Market Update

Tsys slightly higher, flatter with the 10Y 2.313%, TY futures in a narrow overnight range on moderate volume (322k), underperforming core EGBs with some pre auction selling into $23bln 10Y auction at 1:00. Core Euro bonds higher led by gilts, curve 3bps flatter, large 7.5k block by in 10Y gilt futures with the contract at new high since Sep 14th. 10Y bund higher for a fifth day, 10Y 0.313% . GOCs higher in line with tsys led by long end – the BOC auctions $3.7bln in 5Y bonds at 12:00pm, reopened March 2023s with the M23/S22 roll 5.5/5.3 compared to the 5Y benchmark roll @ 3.9/3.8 – both rolls fairly range bound since the first March 23 auction Oct 4th , while the 5/10 curve is 6bps flatter.

News headlines 

Trump Lands in China Seeking Progress on Trade, North Korea (Bloomberg) President Donald Trump toured parts of Beijing on Wednesday after arriving for a high-stakes state visit where he’ll look for wins from Xi Jinping on everything from the U.S.’s massive trade deficit to reining in North Korea.

Democrats, Eyeing Midterms, Score Wins in Key Governor Races (Bloomberg) The only two governors’ races in the U.S. this year ended in victory for Democrats, as voters turned away Republicans aligned with President Donald Trump and telegraphed a fight for his party’s hold on Congress in 2018 midterm elections.

May on Brink of Losing Second Top Minister in One Week (Bloomberg) Prime Minister Theresa May ordered her international development secretary to abandon a visit to Africa and return home immediately, suggesting she’s on the point of firing a member of her cabinet as the U.K. government faces fresh turmoil in the midst of Brext talks.

Gulf Stocks Lose $6.8 Billion in 72 Hours Amid Saudi Purge (Bloomberg) Saudi Arabia’s anti-corruption purge and deepening feud with Iran have spurred a selloff across Gulf stock markets to the tune of almost $7 billion, a sign of the volatility to come as governments in the region push ahead with reforms.

Stocks Slip on Banking Earnings; Dollar Declines: Markets Wrap (Bloomberg) European equities fell, weighed down by financial shares as third-quarter earnings season continued. The dollar weakened and Treasury yields edged lower amid concern about the progress of U.S. tax reforms and as President Donald Trump arrived in China on a state visit.

Slow Down, Bulls: Four Signs This Oil Rally May Not Have Legs (Bloomberg) The rally that pushed crude to a two-year high is showing signs of losing strength, and we may soon see a reversal in prices. Here’s what to look out for in the oil market in months to come.

Encana’s profit slips 7 percent as production falls (Reuters) Canadian oil and gas producer Encana Corp’s profit fell 7.3 percent in the third quarter, hurt by lower oil and gas production. The Calgary-based company said on Wednesday its net profit slipped to $294 million or 30 cents per share in the quarter ended Sept. 30, from $317 million or 37 cents per share, a year earlier.

Overnight markets

Overview: US 10yr note futures are down -0.025% at 125-13, S&P 500 futures are down -0.07% at 2585, Crude oil futures are down -0.26% at $57.05, Gold futures are up 0.48% at $1281.9, DXY is down -0.07% at 94.851, CAD/USD is down -0.36% at 0.7854.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.401% 2 Year 1.633%
5 Year 1.604% 5 Year 1.988%
10 Year 1.889% 10 Year 2.313%
30 Year 2.22% 30 Year 2.776%

US Economic Data

7:00 AM MBA Mortgage Applications, Nov 3rd 0.0% (-2.6% prior)

Canadian Economic Data

8:15 AM Housing Starts, Oct 222.8k est 211.0k (217.1k prior)
8:30 AM Building Permits MoM, Sep 3.8% est 1.0% (-5.5% 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