Market Update US tsys opening higher, yields 1-2bps lower across the curve with the 10Y 3.16% (-2bps), tsy futures slightly lower, giving back gains equities look to open higher (S&P 12.75) after yesterday’s steep selloff (S&P -2%). Core European bonds mixed – UK gilts lower on increasing signs UK & EU are close to deal on Brexit, 10Y gilt 3bps higher vs 5.5bp lower ahead of the headline, GBP erasing yest losses. Crude down for a 2nd day after Trump’s tweet urging OPEC to increase supply. GOCs higher, underperforming tsys by 0.5bps in the short end, 10Y 2.48 (-2.5bps).

News headlines

China’s top trade negotiator Liu He heads to US in bid to kick start new talks on easing tensions. (YahooNews) China’s top economic negotiator is expected to visit the United States soon for talks with his American counterparts aimed at calming trade tensions between the two sides and paving the way for a meeting between the two countries’ presidents.

U.S. car-import probe said to advance as Trump plans trade meeting (Bloomberg) The White House is circulating a draft report by the U.S. Commerce Department over whether to impose tariffs on automobile imports to protect national security, three people familiar with the matter said.

Italy won’t budge on deficit, may offer concession on growth (Bloomberg) Italy’s government may offer the European Commission a minor concession when it resubmits its budget after an unprecedented rejection last month. The populist administration may admit its 2019 spending plans will have a smaller economic impact than previously projected, and cut its growth target to as low as 1.3 per cent from 1.5 per cent, Il Sole 24 Ore reported on Tuesday. La Stampa reported that Finance Minister Giovanni Tria wants to lower the 2019 GDP growth target even further to 1.2 per cent, which would be in line with the level forecast by the commission.

Oil Extends Record Losing Streak as Trump Blasts Saudi Plan (Bloomberg) Oil fell for a 12th day, its longest losing streak on record, after U.S. President Donald Trump criticized Saudi Arabia’s plan to cut output. West Texas Intermediate futures in New York sank as much as 2.6 per cent, extending a drop of more than 11 per cent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet, after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day. Meanwhile, the dollar rose to an 18-month high, hurting demand for commodities priced in the U.S. currency.

GE CEO admits regular investors have fled the stock since he cut the dividend to a penny (CNBC) GE CEO Larry Culp acknowledged Monday that his decision to slash the quarterly dividend to a penny sent regular investors scrambling. About one-third of GE shares are held by retail investors, a higher than average mix for a public company.

Sears should close for good, creditors say (CNN) A committee of unsecured creditors said in a court filing Friday that the company’s plans to stay in business during bankruptcy are « nothing more than wishful thinking  » and « an unjustified and foolhardy gamble with other people’s money. »

Amazon chooses New York, Northern Virginia for HQ2 (Bloomberg) Amazon.com Inc. () has selected New York City and Northern Virginia as the company’s second and third headquarters, the Wall Street Journal reported. An announcement could come as soon as Tuesday, the newspaper reported, citing unidentified people familiar with the plan. Other cities may get major sites from the company, the newspaper said.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 118-12, S&P 500 futures are up 0.41% at 2739, Crude oil futures are down -1.23% at $59.19, Gold futures are down -0.01% at $1203.4, DXY is down -0.27% at 97.277, CAD/USD is down -0.17% at 0.756.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 2.326% 2 Year 2.904%
5 Year 2.419% 5 Year 3.006%
10 Year 2.486% 10 Year 3.16%
30 Year 2.515% 30 Year 3.368%

US Economic Data

6:00 AM NFIB Small Business Optimism, Oct 107.4 est 108 (107.9 prior)
14:00 Monthly Budget Statement, Oct est -100.0b (-63.2b 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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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