10/10/2018

Market Update US tsys weaker across the curve, yields 1-1.5bps higher, 10Y 3.22%, prices off the lows with EGBs as equities weaken, USD moves lower. US tsy supply with two auctions today – $36bln in 3Y notes at 11:30 and $23bln 10Y notes at 1:00ET. US equity futures weaker, S&P -5.25 (-0.18%), Nasdaq -33 (-0.45%). GOCs lower, in line with tsys before US PPI data, with the latest rise in GOC yields OIS mkts pricing in 2 rate hikes in the near term – October and January 

News headlines

U.S. producer prices rebound in September (Reuters) U.S. producer prices increased 0.2 percent in September, reversing an unexpected decline in August and in line with expectations. A rise in services prices offset a slight drop in prices for goods. Final demand prices had fallen 0.1 percent in August. In the 12 months through September, the producer price index rose 2.6 percent, slightly less than expected.

Chinese finance ministry official says ‘optimistic’ on trade war breakthrough (Reuters) A Chinese finance ministry official said on Wednesday he felt “a little bit more optimistic” on the prospect of breaking an impasse in trade negotiations with Washington, saying both sides are too economically integrated to tolerate a fallout.

Tougher U.S. investment rules to get soft opening next month: official (Reuters) As of November 10, investors in 27 industries will come under tougher scrutiny as an inter-agency panel led by the U.S. Treasury Department begins tightening foreign investment rules as part of a pilot program, according to a senior treasury official.

Global financial stability risks rising with trade tensions, IMF says (Reuters) Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund said on Wednesday.

World’s biggest traders see oil at $65-$100 a barrel next year (Reuters) The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as U.S. sanctions on Iran reduce crude exports from the Islamic republic.

Canadian Pacific sees shipment prices to rise 3 to 4 percent (Reuters) Canadian Pacific Railway Ltd (CP.TO) said on Thursday it expects shipment prices to rise 3 to 4 percent in the next eighteen to twenty four months.

U.S. Moves to Broaden Curbs on Chinese Investment (NYTimes) The Trump administration said it would begin reviewing foreign investments in American companies more broadly, initiating new powers that give the United States greater authority to block Chinese and other foreign transactions on national security grounds.

Overnight markets

Overview: US 10yr note futures are up 0.119% at 117-27, S&P 500 futures are down -0.26% at 2886.25, Crude oil futures are up 0.83% at $74.91, Gold futures are up 0.44% at $1193.8, DXY is down -0.08% at 95.683, CAD/USD is down -0.09% at 0.7724. 

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.315%	2 Year	2.885%
5 Year	2.458%	5 Year	3.051%
10 Year	2.572%	10 Year	3.201%
30 Year	2.56%	30 Year	3.362%

US Economic Data

7:00 AM	MBA Mortgage Applications, Oct 5th -1.7%  (0.0% prior)
8:30 AM	PPI Final Demand MoM, Sep 0.2% est -0.2% (-0.1% prior)
	PPI Ex Food and Energy MoM, Sep 0.2% est 0.2% (-0.1% prior)
	PPI Ex Food, Energy, Trade MoM, Sep 0.4% est 0.2% (-0.1% prior)
	PPI Final Demand YoY, Sep 2.6% est 2.7% (2.8% prior)
	PPI Ex Food and Energy YoY, Sep 2.5% est 2.5% (2.3% prior)
	PPI Ex Food, Energy, Trade YoY, Sep 2.9% (2.9% prior)
10:00 AM	Wholesale Inventories MoM, Aug F est 0.8% (0.8% prior)
	Wholesale Trade Sales MoM, Aug est 0.5% (0.0% prior)

Canadian Economic Data

8:30 AM

Building Permits MoM, Aug 0.4% est 0.5% (-1.5% prior)

 

 

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