cti2015header-morning comments web

Market update

US tsys trading slightly lower after claims came in as exp, curve unch, US 10Y 2.333 (+0.4bps). Euro stocks extending o/n weakness on lower earnings from Rolls Royce which is off 21%. Core Euro bonds mixed with German bunds lower, gilts higher despite dovish comments from Draghi (See above). Several Fed speakers including Yellen as well as 30Y auction at 1:00PM. After recent long end steepening US 30Y looks attractive on the curve and vs Cda, with the 10/30 box at its flattest since mid July. GOCs are lower, curve steeper, 10Y above 1.70%. Expect provi supply QC & Ont with spreads unch, Ont 46 104.5/104, QC 48 110.5/109.5.

News headlines

  • Mario Draghi hints at expanding QE to boost recovery (FT) Mario Draghi has dropped another hint that the European Central Bank is readying more measures to boost the eurozone’s recovery, saying there were signs a major measure of inflation would take longer to return to policymakers’ target.
  • Draghi’s Two Words on Inflation Say He Knows Something We Don’t (Bloomberg) Europe’s central bankers used to dismiss core inflation, a measure of price gains that excludes food and energy, as a fixation of economists who don’t eat or drive.ut less so now. European Central Bank President Mario Draghi singled it out on Thursday, saying it’s « somewhat weakened. » Mark Carney last week said the gauge is important to watch as the Bank of England edges toward its first rate increase in more than eight years.
  • Boom times for US corporate bond sales (FT) These are boom times for US debt capital markets and the bankers that are ushering in a wave of corporate debt ahead of an expected policy tightening by the Federal Reserve next month.
  • AB InBev saves by lining up $75bn jumbo loan itself (FT) Thrift is not just for those in search of a bargain. Anheuser-Busch InBev has secured a record $75bn loan package to fund its $108bn acquisition of SABMiller, choosing unexpectedly to arrange the deal itself in a bid to save millions of dollars in fees, according to people familiar with the matter.
  • Why Toronto-Dominion Bank could soon overtake Royal Bank of Canada (FP) Shares of both Toronto-Dominion Bank and Royal Bank of Canada are trading well below their five- and 10-year average price-to-earnings and price-to-book ratios. The reasons why are becoming clear — earnings growth is expected to slow, and there are some major risks lurking on the horizon.
  • Paying to Get Dollars Is Most Expensive Since 2012 in Swaps (Bloomberg) A crunch is developing in international funding markets. The cost to convert local currency payments in the euro area, U.K. and Japan into dollars has jumped amid speculation the Federal Reserve will raise interest rates in December.


Overnight markets

  • Overview: IG24 5Y 78.303/79.032(+1.392), US 10yr note futures are up +0.02% at 126-03, S&P 500 futures are down -0.27% at 2063.5, Crude oil futures are down -1.48% at 42.29$, Gold futures are down -0.24% at $1082.3, DXY is up +0.05% at 99.062.

US Economic Data

  • Initial jobless claims came in at 276K  for the week ending November 7th, higher than expected (270K) and equal to prior week (276K).
  • Continuing claims increased to 2174K from 2169K and was higher than expected (2155K).
  • JOLTs job openings are forecast at 5400 in September compared to August 5370.
  • Monthly budget statement is forecast at -$131.5B in October versus $91.06B in September.

Canadian Economic Data

  • Teranet/National bank housing price index for the month of October came in at 0.1% MoM and 5.6% YoY.
  • New housing price index increased 0.1% MoM (+1.3% YoY) in September compared to August 0.3% MoM (1.3% YoY).


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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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