10/09/2018

Market Update Tsys trading mildly higher, near top end narrow ranges on average volume, short end yld near 10yr highs. Generally quiet start to the week w/mixed direction from European Bonds. Turkey resumes slide after disappointing GDP, German bonds have reversed early gains, with Schatz, Bobl and Bund Dec18 futures all hitting one-month lows, but Italian BTPs continue to rally on more conciliatory budget signals from govt officials over the weekend. Headline watching/trade focus, otherwise limited data today, Atl Fed Pres Bostic fireside chat in Georgia midday, Fed enters media blackout this Friday at midnight. 

News headlines

Investors Lift Canadian Commercial Real Estate to Record Quarter (Bloomberg) Canadian commercial real estate investment reached new heights in the second quarter, boosted by a pair of big acquisitions and by the lure of attractive, income-producing property. Transactions reached C$16.5 billion ($12.5 billion). That’s 38 percent more than the previous record, set in the first quarter of last year, and more than twice the five-year quarterly average, CBRE Group Inc. said in a report Monday. Deal volume for the first six months was C$26.8 billion, a half-year record.

U.K. Economy Posts Fastest Growth in Almost a Year on Services (Bloomberg) The U.K. economy grew at the fastest pace in almost a year between May and July, as construction output rebounded and a heatwave boosted retail sales and the powerhouse services sector. Gross domestic product increased 0.6 percent from the three months through April, the most since August last year, the Office for National Statistics said Monday. That’s more than economists forecast and up from 0.4 percent in the second quarter.

Trump Scrutiny Would Intensify if Democrats Win House Majority (Bloomberg) For President Donald Trump, the nightmare scenario if Democrats win control of the U.S. House would be the death of his legislative agenda, aggressive investigations of his inner circle, and potential impeachment. For Democratic leaders, the vision they’re presenting is far tamer: a limited three-prong agenda of health care legislation aimed at cutting costs and drug prices, an infrastructure spending initiative, and an overhaul of ethics laws aimed at stamping out corruption in Washington.

U.S. Futures, Europe Stocks Shrug Off Asia Malaise: Markets Wrap (Bloomberg) Stocks were mixed at the start of the week, with U.S. equity futures rising alongside European shares following losses in Asia as investors weighed the prospect of further escalation in an American trade war with China. The dollar and Treasuries drifted, while Italian bonds rallied. The Stoxx Europe 600 Index fluctuated in early trading before finding its feet as Italy’s benchmark surged, buoyed by official government comments over the weekend that the country’s budget will be pragmatic and within EU fiscal rules. Equities sank in Shanghai and Hong Kong, with the latter’s benchmark index nearing a bear market in the wake of President Donald Trump’s threat to step up his trade showdown with China. Emerging-market shares slid. Oil rebounded from the biggest weekly loss in two months on speculation of a crude-supply shortage.

Canada’s Freeland sees ‘very good progress’ in NAFTA trade talks (Reuters) Canada’s top trade negotiator said on Friday she and her U.S. counterpart were making “very good progress” in talks to save the North American Free Trade Agreement amid increasing Canadian optimism that a deal could be reached, even if a conclusion did not appear imminent.

Canada job losses surprise, but rate hike still expected (Reuters) The Canadian economy unexpectedly shed over 50,000 jobs in August due to losses in part-time work, Statistics Canada data showed on Friday, but investors still expected the Bank of Canada to raise interest rates next month. The downbeat data came a day after by hawkish comments from a senior Bank of Canada official, capping a week in which the central bank left interest rates unchanged at 1.50 percent and said more increases are needed.

Trump urges Ford, Apple to bring jobs home amid tariff spar (BNN) President Donald Trump insists his trade war with China will spur more manufacturing jobs in the U.S. Two of the companies he’s targeted — Apple Inc. and Ford Motor Co. — disagree. In a tweet Sunday, Trump said Ford’s decision not to import a new sport-utility vehicle from China means the Focus Active “can now be built in the U.S.A.” The automaker has already said it has no plans to restart production elsewhere. Ford said Aug. 31 the Trump administration’s 25 per cent levy on China-built autos undermined the profitability of the car.

Tesla erupts in chaos after senior executives leave, Musk tokes up (BNN) The turmoil at Tesla Inc. () has reached a fever pitch, with the news that two senior executives are leaving Elon Musk’s electric-car maker emerging hours after he smoked marijuana during a podcast interview streamed live online. Chief Accounting Officer Dave Morton gave notice Tuesday that he was resigning less than a month into the job, according to a Friday filing. Tesla’s stock plunged, then extended declines after Gabrielle Toledano, the head of human resources who’s been on a leave of absence, told Bloomberg News that she won’t rejoin the company.

Overnight markets

Overview: US 10yr note futures are down 0% at 119-21, S&P 500 futures are up 0.37% at 2885.25, Crude oil futures are up 0.47% at $68.07, Gold futures are down -0.23% at $1197.6, DXY is down -0.07% at 95.3, CAD/USD is up 0.16% at 0.7583.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.104%	2 Year	2.703%
5 Year	2.21%	5 Year	2.819%
10 Year	2.281%	10 Year	2.939%
30 Year	2.298%	30 Year	3.1%

US Economic Data

15:00 PM

Consumer Credit, Jul est 14.400b (1-.211b prior)

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Sep 7th (56.5 prior)