Market update
US tsys trading higher, curve steeper, US 10Y 2.29 ( -2.1bps), bouncing after weaker PPI, retail sales – with Univ of Michigan sent expected at 10:00. Core Euro bonds higher, bund/gilt spd ~3bps wider on weaker Euro GDP. GOCs higher, underpinned by somewhat dovish comments from BOC deputy Wilkins noting that policy rates likely to remain low if BOC maintains 2% infl target. Provi spds 1bp wider, follow thru on late aft weakness Thursday & risk off this morn – Ont 46 106/105, QC 48 112.5/111.5 – still expect supply likely in longs given flat 10s/30s & tighter Ont 45/25 box.
News headlines
- Euro-Area Growth Misses Estimates as ECB Ponders More Stimulus (Bloomberg) Euro-area economic growth unexpectedly slowed in the third quarter, underscoring the vulnerability of the region’s recovery as the European Central Bank examines the need for fresh stimulus.
- Global oil inventory stands at record level (FT) Global oil inventories have risen to a record level just shy of 3bn barrels, the world’s leading energy agency said on Friday, even as the collapse in prices has boosted demand to a five-year high. “This massive cushion has inflated even as the global oil market adjusts to $50/bbl oil,” said the International Energy Agency (IEA) in its closely watched monthly oil market report.
- European shares hammered after commodity rout (Reuters) European shares were set for their biggest weekly fall since September on Friday after commodity prices tumbled to multi-year lows on worries over a glut in supply and slower global economic growth.
- Eurozone convertible deal snapped up (FT) International Consolidated Airlines Group sold €1bn of convertible bonds on Thursday, with one of the largest deals for 2015 attracting strong demand from investors who have been starved of such offerings this year.
Overnight markets
- Overview: IG24 5Y 79.852/80.568 (+0.617), US 10yr note futures are up +0.20% at 126-14+, S&P 500 futures are down -0.31% at 2034.25, Crude oil futures are down -0.43% at 41.57$, Gold futures are up +0.59% at $1087.4, DXY is down -0.08% at 98.592.
US Economic Data
- Retail sales increased 0.1% MoM in October, below expectations (0.3%), after increasing 0.1% the previous month.
- Retail sales excluding automobiles increased 0.2% in October, compared to consensus of a 0.4% increase, and a revised -0.4% decrease in September.
- PPI came in at -0.4% MoM (-1.6% YoY) in October versus September -0.5% MoM (-1.1% YoY).
- PPI core decreased -0.3% MoM (+0.1% YoY) in October compared to previous month -0.3% MoM (0.8% YoY).
- Business inventories are forecast to increase 0.0% MoM in September, equal to previous month increase.
- University of Michigan confidence (P) is expected at 91.5 in November 1.5 point higher than previous month.
Canadian Economic Data
- There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230