cti2015header-morning comments web

Market Update

US tsys higher, yields 2-3bps lower with the 10Y 2.283 (-2bps) at the lower end of the o/n range. Early Asian trade saw follow thru selling from Thurs, 10s hit 2.34% new high before rebounding in Europe with bunds. Bunds recovering from earlier weakness, ECB Pres Draghi reiterating accommodative stance on mon policy, doesn’t see any inflation threat. GOCs higher, maintaining gains after Cdn CPI came in as exp for Oct , 0.2% with the core softer 0.2% vs 0.3% (1.7% y/y vs 1.8%). Provincial spreads closed another 1-2bps yest, Ont issued reopened 10s @ 84bps which was very well received closing 83/82. CMB spds also moving in, yet 10Y CMBs look particularly attractive vs Onts, the Ont/CMB 26 spd at the bottom of the range ~27bps. (26-31 bps 6mnth range). PSP Capital (Aaa/AAA) priced its 7Y @ 83 bps vs GOC curve or ~8bps over ontarios.

News headlines  

Dollar Extends Trump-Trade Rally as Gold Declines With Stocks (Bloomberg) The dollar jumped versus all of its major counterparts, adding to its best rally in more than 15 years against the yen and its longest winning run since the euro was created. Central banks in Asia were compelled to take steps to shore up their currencies, while the greenback’s strength also weighed on commodities from metals to oil.

ECB’s Draghi, Weidmann differ on inflation ahead of key decision (Reuters) European Central Bank chief Mario Draghi said on Friday the rebound in euro zone inflation was weak, while his top critic, Bundesbank head Jens Weidmann, said price pressures would build eventually and ‘extra care’ was needed with even temporary unconventional measures.

Hot China house prices cool in October as curbs on speculation bite (Reuters) China’s booming property market showed early signs of a softening in October after a fast and furious price rally that propped up economic growth this year. A National Bureau of Statistics (NBS) survey out on Friday showed October’s monthly price growth virtually halved to 1.1 percent from September’s 2.1 percent, as most of China’s first- and second-tier cities posted slowing price growth.

Volkswagen to cut 30,000 jobs at VW brand by 2020 (Reuters) Volkswagen (VOWG_p.DE) and its powerful labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for avoiding forced redundancies in Germany until 2025, a compromise which leaves the carmaker’s profitability still lagging rivals. The turnaround plan announced on Friday will lead to 3.7 billion euros ($3.9 billion) in annual efficiency gains and lift the VW brand’s operating margin to 4 percent by 2020, from an expected 2 percent this year.

CMHC’s mortgage insurance business vulnerable to sharply rising interest rates (TheGlobeAndMail) A sudden sharp rise in interest rates that could cause Canadian home prices to plunge 30 per cent would trigger more than $1-billion in losses to the country’s government-backed mortgage insurer, according to the results of stress tests released today by the federal housing agency.

Canada is naive if it thinks Donald Trump will play nice on NAFTA (Financial Post) There are two Donald Trumps. There’s the firebrand xenophobe progressives see, the one who spouted conspiracy theories and insults during his shockingly abrasive, fear-mongering campaign. The other Trump is more recent, and less scary: The one who gave a surprisingly conciliatory victory speech in the wee hours of Nov. 9; who praised Hillary Clinton for her service to her country; who at times seems more a would-be statesman than a rabble-rouser; the one who’s going to temper his incendiary campaign positions — which, you know, he maybe only said to get elected.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.062% at 126-0, S&P 500 futures are down -0.02% at 2183.75, Crude oil futures are down -0.07% at $45.39, Gold futures are down -0.41% at $1211.9, DXY is up 0.2% at 101.09, CAD/USD is up 0.03% at 0.7393.

US Economic Data 

10:00 AM Leading Index, Oct, est. 0.1% (prior 0.2%)
11:00 AM Kansas City Fed Manufacturing Activity , Nov, (prior 6)

Canadian Economic Data 

8:30 AM CPI NSA, m/m, Oct, 0.2%, est. 0.2% (prior 0.1%)
CPI, y/y, Oct, 1.5%, est. 1.5% (prior 1.3%)
CPI Core, m/m,  Oct, 0.2%, est. 0.3% (prior 0.2%)
CPI Core, y/y, Oct, 1.7%, est. 1.8% (prior 1.8%)


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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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