Market Update
US tsys higher on above avg volume (400k TY futures), 10Y 1.69% (-3.7bps). Equity futures higher, S&P +8, better results from JPM, J&J & BlackRock, thou Goldman Sachs missed Q3 est. German bunds higher, continuing from yest despite better than exp ZEW confidence. UK gilts outperforming, EU Barnie said Brexit deal still possible, GBP close to four-month highs, 10Y gilt futures supported by lingering uncertainty as meeting between Johnson and Northern Ireland leader Foster said to be ‘difficult’. GOCs opening the week higher, 10Y -4bps 1.48% after Friday’s 10bp selloff on another strong Cdn jobs no. Of note, long GOCs well bid in the selloff, 10s30s narrowest since last Nov. , 10s30s Can/US Box at July lows (i.e. GOC curve outflattening US)
News headlines
German investor sentiment falls less than expected in October (Reuters) The mood among German investors worsened less in October than analysts had expected, a survey showed on Tuesday, amid concern that Europe’s biggest economy might be headed for a recession
China Import Slump Casts Gloom Over World Buffeted by Trade War (Bloomberg) China is buying less from the rest of the world, pushing its trade surplus higher and dragging on global economic growth. Imports in the world’s second-largest economy dropped 8.5% in September for a ninth decline in the past 10 readings, while exports decreased 3.2% in dollar terms from a year earlier. That left a trade surplus of $39.65 billion for the month, with the total for the first nine months jumping 36% to $298 billion.
Sub-zero interest rates could be problematic in U.S.: Fed’s Bullard (Reuters) St. Louis Federal Reserve bank president James Bullard said on Tuesday that negative interest rates could be problematic in the United States. Central banks in the euro zone and Japan have cut interest rates below zero to boost inflation and economic growth, raising a debate about the ammunition other major central banks such as the U.S. Federal Reserve have to fight a slowdown.
China wants tariffs cut to enable $50 billion imports from U.S. (Bloomberg) China will struggle to buy $50 billion of U.S. farm goods annually unless the United States removes retaliatory tariffs on American products, Bloomberg reported on Tuesday. China would make the purchases only if U.S. President Donald Trump rolls back levies put in place since the trade war began, Bloomberg said bloom.bg/2OR9dvt, citing people familiar with the matter.
Boris Johnson’s Brexit Deal on Knife Edge (Bloomberg) U.K. Prime Minister Boris Johnson’s Brexit deal was hanging in the balance Tuesday, after the European Union Presidency said more time was needed before a summit of its leaders this week. Antti Rinne, premier of Finland — which currently has the rotating presidency of the EU — said negotiations may need to continue after the EU Council summit that starts Thursday.
The UK’s once star fund manager Neil Woodford was dealt another blow as his equity fund gets shut down (BI) The fall from grace for Neil Woodford, once known as the UK’s best-known stock picker, has climaxed on Tuesday with an announcement that he will cease control of the fund and it will be wound down. Link Fund Solutions (LFS), the fund’s authorized corporate director, announced the decision on Tuesday morning via its website, that it would be wind up the fund as soon as possible.
Chinese Inflation Surges as Pig Prices Fly High (WSJ) Surging pork prices pushed China’s consumer inflation to a near six-year high in September, complicating Beijing’s effort to stimulate growth but also giving it an incentive to buy more agricultural goods from the U.S. The consumer-price index rose 3% in September from a year earlier, according to data released by the National Bureau of Statistics on Tuesday, bumping up against Beijing’s inflation target of “around 3%” this year. The rise in consumer prices accelerated from August’s 2.8% expansion and topped a median forecast for 2.9% growth from economists polled by The Wall Street Journal.
Market Overview: US 10yr note futures are up 0.144% at 130-13, S&P 500 futures are up 0.3% at 2974.5, Crude oil futures are down -0.6% at $53.27, Gold futures are up 0.01% at $1497.7, DXY is up 0.07% at 98.52, CAD/USD is down -0.04% at 0.7559.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.625% | 2 Year | 1.553% |
| 5 Year | 1.486% | 5 Year | 1.513% |
| 10 Year | 1.469% | 10 Year | 1.689% |
| 30 Year | 1.607% | 30 Year | 2.169% |
US Economic Data
| 12:00 AM | Monthly Budget Statement, Sep Survey: $83.0b Prior: $119.1b |
Canadian Economic Data
| 09:00 AM | Existing Home Sales MoM, Sep Survey: 2.00% Prior: 1.40% |
| 10:00 AM | Bloomberg Nanos Confidence, 40817 Survey: — Prior: 5820.00% |
| 10:15 AM | Bloomberg Oct. Canada Economic Survey, Survey: 0.00% )Actual: 0.00% Prior: 0.00% |
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, Émile Bordeleau
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