Market Update
US tsys trading slightly higher, 10Y 2.90% (-1bp), curve 0.5bps flatter 2s10s, light volume in TY futures (256k). The ECB left its deposit rate unch at 0.25% as exp, confirming it will end its bong buying program this month, after four years of QE, Draghi press conference at 8:30. US equity futures higher, S&P +6.5, having given up earlier gains after UK PM May won confidence vote yest aft. GOCs higher, outperforming tsys in 10s by 0.5bps , 10Y 2.11% (-0.5bps). No data until next Wed CPI. Provis widened 0.5-1bp syest with Alberta reopening its 2050 issue @ 101 (Ont+8). CMB 5Y pricing this morning ~40.5bps
News headlines
North Korea Fixer for Dennis Rodman Probed by China Spy Agency (Bloomberg) A second Canadian national is being questioned by Chinese authorities, further heightening tensions between the two countries after the detention of a former diplomat in Beijing and the arrest of a Huawei Technologies Co. executive in Vancouver. Michael Spavor was placed under investigation Monday for “suspected activities harming state security,” Northeast News, a website run by the propaganda department in the northeastern Chinese province of Liaoning, said Thursday.
ECB Confirms It Will Stop Asset-Purchases, Hold Rates to Summer (Bloomberg) The European Central Bank decided to stop net asset purchases at the end of December, the Governing Council said in a statement. The ECB expects the interest rates to “remain at their present levels at least through the summer of 2019,” Bloomberg News reports.
Brexit Reversal More Likely After May’s Confidence Vote (Bloomberg)Prime Minister Theresa May enjoyed a Pyrrhic victory last night, surviving an attempt by her own party to oust her. While it remains unclear how this Greek tragedy will play out, Goldman Sachs is of the view that her win reduces the likelihood “of a disorderly Brexit and increases the probability of a reversal of Brexit itself.”
U.S. Futures, Europe Stocks Pare Gain; Bonds Rise: Markets Wrap (Bloomberg) U.S. equity futures and European shares surrendered early gains as investors weighed the latest developments in America-China trade relations. The euro edged up and bonds stayed higher as the ECB confirmed an end to its asset purchase program. Futures on the S&P 500 gave up most of an earlier advance made after news that Chinese importers have bought U.S. soybeans, while declines in energy and media shares led the Stoxx Europe 600 Index lower after a positive start. General Electric climbed in pre-market trading after an upgrade from JPMorgan. Hong Kong and Chinese stocks outperformed as equities across Asia bucked the trend and continued their rebound.
Canada warns U.S. not to politicize extradition cases (Reuters) Canadian Foreign Minister Chrystia Freeland on Wednesday warned the United States not to politicize extradition cases, a day after President Donald Trump said he could intervene in the affair of a Chinese executive detained in Canada at Washington’s request. Freeland also told reporters that a second Canadian citizen could be in trouble in China. Authorities in China are already holding former diplomat Michael Kovrig, who was detained on Monday.
Bombardier’s venture in China gets $453 million state rail contract (Reuters) Canadian plane and train maker Bombardier Inc’s Chinese joint venture said on Thursday it had won a $453 million contract to supply 168 high-speed train cars to state-owned China Railway Corp (CRC). The win for the Canadian company comes a day after it lost a C$989 million ($741 million) rail order in Canada when state-owned Via Rail picked Germany’s Siemens AG to supply new locomotives.
Alberta seeks proposals to build new refinery amid crude crisis (BNN) Alberta is looking for someone to build a new oil refinery, but Premier Rachel Notley says any deal needs to work for both industry and taxpayers. “The project must make sense for Alberta,” Notley said Tuesday. “It must have a return on investment for Albertans, and it must diversify the way we use the energy resources that we as Albertans all own.” Notley announced the province is looking for expressions of interest from companies to build a new refinery or expand an existing one. Such requests are the first step in the process, but would include specifics such as financing, technical feasibility, and timelines.
Total number of new mortgages slumped in Q2 (BNN) Rising interest rates and slower income and population growth helped temper demand for new mortgages in the second quarter, according to Canada Mortgage Housing Corp. The federal housing agency says fewer Canadians opened new mortgages in the three-month period ending June 30, even though the total number of active mortgages and the value of those mortgages rose during the same quarter compared with a year ago. In a report which analyzed mortgage and consumer credit trends from credit agency Equifax, CMHC found that there were 205,000 new mortgages in the second quarter of 2018, down 11.9 per cent compared with a year ago.
Overnight markets
Overview: US 10yr note futures are up 0.039% at 120-09, S&P 500 futures are up 0.13% at 2660, Crude oil futures are down -1.11% at $50.58, Gold futures are down -0.25% at $1246.9, DXY is down -0.03% at 97.019, CAD/USD is up 0.08% at 0.7484.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.059% | 2 Year | 2.768% |
| 5 Year | 2.058% | 5 Year | 2.756% |
| 10 Year | 2.11% | 10 Year | 2.901% |
| 30 Year | 2.275% | 30 Year | 3.146% |
US Economic Data
| 8:30 AM | Import Price Index MoM, Nov est -1.0% (0.5% prior) |
| Import Price Index ex Petroleum MoM, Nov est -0.1% (0.2% prior) | |
| Import Price Index YoY, Nov est 1.3% (3.5% prior) | |
| Export Price Index MoM, Nov est -0.3% (0.4% prior) | |
| Export Price Index YoY, Nov (3.1% prior) | |
| Initial Jobless Claims, Dec 8th est 226k (231k prior) | |
| Continuing Claims, Dec 1st est 1649k (1631k prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Dec 9th (60.3 prior) |
Canadian Economic Data
| 8:30 AM | New Housing Price Index MoM, Oct est 0.0% (0.0% prior) |
| New Housing Price Index YoY, Oct est 0.1% (0.2% 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