Market Update
US tsys higher, yields ~3bps lower, 10Y 1.77% , above avg volume in TY futures (435k), tsy prices retracing part of post FOMC losses which saw the 10Y surge 10bps to 1.82%. Bunds paring losses, the OECD cut its outlook for global growth to 2.9% from 3.0%, the smallest rise since 2009 on US-China trade tensions, US GDP forecast for this year revised to 2.4% from 2.8%. The NY Fed will conduct its third straight repo operation to maintain FF in 1.75-2% range, up to $75bln. Yesterdays’ operation was oversubscribed with $81bln in bids for $75bln in securities. The USD-JPY cross currency basis swap widened 8bps to -30bps signalling increased demand for USD on the part of Japanese banks. GOCs underperforming tsys ~2bps, spreads holding steady after yesterday’s CPI, FOMC. Today sees the BOC auction $3bln in 2Y notes, reopening the 1.25% Nov 21s with the Nov21/2Y roll at -1.7/-1.9bps
News headlines
U.S. Futures, Dollar Dip as Europe Stocks Advance: Markets Wrap (Bloomberg) A split mood emerged across major markets on Thursday, with U.S. equity futures dropping and European stocks rising as investors processed a slew of fresh policy decisions following the Federal Reserve rate cut. The euro strengthened versus the dollar.
Futures lower after mixed signals from Fed (Reuters) Futures for Canada’s main stock index pointed to a lower opening on Thursday, tracking U.S. stock futures, after the U.S. Federal Reserve cut interest rates but set a higher bar for further reductions.
OECD warns of weakest global economic growth in a decade (BNN) Intensifying trade conflicts have sent global growth momentum tumbling toward lows last seen during the financial crisis, and governments are not doing enough to prevent long-term damage, the OECD said in its latest outlook.
Real crunch from Saudi Arabia’s oil outage has yet to be felt (Reuters) Saudi Arabia’s ability to avert a global oil supply crunch will only become clear in a few weeks, because for now its crude held in storage can fill the gap and mask the scale of damage to its facilities, traders and analysts say.
U.S., Chinese trade deputies face off in Washington amid deep differences (Reuters) U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks on Thursday for the first time in nearly two months as the world’s two largest economies try to bridge deep policy differences and find a way out of a bitter and protracted trade war.
France and Germany united on strategy to fight global slowdown: French minister (Reuters) France and Germany are agreed on a joint strategy to respond to a global economic slowdown at a time of international trade tensions, French Finance Minister Bruno Le Maire said on Thursday.
Bank of England keeps rates steady, warns Brexit delay would hurt growth (Reuters) The Bank of England said Brexit uncertainty was causing slack to re-emerge in Britain’s economy and damaging productivity, and a failure to reach a transition deal by Oct. 31 could lead to further weakness.
Powell stresses solid U.S. outlook after Fed cuts rates again (BNN) Federal Reserve policy makers lowered their main interest rate for a second time this year and Chairman Jerome Powell said that “moderate” policy moves should be sufficient to sustain the U.S. expansion.
Market Overview: US 10yr note futures are up 0.109% at 129-17, S&P 500 futures are down -0.12% at 3005, Crude oil futures are up 2.01% at $59.28, Gold futures are down -0.38% at $1510.1, DXY is down -0.3% at 98.264, CAD/USD is down -0.13% at 0.7534.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.598% | 2 Year | 1.732% |
| 5 Year | 1.45% | 5 Year | 1.645% |
| 10 Year | 1.423% | 10 Year | 1.765% |
| 30 Year | 1.578% | 30 Year | 2.21% |
US Economic Data
| 08:30 AM | Current Account Balance, 2Q Survey: -$127.4b Actual: -$128.2 Prior: -$130.4b |
| Philadelphia Fed Business Outlook, Sep Survey: 10.5 Actual: 12.0 Prior: 16.8 | |
| Initial Jobless Claims, Sep 14 Survey: 213k Actual: 208K Prior: 204k Revised: 206k | |
| Continuing Claims, Sep 7 Survey: 1672k Actual:1661k Prior: 1670k Revised: 1674k | |
| 09:45 AM | Bloomberg Consumer Comfort, Sep 15 Survey: — Prior: 63.2 |
| Bloomberg Economic Expectations, Sep Survey: — Prior: 48.5 | |
| 10:00 AM | Leading Index, Aug Survey: -0.10% Prior: 0.50% |
| Existing Home Sales, Aug Survey: 5.38m Prior: 5.42m | |
| Existing Home Sales MoM, Aug Survey: -0.70% Prior: 2.50% |
Canadian Economic Data
| 08:30 AM | ADP Canada Releases Aug. Payroll Estimates |
| Teranet/National Bank HPI MoM, Aug Survey: — Actual: 0.4% Prior: 0.7% | |
| Teranet/National Bank HPI YoY, Aug Survey: — Actual: 0.6% Prior: 0.4% | |
| Teranet/National Bank HP Index, Aug Survey: — Actual: 227.51 Prior: 226.57 |
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