Market Update US tsys trading higher after CPI rose 0.2%, core 0.1% (0.3%, 0.2% exp). ECB left rates unch as exp, repeating the pledge to leave rates unch “at least through the summer of 2019”. Draghi confident that policy stance is appropriate given the ‘uncertainty around the inflation outlook is receding’ The BOE also left rates unchanged yet raised its estimate for Q3 growth. European equities maintaining gains after ECB, EUR currency higher. GOCS higher, 10Y 2.3255 (-1.5bps) in line with tsys after Can House Prices rose 0.1% as exp for July.
News headlines
Who Has Leverage at the Nafta Table? It Might Not Just Be Trump (Bloomberg) From day one, President Donald Trump has imposed his will on talks to overhaul the North American Free Trade Agreement. But as his administration tries to seal the deal, it’s not clear he holds all the cards. Trump’s repeated threats to pull out of the pact have kept Mexico and Canada on their heels. The president may still brandish the threat of withdrawal to push a deal through Congress.
Turkey Central Bank Raises Benchmark Rate to 24%; Lira Rallies (Bloomberg) Turkey’s central bank raised its benchmark interest rate by the most since Recep Tayyip Erdogan came to power 15 years ago, countering the president’s call for lower borrowing costs just two hours before the decision was announced. The currency rallied. The Monetary Policy Committee led by Governor Murat Cetinkaya on Thursday increased the one-week repo rate by 625 basis points to 24 percent, more than the median estimate in a Bloomberg survey that called for a hike of 325 basis points.
Pompeo Fills State Department Gaps as He Vows Trump-Like Swagger (Bloomberg) Secretary of State Michael Pompeo isn’t one to dawdle: On his most recent trip abroad he spent just three hours in Pakistan and 24 in India before heading home. Now he’s applying the same impatience to staffing up a State Department hobbled by vacancies and shattered morale. As he rushes to fill key openings, the former CIA director is trying to rebrand his department with an image more to his liking — and more likely to appeal to his boss, President Donald Trump. Instead of overseeing a corps of cautious and cerebral diplomats, Pompeo boasts on social media that he’s leading the “Department of Swagger.”
U.S. Equity Futures Climb; Turkey Hike Boosts Lira: Markets Wrap (Bloomberg) An Asian stock rebound helped spur global equity gains as the prospect for fresh trade talks between the U.S. and China grew. Central banks dominated the rest of the agenda, with Turkey’s lira jumping after a rate hike while the Bank of England and ECB offered little to move the pound or euro. Contracts on the Dow, S&P 500 and Nasdaq all pointed to a firmer open after the U.S. government proposed another round of talks with Beijing, while automakers — among companies most-exposed to trade — led the gains as the Stoxx Europe 600 Index rose a second day. The MSCI Asia Pacific Index climbed for the first time in 11 sessions, with equities rallying in Shanghai and Hong Kong. Treasuries edged lower.
Canada’s Freeland won’t hold NAFTA talks, says more work needed (Reuters) Canadian Foreign Minister Chrystia Freeland on Wednesday said officials needed to do more work before she could hold fresh talks with the United States on renewing NAFTA as time runs out to reach a deal. A well-placed source had earlier told Reuters that Freeland planned to return to Washington for more talks on Thursday with U.S. Trade Representative Robert Lighthizer, adding that plenty of work remained.
China welcomes U.S. invite for trade talks, Asian markets relieved (Reuters) China said on Thursday that it welcomed an invitation by the United States to hold a new round of trade talks, as Washington prepares to further escalate the U.S.-China trade war with tariffs on $200 billion worth of Chinese goods. The Trump administration had invited Chinese officials to restart trade talks, the White House’s top economic adviser said on Wednesday, news that gave a lift to Asian stocks, including Chinese shares and the yuan currency.
Apple unveils new iPhones, with cheapest model starting at $1,029 (BNN) Apple Inc. took the wraps off a renewed iPhone strategy on Wednesday, debuting a trio of phones that aim to spread the company’s latest technology to a broader audience. The iPhone Xs succeeds last year’s flagship model with a faster A12 processor and updated cameras. The iPhone Xs Max is a higher-end version with a 6.5-inch OLED screen, making it one of the biggest on the market. There are 512 GB storage options for the first time. The Xs will be available in Canada starting at $1,379 and the Xs Max will start at $1,519, according to an Apple press release.
ECB still sees bond-buying phased out as rates stay on hold (BNN) The European Central Bank confirmed it will cut bond-buying in half next month and anticipates that new purchases will be halted by the end of the year. The Frankfurt-based institution said it will buy 15 billion euros (US$17 billion) of assets a month from October to December, and that a decision to halt the program after that continues to be contingent on incoming economic data. Policy makers reiterated that interest rates will remain at their present record lows “at least through the summer” of 2019. Attention now turns to President Mario Draghi’s press conference at 2:30 p.m. in Frankfurt, where he’ll present updated projections for growth and inflation and an assessment of the risks to the outlook.
Overnight markets
Overview: US 10yr note futures are down -0.118% at 119-10, S&P 500 futures are up 0.26% at 2901, Crude oil futures are down -1.34% at $69.43, Gold futures are up 0.02% at $1211.2, DXY is up 0.09% at 94.882, CAD/USD is up 0.04% at 0.769.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.144% | 2 Year | 2.765% |
| 5 Year | 2.26% | 5 Year | 2.879% |
| 10 Year | 2.336% | 10 Year | 2.979% |
| 30 Year | 2.351% | 30 Year | 3.119% |
US Economic Data
| 8:30 AM | CPI MoM, Aug est 0.3% (0.2% prior) |
| CPI Ex Food and Energy MoM, Aug est 0.2% (0.2% prior) | |
| CPI YoY, Aug est 2.8% (2.9% prior) | |
| CPI Ex Food and Energy YoY, Aug est 2.4% (2.4% prior) | |
| CPI Index NSA, Aug est 252.396 (252.006 prior) | |
| CPI Core Index SA, Aug est 258.414 (257.930 prior) | |
| Real Avg Weekly Earnings, Aug (0.1% prior) | |
| Real Avg Hourly Earnings YoY, Aug (-0.2% prior) | |
| Initial Jobless Claims, Sep 8th est 210k (203k prior) | |
| Continuing Claims Sep 1st est 1710k (1707k prior) | |
| 10:00 AM | Bloomberg Consumer Comfort, Sep 9th (58.0 prior) |
| 14:00 AM | Monthly Budget Statement, Aug est -187.0b (-107.7b prior) |
Canadian Economic Data
| 8:30 AM | New Housing Price Index MoM, est 0.1% (0.1% prior) |
| New Housing Price Index YoY, est 0.5% (0.8% 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