Market update
US tsys trading lower, curve flatter, US 10Y 2.347 (+1.8bps). Core Euro bonds mixed, German bunds higher on report from Reuters saying a consensus is building at the ECB to cut the deposit rate further. Euro stocks ~0.25% lower, USD lower, crude flat and gold slightly higher. Focus is on retail sales and consumer sentiment on Friday in holiday shortened week. US auctions $24bln in 3Y notes today, $24bln 10Y notes on Thurs & $10bln 30Y bonds Friday. The Latest CFTC COT report dated Nov 3rd showed spec shorts adding to shorts in 5Y notes thru Ultra longs – 10Y shorts rose to the highest since May 8th. GOCs opening lower, curve steeper led by 10s. Provis unch after closing tighter Fri post empl, Ont 46 103/102, Ont 45/25 9.5/9.2, Qc/Ont 25 5.7/5.2 (unch).
News headlines
- China Exports Slump as Global Demand Shrinks (WSJ) China’s exports fell in October for the fourth consecutive month, as a once-powerful engine of the country’s growth continued to sputter in the face of weak global demand.
- Big Banks Could Be Forced to Raise Up to $1.19 Trillion in New Securities (WSJ) Global financial regulators published new rules to stop banks from becoming “too big to fail,” which could force the world’s largest lenders to raise as much as $1.19 trillion by 2022 in debt or other securities that can be written off when winding down failing banks.
- Takeover Loans Have Few Takers on Wall Street (WSJ) Wall Street banks are struggling to sell billions of dollars of loans they made to finance the corporate buyout boom, a sign that investor appetite for riskier debt remains muted despite a robust autumn rally in other financial markets.
- Banking Giants Learn Cost of Preventing Another Lehman Moment (Bloomberg) Banking behemoths led by HSBC Holdings Plc and JPMorgan Chase & Co. now know the cost they’ll have to shoulder so the global financial system doesn’t have another Lehman moment.
- Hedge Funds Raised Treasury Shorts by Most Since ’13 Before Jobs (Bloomberg) Hedge funds picked just the right time to boost bearish bets on Treasuries by the most since March 2013.Large speculators including hedge funds increased net short positions in 10-year notes by 128,601 contracts to 164,264 in the week ended Nov. 3, data from the Commodity Futures Trading Commission show.
- US is suffering a profits recession (FT) It is easy to forget that when market volatility first started to rise in late June, investors were reacting to concerns over rising interest rates and a pending Federal Reserve tightening.
- Toronto housing market at mounting risk of ‘sharp correction,’ OECD warns (G&M) The OECD has issued a long to-do list to Canada’s new government and the provinces: Cool down house prices, act as a group on climate change and cover essential drugs in public health plans.
Overnight markets
- Overview: IG24 5Y 75.723/76.460 (+0.524), US 10yr note futures are down -0.11% at 125-29, S&P 500 futures are up +0.27% at 2088.0, Crude oil futures are up +0.47% at 44.50$, Gold futures are up +0.20% at $1069.9, DXY is up +0.00% at 99.167.
US Economic Data
- Labor market conditions for October will be release at 10:00 and is forecasted at 0.9 after a 0.0 level in September.
Canadian Economic Data
- Housing starts came in at 198.1K in October versus September revised 231.3K.
- Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230