cti2015header-morning comments web

Market Update

US Tsys begin NY lower after overnight mixed flows followed Wed. post-Trump-victory selloff on improved risk tone; US 10-year note 2.087%. TOKYO saw Asian central bank buying of 5s and 10s Tsys, along with Asian real$ buying 5s, 10s and 30s. Later, Japanese accts joined Asian real and fast$ accts buying 10s, 5s/30s flatteners in cash. Some anti-Trump protests spurred mild buying in TSys, with also other selling too. US swaps saw Asian bank receiving in 2’s/5’s swaps. Japan’s Nikkei stock index +6.7%Gilts/Bunds lower on risk-on momentum. Flow two-way in intermediates from foreign and domestic real$, leveraged acct payers in 10s, more flatteners and/or steepener unwinds from prop accts taking profits. Foreign central bank sales in 5s and under as well as 10s, asset manager sold 5s and 10s, fast$ bought 3a and 10s. But also foreign central bank buys in 10Y notes.

News headlines 

Stock futures rise day after Trump wins U.S. election (Reuters) U.S. stock index futures were higher on Thursday with Dow futures hitting a record high, a day after Republican Donald Trump won the White House race and signaled a shift from austerity policies. Investors are seeing Trump’s policies such as tax cuts, deregulation of banks and higher defense and infrastructure spending as being more business-friendly.

Treasuries Plunge Most in Four Decades as Trump Spurs Selloff (Bloomberg) Treasuries plunged, with 30-year bond yields climbing the most since at least 1977, amid concern that a Donald Trump administration and a Republican-led U.S. Congress will unleash a wave of spending to boost the U.S. economy, triggering a surge in inflation.

TransCanada Corp still ‘fully committed’ to Keystone XL, plans to engage with new president Trump (Financial Post) The controversial Keystone XL pipeline, all but dead under U.S. President Barack Obama, may find new life under President-elect Donald Trump. TransCanada Corp. said Wednesday it is considering how to pitch the newly elected president on the benefits of the proposed, and denied, pipeline that would give oilsands crude better access to U.S. markets.

Yuan Falls to Six-Year Low Amid Concern Trump Will Target China (Bloomberg) The yuan slipped to a six-year low as concern about China’s trade relationship with a more protectionist U.S. provided a new reason to sell the currency that’s heading for a third annual loss. The exchange rate fell 0.21 percent to 6.7923 per dollar at 5:13 p.m. in Shanghai, heading for its lowest closing level since September 2010, and extending its drop this year to 4.4 percent. China’s central bank barely weakened its yuan fixing even after a 1.4 percent surge by the Bloomberg Dollar Spot Index on Wednesday, helping the Asian currency rally against a basket of peers.

Canadians continue to pile up non-mortgage debt: report (GlobeAndMail) Canadians continued to pile up non-mortgage debt compared with a year ago but delinquency rates remained low, according to credit monitoring agency TransUnion. Average consumer non-mortgage debt balances rose to $21,686 at the end of the third quarter, up from $21,195 in the same quarter last year.

Manulife tops Q3 estimates as Asia operations grow 16.6% (BNN) Manulife Financial Corp (MFC.TO), Canada’s biggest life insurer, reported a better-than-expected quarterly profit, primarily driven by growth in Asia. Manulife has relied on Asian markets to fuel its growth in recent quarters while the insurer’s commodities-sector investments ate into its bottom line.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.2563% at 127-23, S&P 500 futures are up 0.43% at 2169.5, Crude oil futures are down -0.93% at $44.85, Gold futures are up 0.45% at $1279.2, DXY is up 0.34% at 98.843, CAD/USD is up 0.35% at 0.7423.

US Economic Data 

8:30 AM Initial Jobless Claims, Nov 5th , 254k, est. 260k (prior260k)
8:30 AM Continuing Claims, Oct 29th , 2041k, est. 2025k (prior 2026k, revised 2023k)
 2:00 PM Monthly Budget Statement, Oct, est. -70.0b (prior -136.6b)

Canadian Economic Data

8:30 AM New Housing Price Index, Sep,  0.2%, est. 0.2% (prior 0.2%)
8:30 AM New Housing Price Index, Sep,  2.8%, est. 2.8% (prior 2.7%)

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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