Market Update

Tsys trading higher led by the long end, curve 2bps flatter 2s30s, 10Y 2.388 (-1.8bps), above avg volume in TY futures (350k), short end weighed by firmer Oct PPI (0.4% vs 0.1%, overall 2.8%  highest since Feb 2012). Fed Bullard  sounding dovish saying fed funds rate appropriate for near term, need higher productivity to lift wages. Tsys declined in Asia session and then rallied in Europe led by longs. Tsy curve resuming flattening trend from last week, 5s30s at new lows 77.7, 4 bps narrower since Friday. So far not much news from ECB central bank panel in term s of monetary policy. GOCs better offered curve 2bps flatter, spds ~1bp wider vs tsys in the short end. The BOC auctions $3bln in 3Y bonds tomorrow and a $500mln in ultra longs Thursday

News headlines 

Trump Declares Trade ‘Rules Have Changed’ as Asia Trip Concludes (Bloomberg) President Donald Trump ended his swing through Asia, hailing progress toward his goal of reducing the U.S. trade deficit. Trump took off from Manila aboard Air Force One on Tuesday, skipping the final session of meetings hosted by the Association of Southeast Asian Nations. The trip, which included stops in Japan, South Korea, China and Vietnam, brought Trump in contact with dozens of leaders, including the heads of Asia’s five biggest economies and a brief encounter with Russian President Vladimir Putin.

Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) The Senate tax-writing committee continues hammering out the details of its tax cut proposal on Tuesday, while the House may vote on its bill as soon as Thursday

Powell Wants to Change How the Fed Communicates (Bloomberg) Federal Reserve Chair nominee Jerome Powell has likened central bank communication to a popular Far Side cartoon: A man chides his dog Ginger about rooting through the trash, but all the dog hears is “Blah, blah, Ginger, blah, blah blah.”

German Economy Beats Forecasts, Heads for Best Year Since 2011 (Bloomberg) German growth steamed ahead in the third quarter, keeping Europe’s largest economy on track for its best year since 2011. The 0.8 percent jump in gross domestic product was an acceleration from the previous three months and topped the 0.6 percent median forecast in a Bloomberg survey. The expansion was driven by exports and capital investment, and net trade made a positive contribution.

Stock Selloff Heads Toward U.S. as Euro Advances: Markets Wrap (Bloomberg) The equity selloff that moved from Asia to Europe looks to continue, with U.S. stock futures joining the retreat. Treasuries and bonds turned positive as the world’s most powerful central bankers spoke in Frankfurt, while the dollar weakened and the euro appreciated on German growth data.

Venezuela Creditor Meeting Is a Bust as S&P Declares Default (Bloomberg) Venezuela’s grand gathering with creditors Monday lasted all of 30 minutes and didn’t produce anything of substance. To make matters worse, S&P Global Ratings declared the country in default while Fitch Ratings cited missed payments by the state oil company.

EgyptAir signs letter of intent for up to 24 Bombardier CS300s (CBC) Montreal-based Bombardier Inc. has signed a letter of intent to sell up to 24 CS300 aircraft to EgyptAir Holding Co. The CS300 is the larger version of Bombardier’s C Series aircraft. The agreement announced at the Dubai Airshow includes 12 CS300 aircraft with purchase rights for an additional 12 aircraft.

Fifth NAFTA round reaches Mexico under shadow of U.S. tax reform (Reuters) U.S., Canadian and Mexican negotiators hope to make modest progress in the next round of NAFTA trade talks as the White House focuses on pushing tax cuts through Congress, with little sign of compromise in sight on key sticking points.

Overnight markets

Overview: US 10yr note futures are up 0.025% at 124-21, S&P 500 futures are down -0.19% at 2577, Crude oil futures are down -0.55% at $56.45, Gold futures are down -0.32% at $1274.8, DXY is down -0.4% at 94.112, CAD/USD is down -0.18% at 0.7868.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.474% 2 Year 1.683%
5 Year 1.692% 5 Year 2.072%
10 Year 1.968% 10 Year 2.39%
30 Year 2.299% 30 Year 2.846%

 US Economic Data

6:00 AM NFIB Final Demand MoM, Oct 103.8 est 104.0 (103.0 prior)
8:30 AM PPI Final Demand MoM, Oct 0.4% est 0.1% (0.4% prior)
PPI Ex Food and Energy MoM, Oct 0.4% est 0.2% (0.4% prior)
PPI Ex Food Energy, Trade MoM, Oct 0.2% est 0.2% (0.2% prior)
PPI Final Demand YoY, Oct 2.8% est 2.4% (2.6% prior)
PPI Ex Food and Energy YoY, Oct 2.4% est 2.2% (2.2% prior)
PPI Ex Food, Energy, Trade YoY, Oct 2.3% (2.1% 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