keep the government open. But lawmakers have yet to take it up as they focus on concluding an agreement to overhaul the tax system.
Theresa May Faces New Brexit Revolt From Boris Johnson (Bloomberg) Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her chances of breaking the deadlock in negotiations.
Stocks Drop as Risk-Off Takes Hold; Bonds Advance: Markets Wrap (Bloomberg) European shares followed their Asian counterparts lower as investors continued to lock in gains in the year’s better performing assets amid a broad risk-off mood. The dollar inched higher and Treasuries climbed as focus turns to efforts to avert a U.S. government shutdown on Saturday.
Oil Drops as Industry Data Show U.S. Gasoline Stockpiles Grew (Bloomberg) Oil declined after industry data showed U.S. gasoline stockpiles expanded for the first time in four weeks. Futures dropped 1.3 percent in New York after rising 0.3 percent on Tuesday. Motor-fuel inventories climbed by 9.2 million barrels last week, the American Petroleum Institute was said to report. That would be the biggest gain since January 2016 if replicated in government data due later on Wednesday. Nationwide crude stockpiles declined, according to the API data.
As Selloff Hits Stocks, Some Investors Point to Jerusalem (Bloomberg) Investors watching the selloff that enveloped Asian markets Wednesday saw a host of reasons, ranging from profit-taking to the continued drop in technology stocks. But one matter was prominent for some commentators: U.S. President Donald Trump’s plan to formally declare Jerusalem as Israel’s capital.
Condos a bright spot in recovering Toronto, Vancouver markets (Reuters) he market for condos and attached properties surged in Canada’s main real estate markets, Toronto and Vancouver, as buyer interest in expensive detached homes has withered, data showed on Tuesday.
Rogers considering sale of Blue Jays, Cogeco stake (Reuters) Canadian telecom company Rogers Communications Inc is looking to sell assets such as the baseball team Toronto Blue Jays and a stake in media company Cogeco Inc, Bloomberg reported on Wednesday, citing Chief Financial Officer Tony Staffieri.
Hudson’s Bay reports worse-than-expected loss on lower retail sales (Reuters) Canadian department store Hudson’s Bay Co (HBC.TO) on Wednesday reported a wider-than expected quarterly loss as retail sales fell.
Retailer Dollarama reports third-quarter profit and sales up from year ago (CTV News) Dollarama Inc. says it earned $130.1 million in its third quarter, up from $110.1 million in the same quarter last year, boosted by higher sales. The company (TSX:DOL) says the profit amounted to $1.15 per diluted share, up from 92 cents per diluted share a year ago when the company had more shares outstanding.
Overnight markets
Overview: US 10yr note futures are up 0.176% at 124-18, S&P 500 futures are down -0.1% at 2625.75, Crude oil futures are down -1.28% at $56.88, Gold futures are up 0.38% at $1269.7, DXY is down -0.04% at 93.342, CAD/USD is down -0.22% at 0.7899.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.541% | 2 Year | 1.798% |
| 5 Year | 1.705% | 5 Year | 2.118% |
| 10 Year | 1.891% | 10 Year | 2.331% |
| 30 Year | 2.186% | 30 Year | 2.717% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Dec 1st 4.7% (-3.1% prior) |
| 8:15 AM | ADP Employment Change, Nov 190k est 190k (235k prior) |
| 8:30 AM | Nonfarm Productivity, 3Q 3.0% est 3.3% (3.0% prior) |
| Unit Labor Costs, 3Q -0.2% est 0.2% (0.5% prior) |
Canadian Economic Data
| 8:30 AM | Labor Productivity QoQ, -0.6% 3Q (-0.1% prior) |
| 10:00 AM | Bank of Canada Rate Decision, Dec 6th est 1.00% (1.00% 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