Market Update
US tsys trading weaker, curve steeper, 10Y 2.89% (+1.3bps), avg volume in TY futures (343k), equity futures higher (S&P +22), European equities rising for a second day, Euro Stoxx +1.5%. Core EGBS lower, bunds pressured in the last hr as BTPs rally on news Italian govt has agreed on new fiscal budget before meetings in Brussels today, while in the UK 10Y gilts ~3bps higher as PM May faces a non-confidence vote on Brexit, thou she is widely expected to survive. ECB meeting tomorrow – ECB expected to announce an end to asset purchases despite signs of weaker economy, Brexit upheaval… In Canada, GOCs slightly lower in line with tsys, 10Y 2.09% – 4bps off Mondays 2.05% one-year low. Povis widening yest on supply – long Sask 2050 @ 96.5 (ont +4).
News headlines
Theresa May Faces Confidence Vote Today on Her Leadership (Bloomberg) Theresa May will face a vote of confidence in her leadership of the Conservative Party as the embattled U.K. prime minister warned the rebels who want her out that they will be putting Brexit at risk.
Huawei CFO Gains Bail in Canada as U.S. Seeks Extradition (Bloomberg) Huawei Technologies Co. Chief Financial Officer Meng Wanzhou was granted bail by a Canadian court, allowing the executive to stay in her Vancouver home as she awaits a possible extradition to the U.S. over fraud charges. Justice William Ehrcke of the British Columbia Supreme Court agreed to release Meng on the condition she post bail of C$10 million ($7.5 million), including at least C$7 million in cash, and submit five people who would act as “sureties” — guarantors to ensure she complies with the bail terms who would lose the cash or other assets they put up if she were to flee.
Trump Says He Would Intervene in Huawei Case to Get China Deal (Bloomberg) President Donald Trump said he would intervene in U.S. efforts to extradite Huawei Technologies Co. executive Meng Wanzhou if it helped him win a trade deal with China. “If I think it’s good for what will be certainly the largest trade deal ever made, which is a very important thing — what’s good for national security — I would certainly intervene, if I thought it was necessary,” Trump said Tuesday in an interview with Reuters.
Stocks Rally on Renewed Trade Hopes; Pound Climbs: Markets Wrap (Bloomberg) Stocks rallied globally as the outlook for U.S.-China trade took a positive turn. The pound strengthened as the British prime minister vowed to fight a challenge to her leadership. U.S. equity futures and European shares climbed following big gains in Asia after the chief financial officer of Huawei Technologies Co. was granted bail and President Donald Trump said he’d consider intervening in the case if it helps get a trade deal with China. In the U.K., markets took news that Theresa May will face a vote of confidence from the Conservative Party she leads in stride. Sterling gained as several ministers rushed to back her and she vowed to contest the vote “with everything I’ve got.”
Amazon aims at office workers with compact cashier-less food store (Reuters) Amazon.com Inc on Wednesday opened a compact version of its cashier-less Amazon Go food stores, broadening its footprint in the bricks-and-mortar world in a move to add shops in places such as office lobbies and hospitals. Located in one of the company’s Seattle offices, the eighth Amazon Go store is near the original and a quarter the size, at a mere 450 square feet. That is about the size of a New York City studio apartment. The new store is aimed at selling salads and snacks to office workers.
Ex-diplomat Kovrig who led Trudeau’s Hong Kong visit detained in China (BNN) China has detained a former Canadian diplomat in Beijing in apparent retaliation for the jailing of a top Chinese executive at the request of the United States, escalating a legal and diplomatic wrangle between the three countries. Relations were shaken by Canada’s arrest of Meng Wanzhou, chief financial officer of Chinese telecommunications giant Huawei and daughter of its founder. Canadian authorities detained Meng on Dec. 1 during a layover at the Vancouver airport. The U.S. accuses Huawei of violating American economic sanctions against Iran.
Modest home price growth expected for 2019: Re/Max, Royal LePage (BNN) Home prices across the country are expected to rise in 2019, but only at a moderate pace compared with recent years, according to two of Canada’s largest residential real estate brokerages. Royal LePage is anticipating the national median home price will increase by 1.2 per cent in 2019, with prices in Toronto and the surrounding areas expected to rise 1.3 per cent to $854,552. Home prices in Greater Vancouver are forecast to go up by just 0.6 per cent to $1.29 million, while home prices in Montreal and the nearby region are expected to see the largest rise out of Canada’s biggest cities, with home prices anticipated to jump three per cent to $421,306 in 2019.
Overnight markets
Overview: US 10yr note futures are down -0.052% at 120-12, S&P 500 futures are up 0.91% at 2665.25, Crude oil futures are up 1.8% at $52.58, Gold futures are up 0.21% at $1249.8, DXY is down -0.1% at 97.294, CAD/USD is down -0.17% at 0.7481.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.052% | 2 Year | 2.768% |
| 5 Year | 2.046% | 5 Year | 2.751% |
| 10 Year | 2.095% | 10 Year | 2.892% |
| 30 Year | 2.241% | 30 Year | 3.143% |
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Dec 7th 1.6% (2.0% prior) |
| 8:30 AM | CPI MoM, Nov est 0.0% (0.3% prior) |
| CPI Ex Food and Energy MoM, Nov est 0.2% (0.2% prior) | |
| CPI YoY, Nov est 2.2% (2.5% prior) | |
| CPI Ex Food and Energy YoY, Nov est 2.2% (2.1% prior) | |
| CPI Index NSA, Nov est 252.006 (252.885 prior) | |
| CPI Core Index SA, Nov est 259.412 (258.939 prior) | |
| Real Avg Weekly Earnings YoY, Nov (0.9% prior) | |
| Real Avg Hourly Earnings YoY, Nov (0.7% prior) | |
| 14:00 PM | Monthly Budget Statement, Nov est -199.0b (-100.5b prior) |
Canadian Economic Data
| 8:30 AM | Teranet/National Bank HP Index, Nov (225.30 prior) |
| Teranet/National Bank HPI MoM, Nov (-0.4% prior) | |
| Teranet/National Bank HPI YoY, Nov (2.8% prior) | |
| Capacity Utilization Rate, 3Q est 86.0% (85.5% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230