Market Update

Tsys lower, yields 2-3bps higher, 10Y 2.33% (+3bps), equities higher (S&P fut +3.25), gold down for a third day, crude recovering from yesterday’s midday slide (52.06 +0.35%) after API data showed a large drop of 7.13mln bbls in crude oil inventories last week. Tsy futures hitting session lows after NY Fed Dudley said US economy looking ‘quite good’.  Core Euro bonds lower, following weakness in tsys and gilts , the latter pressured by data showing an uptick in UK wage growth for August . GOCs lower,  yet continuing steady outperformance vs tsys, another 1bp this morning, Can/US 10Y -30bps at one month lows. Provis better bid this morning, Ont 27s trading up @ 68bps, BC/Ont 48 -6.3/-6.8 unch. PSP Capital (AAA/Aaa) in the mkt reopening its Oct 2022 issue.

News headlines 

Xi Plans to Turn China Into a Leading Global Power by 2050 (Blomberg) President Xi Jinping warned of “severe” challenges while laying out a road map to turn China into a leading global power by 2050, as he kicked off a twice-a-decade party gathering expected to cement his influence into the next decade.

Senators Get Deal to Prop Up Obamacare, Keep Subsidies Trump Cut (Bloomberg) Senators in both political parties say they’ve reached agreement on fixes to stabilize Obamacare just two weeks before Americans start signing up for 2018 coverage.

Brexit Divisions Are Making Talks ‘Difficult’ for Europe (Bloomberg) European Union leaders and officials are finding Theresa May’s government a difficult negotiating partner, as splits inside the U.K. make it hard to know what they want.

U.K. Jobless Rate at 42-Year Low Amid Strong Labor Demand (Bloomberg) The U.K. jobless rate held at a 42-year low in the three months through August as Britain enjoyed near-record employment, according the figures published Wednesday.

Stocks Gain as Euro Slips; Dollar Pushes Higher: Markets Wrap (Bloomberg) The euro headed for its longest losing streak in almost a year as a deadline on Catalonia’s independence looms. Stocks in Europe advanced, while the dollar continued to strengthen helped by speculation that the next Federal Reserve chair will be more hawkish.

Wall Street Poised to Get a Key SEC Reprieve Over MiFID (Bloomberg) The U.S. Securities and Exchange Commission is preparing to give Wall Street a reprieve by telling financial firms they won’t have to overhaul their operations to comply with sweeping new European rules governing investment research, said three people familiar with the matter

OSFI sets new mortgage rules, including stress test for uninsured borrowers (CBC) Canada’s top banking regulator has published the final version of its new mortgage rules, which include a requirement to “stress test” borrowers with uninsured loans to ensure they could withstand higher interest rates.

Veteran investor Marc Faber booted from 3rd company after racist comments (CBC) Veteran investor Marc Faber has resigned his board seats at three companies based in Canada on Tuesday following comments he made in his investment newsletter that America was better off because it was settled by white people instead of black people.

CP Rail beats third-quarter profit estimates on higher shipments (Reuters) Railroad operator Canadian Pacific Railway Ltd (CP.TO) (CP.N) on Tuesday reported a better-than-expected quarterly profit on higher shipments of crude oil, coal and potash and raised its full-year profit forecast.

Rio Tinto charged with fraud in US and fined in UK (Financial Times) Rio Tinto and two former senior executives were hit with fraud charges in the US, and the miner with a UK penalty, for allegedly trying to hide a multibillion-dollar business failure by inflating the value of coal assets in Mozambique.

Overnight markets 

Overview: US 10yr note futures are down -0.237% at 125-05, S&P 500 futures are up 0.14% at 2560.5, Crude oil futures are up 0.35% at $52.06, Gold futures are down -0.41% at $1280.9, DXY is up 0.24% at 93.713, CAD/USD is up 0.05% at 0.7982. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.523% 2 Year 1.567%
5 Year 1.717% 5 Year 1.99%
10 Year 2.029% 10 Year 2.33%
30 Year 2.37% 30 Year 2.83%

US Economic Data

7:00 AM MBA Mortgage Applications, Oct 13th 3.6% (-2.1% prior)
8:30 AM Housing Starts, Sep  1127k est 1175k (1180k prior)
Housing Starts MoM -4.7%, -0.4% (-0.8% prior)
Building Permits, Sep est 1215k 1245k (1300k prior)
Building Permits MoM -4.5%, Sep est -2.1% (5.7% prior)
14:00 PM U.S Federal Reserve Release Beige Book
10/18 – 10/20 Monthly Budget Statement

Canadian Economic Data

8:30 AM Manufacturing Sales MoM 1.6%, Aug est -0.3% (-2.6% 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