Market Update

Tsys trading sharply lower, yields 2-3bps higher on heavy volume in TY futures (515k vs 300k avg). Euro stocks lower, S&P futures -8, gold higher, crude unch 57.17. Tax reform cited as contributing to the selloff in both stocks & bonds the last couple of days, more specifically that the US Senate tax plan would delay corp tax cuts to 2019, even as the tax rate would decline to 20% from 35%. Core EGB yields higher for a second day led by  UK gilts, 10Y bund 0.39%  a two-week high, profit taking after 10Y bund yields had fallen rapidly(~ 18bps) just since ECB ‘dovish taper’ meeting Oct 26th.  Next week also sees a substantial uptick in European bond supply (~E31bln from E7.2bln this week according to MNI) from from France, Spain , Germany, Italy and the Netherlands. Provis wider for a second day led by longs, Ont 10Y 64bps – 3bps wider on the week with the Ont 48/27 curve 0.5bps steeper.

News headlines 

Trump Offers Trade to Asian Nations But Only If They Play Fair (Bloomberg) President Donald Trump told Asian nations eager for the U.S. to stay committed to the region that he would no longer join multilateral deals like the Trans-Pacific Partnership but would seek bilateral pacts — and only with countries that played by the rules and didn’t try to exploit the United States.

China Moves to Open Market for Financial Firms in Historic Step (Bloomberg) China took a major step toward the long-awaited opening of its financial system, saying it will remove foreign ownership limits on banks while allowing overseas firms to take majority stakes in local securities ventures, fund managers and insurers.

GOP’s Dueling Tax Overhauls Struggle to Pass a Key Red-Ink Test (Bloomberg) Republican tax writers in the House and Senate scoured the U.S. tax code Thursday and shook the couch cushions for loose change, as one member put it, in an all-day struggle to find ways to pay for the deep tax cuts their leaders and President Donald Trump have promised.

Get Ready for a Washington Train Wreck in December (Bloomberg) Republicans in Congress are so focused on passing a massive tax overhaul this year that they’re saying little publicly about another December deadline — the day the government would shut down if the GOP can’t reach a deal with Democrats on spending and other hot-button issues.

Stocks, Dollar Fall on Senate Tax Plan Concerns: Markets Wrap (Bloomberg) U.S. stocks stumbled Thursday, with losses widening after the Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. Treasuries turned higher and the dollar extended losses.

Irish Border Throws Unexpected Hurdle Into Brexit Talks (Bloomberg) The future of the Irish border erupted unexpectedly into Brexit talks this week, as the European Union made new demands on Britain that risk distracting from efforts to reach a breakthrough by year-end.

Big Tobacco urges Canada to ensure legal nicotine competitive with black market (CTV) If the price of legal marijuana must be competitive with the black market in order to discourage underground sales, then the same logic should apply to nicotine, the head of Imperial Tobacco Canada said Thursday.

Justin Trudeau says Canada won’t be pressured into premature TPP deal, denies report ‘principle’ agreement reached  (Global News) Canada won’t be pressured into prematurely signing a deal on the Trans-Pacific Partnership, Prime Minister Justin Trudeau said Thursday as his Liberal government flatly denied media reports of a “deal in principle” on the Pacific Rim trade pact.

Overnight markets

Overview: US 10yr note futures are down -0.187% at 124-31, S&P 500 futures are down -0.29% at 2576.5, Crude oil futures are up 0.02% at $57.18, Gold futures are down -0.16% at $1285.5, DXY is down -0.02% at 94.421, CAD/USD is down -0.09% at 0.7892

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.468% 2 Year 1.65%
5 Year 1.677% 5 Year 2.032%
10 Year 1.965% 10 Year 2.365%
30 Year 2.303% 30 Year 2.847%

US Economic Data

10:00 AM U. of Mich. Sentiment, Nov est 100.0 (100.7 prior)
U. of Mich. Current Conditions, Nov est 116.3 (116.5 prior)
U. of Mich. Expectations, Nov est 91.0 (90.5 prior)
U. of Mich. 1 Yr Inflation, Nov (2.4% prior)
U. of Mich. 5-10 Yr Inflation, Nov (2.5% prior)

Canadian Economic Data

8:00 AM Bloomberg Nov. Canada Economic Survey

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