Market Update

US tsys slightly higher, 10Y 2.345 (-1.5bps) on avg volume in TY futures (270k).  a large5Y  tsy/German block trade helped underpin tsys in Europe. Gilts lower, underperforming bunds on weak 20Y gilt reopening and better than exp Sep industrial production. Tsy supply a factor this week with $66bln in 3,10 & 30Y auctions. Data calendar highlighted by Sep PPI, CPI later this week with the latter expected to reflect the post hurricane surge in gas prices.  In Canada, GOCs higher in line with tsys, little reaction to stronger than exp Sep Housing Starts.

News headlines 

Catalans Face a Day of Reckoning Over Independence (Bloomberg) The Catalan government’s determination to break from Spain faces its moment of truth, as the regional parliament meets to consider a declaration of independence that risks an ironclad backlash from Madrid, the threat of economic meltdown and international isolation.

Old Grudges Blow Up in the Turkey-U.S. Feud (Bloomberg) With its arrest warrants and visa freezes, the Turkey-U.S. standoff looks more like a flashpoint between enemies than a difference of views among friends.

Politics in Focus as Spanish Stocks, Dollar Drop: Markets Wrap (Bloomberg) Politics remained the dominant theme in the markets on Tuesday as Spanish stocks declined and the euro rose before a pivotal meeting of Catalan’s regional parliament. The dollar weakened on concerns over U.S. tax reform and sterling rose as U.K. Prime Minister Theresa May won support for her Brexit stance.

U.K. Shows ‘Mixed Picture’ as Output Rises, Trade Deficit Widens (Bloomberg) A picture of an economy struggling to gain momentum emerged in U.K. figures published Tuesday.

Oil Companies Wade Back Into Gulf of Mexico as Nate Fizzles (Bloomberg) Oil companies were heading back into the Gulf of Mexico and working to restore operations after Hurricane Nate fizzled out over the U.S. South on Sunday.

Canada gains jobs for 10th month in a row with boost in full-time work (Financial Post) surge in full-time work fuelled a 10th-straight month of net job gains to match the economy’s longest monthly streak since the financial crisis nine years ago.

U.S. Lost 33,000 Jobs in September; Unemployment Rate Dips to 4.2% (NY Times) Staggering from the impact of hurricanes that walloped Texas, Florida and neighboring states, the economy lost 33,000 jobs in September, the first monthly decline in employment in seven years, the government reported on Friday.

Overnight markets 

Overview: US 10yr note futures are up 0.05% at 125-05, S&P 500 futures are up 0.13% at 2547, Crude oil futures are up 1.29% at $50.22, Gold futures are up 0.72% at $1294.2, DXY is down -0.29% at 93.402, CAD/USD is down -0.36% at 0.7996. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.549% 2 Year 1.504%
5 Year 1.772% 5 Year 1.951%
10 Year 2.118% 10 Year 2.354%
30 Year 2.486% 30 Year 2.892%

US Economic Data

6:00 AM NFIB Small Business Optimism, Sep 103.0 est 105.0 (105.3 prior)

Canadian Economic Data

8:15 AM Housing Starts, Sep est 212.0k (223.2k prior)
8h30 AM Building Permits MoM, Aug, est -1.0% (-3.5% prior)
10:00 AM Bloomberg Nanos Confidence, Oct 6th (58.3 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