Market Update
ECB – cuts deposit rate 10bps, strengthens forward guidance and link it to inflation, QE 20B/month, starting in Nov – open-ended and linked to the date of liftoff, which is tied to inflation. First take is more hawkish on the rate cut but fairly dovish in terms of both guidance and QE program is open-ended (though lower per month than we expected). Key question for press conf is what is communicated about the limits. Tiering broadly looks as expected. There has been little US-specific news to move USTs through the European session. The market continues to focus on the positive developments over the past 24 hours of Trump extending the next increase of tariffs on China by 2 weeks. While it has also been cited that China will allow its firms to begin more purchases of US agricultural goods.
News headlines
U.S. Futures Climb on Trade; Euro Drops After ECB: Markets Wrap (Bloomberg) U.S. equity futures climbed with Asia stocks on Thursday as signs of goodwill in the trade war boosted risk appetite. The euro reversed its gain and European shares turned higher as policy makers lowered interest rates and restarted stimulus.
Futures little changed as oil prices dip (Reuters) Futures for Canada’s main stock index were little changed on Thursday after oil prices fell, as a meeting of the OPEC+ alliance yielded no discussion about deepening supply cuts.
As trade talks loom, Chinese firms look into buying U.S. farm goods (Reuters) Chinese companies have started to inquire about prices for U.S. agricultural goods purchases, Beijing said on Thursday, in a further sign of potential de-escalation in the bitter and protracted trade war between the world’s two largest economies.
OPEC members Iraq, Nigeria agree to cut oil output (Reuters) OPEC agreed on Thursday to trim oil output by asking over-producing members Iraq and Nigeria to bring production in line with their targets as the group strives to prevent a glut amid soaring U.S. production and a slowing global economy.
ECB cuts key rate, to restart bond purchases (Reuters) The European Central Bank approved a fresh stimulus package as expected on Thursday, cutting interest rates and approving a new round of bond purchases to prop up euro zone growth and halt a worrisome drop in inflation expectations.
Exclusive: Germany sees windfall from lower borrowing costs, sources say (Reuters) Germany foresees much lower borrowing costs because of record-low yields, and that could create a windfall of roughly 5 billion euros this year, maybe more, three people familiar with Berlin’s budget planning told Reuters on Thursday.
Trudeau enters campaign playing on a steady economic backdrop (BNN) Prime Minister Justin Trudeau, who called an election Wednesday, heads into the campaign with the economy on his side.
Trump delays China tariff increase by two weeks, until Oct. 15 (BNN)President Donald Trump said he was postponing the imposition of five per cent extra tariffs on Chinese goods by two weeks, a move that delays the next escalation of the trade war and brightens the backdrop for upcoming negotiations.
Market Overview: US 10yr note futures are up 0.192% at 130-05, S&P 500 futures are up 0.21% at 3010, Crude oil futures are down -1.76% at $54.77, Gold futures are up 1.34% at $1523.4, DXY is up 0.26% at 98.902, CAD/USD is up 0.03% at 0.7577.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.562% | 2 Year | 1.654% |
| 5 Year | 1.401% | 5 Year | 1.562% |
| 10 Year | 1.374% | 10 Year | 1.701% |
| 30 Year | 1.588% | 30 Year | 2.184% |
US Economic Data
| 08:30 AM | CPI MoM, Aug Survey: 0.10% Prior: 0.30% |
| CPI Ex Food and Energy MoM, Aug Survey: 0.20% Prior: 0.30% | |
| CPI YoY, Aug Survey: 1.80% Prior: 1.80% | |
| CPI Ex Food and Energy YoY, Aug Survey: 2.30% Prior: 2.20% | |
| CPI Core Index SA, Aug Survey: 264.100 Prior: 263.569 | |
| CPI Index NSA, Aug Survey: 256.586 Prior: 256.571 | |
| Real Avg Weekly Earnings YoY, Aug Survey: — Prior: 0.80% | |
| Real Avg Hourly Earning YoY, Aug Survey: — Prior: 1.30% | |
| Initial Jobless Claims, Sep 7 Survey: 215k Prior: 217k | |
| Continuing Claims, Aug 31 Survey: 1675k Prior: 1662k | |
| 09:45 AM | Bloomberg Consumer Comfort, Sep 8 Survey: — Prior: 63.4 |
| 02:00 PM | Monthly Budget Statement, Aug Survey: -$197.5b Prior: -$119.7b |
Canadian Economic Data
| 08:30 AM | New Housing Price Index MoM, Jul Survey: 0.00% Prior: -0.10% |
| New Housing Price Index YoY, Jul Survey: -0.20% Prior: -0.20% |
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