Market Update

US tsys trading mixed, curve 1bp steeper with long end yields 1.5bps higher, 10Y 1.59%, heavy volume in TY futures (565k). Tsys initially rose in Asia on reports US-China trade talks would be curtailed, while it now seems China will seek a partial trade deal with the US and include a currency pact according to BN. Crude higher as OPEC said demand outstripped supply in Q3 by the widest margin in several years, thou it also lowered its forecast for oil demand for the 3rd month in a row, 980k b/d, down 40k from the Sep estimate. Core Euro bonds lower, yields 3-4bps higher, 10Y gilts lower for a second day – UK GDP accelerated in August on a 3m basis to 0.3% from 0.1% in July (0.1% exp). GOCs trading lower, 2-3bps wider vs US tsys, 10s heavy on the curve , CGBs at new weekly lows.

News headlines

Stocks Whipsawed Before Trade Talks; Dollar Slumps: Markets Wrap (Bloomberg) U.S. equity futures and European stocks fluctuated as a long-anticipated meeting on trade between America and China approached, and after contrasting reports on the talks spurred volatile trading in Asia. Treasuries were steady, while the dollar slumped.

CANADA STOCKS-TSX futures ease ahead of Sino-U.S. trade talks (Reuters) Canada’s main index futures edged lower on Thursday, ahead of U.S.-China trade talks starting later in the day.

Oil Holds Losses on Bearish Headwinds From Trade to Stockpiles (Bloomberg) Oil held losses near a two-month low as pessimism persisted over the global economic outlook and American crude inventories expanded more than expected.

Top-level U.S.-China trade talks resume as irritants sour atmosphere (Reuters) The United States’ and China’s top trade negotiators were set to meet on Thursday for the first time since late July to try to find a way out of a 15-month trade war as new irritants between the world’s two largest economies threatened hopes for progress.

UK economy on track to dodge pre-Brexit recession but outlook weak (Reuters) Britain’s sluggish economy looks to have dodged recession in the run-up to its deadline for leaving the European Union this month, official data showed on Thursday.

UK data show economy a bit weaker than expected: Carney (Reuters) Bank of England Governor Mark Carney said economic data published earlier on Thursday reflected how underlying growth was a bit weaker than the central bank had expected.

U.S. said to weigh currency pact with China as part of partial deal (BNN) The White House is looking at rolling out a previously agreed currency pact with China as part of an early harvest deal that could also see a tariff increase next week suspended, according to people familiar with the discussions.

ECB Meeting Account Shows Officials Far Apart on Stimulus (Bloomberg) European Central Bank officials were far apart on many elements of the stimulus package last month that led to public acrimony over the decision.

Market Overview: US 10yr note futures are up 0.048% at 131-11, S&P 500 futures are down -0.15% at 2914.5, Crude oil futures are up 0.44% at $52.82, Gold futures are down -0.03% at $1512.3, DXY is down -0.37% at 98.754, CAD/USD is down -0.19% at 0.7514.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.484% 2 Year 1.454%
5 Year 1.334% 5 Year 1.397%
10 Year 1.339% 10 Year 1.589%
30 Year 1.536% 30 Year 2.098%

US Economic Data

08:30 AM CPI MoM, Sep  Survey: 0.10%  Prior: 0.10%
         CPI Ex Food and Energy MoM, Sep  Survey: 0.20%  Prior: 0.30%
          CPI YoY, Sep  Survey: 1.80%  Prior: 1.70%
          CPI Ex Food and Energy YoY, Sep  Survey: 2.40%  Prior: 2.40%
         CPI Core Index SA, Sep  Survey: 264.742  Prior: 264.245
         CPI Index NSA, Sep  Survey: 256.957  Prior: 256.558
          Real Avg Weekly Earnings YoY, Sep  Survey: —  Prior: 1.20%
          Real Avg Hourly Earning YoY, Sep  Survey: —  Prior: 1.50%
         Initial Jobless Claims, Oct 5  Survey: 220k  Prior: 219k
         Continuing Claims, Sep 28  Survey: 1651k  Prior: 1651k
09:45 AM Bloomberg Consumer Comfort, Oct 6  Survey: —  Prior: 62.0

Canadian Economic Data

  08:30 AM   New Housing Price Index MoM, Aug  Survey: -0.10%  Prior: -0.10%
          New Housing Price Index YoY, Aug  Survey: -0.40%  Prior: -0.40%

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230