Market Update

US tsys rising sharply after Sep CPI/retail sales misses- particularly the latter with core CPI 0.1% vs 0.2% exp, retail sales were relatively firm, , US 10Y 2.33%, trailing the strong gains in core Euro bonds where longer term yields are 2-3bps lower. TY futures confined to a fairly narrow 3tick range o/n on below avg volume (270k contracts) before key CPI/retail sales data.  Bank earnings mixed – BOA beat est, Wells Fargo missed with the stock down ~3% premkt.  The 10Y bund yield fell to a two week low 0.42% – according to Reuters the ECB is considering a nine month extension to their bond buying program. 10Y gilt more volatile, prices moving back to unch after testing recent lows earlier, supported by gains in bunds. GOCs well bid, keeping up pace with tsys, curve 2bps flatter post 8:30 US data. Provincials opening unch, spds near recent tights, unch yest despite 2 deals – BC  & QC 10Y deals .

News headlines 

ECB to Consider Cutting QE Purchases in Half Next Year (Bloomberg) European Central Bank officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate.

China Exports Remain Resilient as Rising Imports Signal Strength (Bloomberg) China’s overseas shipments rose from a year earlier, narrowly missing estimates, the latest sign that Asian trade is holding up on robust external demand and a brighter global outlook.

Trump Expected to Disavow Iran Nuclear Deal, Not Abandon It (Bloomberg) President Donald Trump is expected on Friday to refuse to certify that the multinational accord to curb Iran’s nuclear program sufficiently serves U.S. interests, though he will stop short of abandoning it, according to two senior administration officials.

Oil Set for Weekly Gain on Rebalancing Signs From U.S. to China (Bloomberg) Oil is heading for the biggest weekly gain since mid-September as a drop in U.S. crude stockpiles and near-record Chinese imports added to signs the global market is rebalancing.

Bonds Gain After ECB QE Report; Stocks Advance: Markets Wrap (Bloomberg) Bonds in Europe gained after a report that the European Central Bank may continue asset purchases for at least nine months after it starts tapering in January. Stocks advanced after Chinese trade data underscored the resilience of the global recovery.

Europe’s Best Developed Stock Market May Get Election Boost (Bloomberg) Even the chance of a far-right party getting into power in Sunday’s Austrian election isn’t expected to spoil the run for investors in Europe’s best-performing developed stock market this year.

Bombardier to miss year-end streetcar delivery target (Toronto Star) Bombardier will miss yet another target on its troubled TTC streetcar order, falling at least five cars short of the 40 it was supposed to deliver this year. In a statement released Thursday, the Montreal-based rail manufacturer said it will supply 35 streetcars in 2017, for a cumulative total of 65 since the order began. The company blamed the latest delay on “issues with the supply chain.”

Quebec won’t budge on Uber rules with hours left before deadline (CBC News) The Quebec government has announced it is standing firm on the main tenets of its new rules regulating how ride-hailing company Uber operates in the province.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-11, S&P 500 futures are up 0.12% at 2552.5, Crude oil futures are up 2% at $51.61, Gold futures are down -0.13% at $1294.8, DXY is up 0.17% at 93.214, CAD/USD is up 0.24% at 0.7997. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.569% 2 Year 1.521%
5 Year 1.76% 5 Year 1.948%
10 Year 2.079% 10 Year 2.327%
30 Year 2.437% 30 Year 2.855%

US Economic Data

8:30 AM CPI MoM, Sep 0.5% est 0.6% (prior 0.4%)
CPI Ex Food and Energy MoM, Sep 0.1% est 0.2% (0.2% prior)
CPI YoY, Sep 2.2% est 2.3% (1.9% prior)
CPI Ex Food and Energy YoY, Sep 1.7% est 1.8% (1.7% prior)
CPI Core index SA, Sep 252.860  est 253.059 (252.540 prior)
CPI Index NSA, Sep 2446.819 est 246.911 (245.519 prior)
Real Avg Weekly Earnings YoY, Sep 0.6% (0.9% prior)
Real Avg Hourly Earning Yoy, Sep 0.7% (0.6% prior)
Retail Sales Advance MoM, Sep 1.6% est 1.7% (-0.2% prior)
Retail Sales Ex Auto MoM, Sep 1.0% est 0.9% (0.2% prior)
Retail Sales Ex Auto and Gas, Sep 1.0% est 0.4% (-0.1% prior)
Retail Sales Control Group, Sep 0.4% est 0.4% (-0.2% prior)
10:00 AM U of Mich. Sentiment, Oct est 95.0 (95.1 prior)
Business Inventories, Aug est 0.7% (0.2% prior)
10/13-10/20 Monthly Budget Statement, Sep est 6.0b (33.4b prior)

Canadian Economic Data

There is no Canadian economic data for today.


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