Market Update
US tsys & GOCs higher on FTQ bid as stocks weaken globally, heavy volume in TY futures overnight (TY 535k). US 10Y 3bps lower @ 2.336% , maintaining overnite gains despite rise in y/y core Oct CPI and retail sales (0.2% vs 0.0%)with the 2s10s tsy curve @66bps the flattest in a decade (Oct07). Japan’s Topix index fell for a fifth day led by oil stocks, the DAX down 1.0% below its 50 dma, S&P futs -10.25. Crude oil down another 1.0% after yesterdays 1.9% decline – doubts emerging over OPEC’s commitment to extend production cuts, while specs net position in crude has surged to a new record as of last week to ~540k bbls . GOCs higher, in line with tsys , longs 1bp wider, 10Y 1.91% The BOC auctions $3.0bln in 3Y bonds at noon, the second reopening of the 0.75% March 21 issue. Like last week’s 5Y (Mar 23s), the amount being sold is lower vs last auction ($3.0bln vs $3.2bln in Oct). The current 3Y Sep 20 have $26bln outstanding while the March 21s are already at $21bln at the second reopening given the issue was originally sold as a 5Y. The Mar21/Sep20 has widened ~2bps since the last auction on Oct 18th and looks cheap on a relative basis given that the Sep20/2Y (Nov19). CMB 10Y this morning – new MArch 2028 in the area of 45 bps, pricing ~9:30am – the issue is well spoken for..
News headlines
The Treasury Market and the Fed Won’t Get Sidetracked by an Inflation Surprise (Bloomberg) The dominant dynamic in the $14.2 trillion Treasury market can withstand whatever Wednesday’s inflation numbers say and whatever Fed speakers have to say about them. Over the past year, the yield on two-year U.S. debt has marched nearly 70 basis points higher, compared to a paltry 12 basis point rise in its 10-year counterpart — an intense so-called bear flattening of the yield curve.
Senate Plan Would Repeal Mandate, Sunset Cuts: Tax Debate Update (Bloomberg) The Senate tax-writing committee hammered out the details of its tax cut proposal Tuesday, while the House may vote on its bill as soon as Thursday.
Stocks Decline Globally as Oil Slides; Euro Gains: Markets Wrap (Bloomberg) The risk-off mood gripping global markets showed little sign of easing as European stocks followed declines in Asia. Taking impetus from a selloff in energy commodities, the slide also spread to U.S. equity futures as bonds and gold advanced with the yen and euro.
For Global Economy, Slowdown in China Couldn’t Be Better Timed (Bloomberg) China’s moderation in growth last month comes at the right time for a global economy that’s benefiting from Europe’s pick up and the U.S.’s strength. That’s especially the case if it means the world’s second-largest economy is moving toward more sustainable drivers with less reliance on cheap debt. Click here to read details of Tuesday’s data.
Airbus Seals $50 Billion Jet Deal to Outdo Boeing in Dubai (Bloomberg) Airbus SE announced the biggest commercial-plane transaction in its history, securing an order for single-aisle aircraft valued at nearly $50 billion at the Dubai Air Show, outdoing Boeing Co.’s own $20 billion mega-deal
Vancouver imposes sharp restrictions on Airbnb, homesharing sites (Reuters) The city of Vancouver passed new rules on Tuesday banning homeowners from renting out certain kinds of property on short-term rental websites like Airbnb, as part of an attempt to deal with a housing shortage that has led to soaring rents.
Loblaw is closing 22 unprofitable stores; doubles profit on sale of gas bars (Financial Post) Loblaw Companies Ltd. says it has finalized a plan that will result in the closure of 22 unprofitable stores across a range of its banners and formats. The company says it expects that the closures will be substantially complete by the end of the first quarter of next year. The move comes as Loblaw more than doubled its third-quarter profit compared with a year ago as its results were boosted by the sale of its gas bar business. The retailer says its profit attributable to common shareholders totalled $883 million or $2.24 per diluted share for the 16 week ended Oct. 7. That compared with a profit of $419 million or $1.03 per diluted share for the same period last year.
US Economic Data
| 7:00 AM | MBA Mortgage Applications, Nov 10th 3.1% (0.0% prior) |
| 8:30 AM | CPI MoM, Oct 0.1% est 0.1% (0.5% prior) |
| CPI Ex Food and Energy MoM, Oct 0.2% est 0.2% (0.1% prior) | |
| CPI YoY, Oct 2.0% est 2.0% (2.2% prior) | |
| CPI Ex Food and Energy YoY, Oct 1.8% est 1.7% (1.7% prior) | |
| Real Avg Weekly Earnings YoY, Oct 0.4% (0.6% prior) | |
| Real Avg Hourly Earings, Oct 0.4% (0.7% prior) | |
| Empire Manufacturing, Nov 19.4 est 25.1 (30.2 prior) | |
| Retail Sales Advance MoM, Oct 0.2% est 0.0% (1.6% prior) | |
| Retail Sales Ex Auto MoM, Oct 0.1% est 0.2% (1.0% prior) | |
| Retail Sales Ex Auto and Gas, Oct 0.3% est 0.3% (0.5% prior) | |
| 10:00 AM | Business Inventories, Sep est 0.0% (0.7% prior) |
| 16:00 PM | Total Net TIC Flows, Sep (125.0b prior) |
| Net Long-term TIC Flows, Sep (67.2b) |
Canadian Economic Data
| 8:30 AM | Teranet/National Bank HPI MoM, Oct -1.0% (-0.8 prior) |
| Teranet/National Bank HPI YoY, Oct 10.0% (11.4% prior) | |
| Teranet/National Bank HPI Index, Oct 218.13 (220.33 prior) | |
| 9:00 AM | Existing Home Sales MoM, Oct (2.1% prior) |
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