Market Update US tsys lower, close to lows of o/n session on heavy volume in TY futures (568k) as equities rebound – S&P futures +12.5 China shares rise ~3.0%. European stocks slightly positive now, recovering from earlier losses which saw the Stoxx fall back to Monday’s low. Quiet on US data front only Sep Existing Home Sales at 10:00. Large move in BTPs overnite, the Italian 2Y surging to 1.70% from 1.50%, now 1.58% – ongoing conflict between the EU and Italy has intensified, with Italy insisting on higher budget deficit target. In Canada, GOCs lower, 10Y 2.51% before key Aug Retail Sales and Sep CPI, with the latter expected to slow to 2.7% y/y from 2.8% in Aug mostly due to a lower cont from gasoline. Focus will be on the three core measures which rose to a high since 2012 2.1% in August.
News headlines
China’s Economy Slows Amid Darker Outlook at Home and Abroad (Bloomberg) China’s economic growth slowed more than expected in the third quarter, as weak industrial output data and what the government called the « severe international situation » challenged efforts to stabilize the economy and reach its growth targets. Gross domestic product increased 6.5 percent in the three months through September from a year earlier, compared to 6.6 percent in a Bloomberg survey and down from the 6.7 percent pace in the previous quarter. That’s the slowest since the aftermath of the global financial crisis in 2009.
Italy Faces Off With EU as Pressure Mounts Over Budget (Bloomberg) The gloves came off in Italy’s fight with the European Union, as several of the bloc’s leaders attacked the populist government in Rome and the EU’s executive warned that its budget draft won’t fly. Markets took fright at the prospect of more upheaval in the euro area’s most indebted nation after Greece, with the Five Star Movement-League coalition setting itself on a collision course with Brussels over its spending plans.
The ECB May End its Negative Interest-Rate Policy in 2020 (Bloomberg) The European Central Bank will end its negative interest-rate policy in January 2020 and start paying for deposits eight months after that, according to a Bloomberg survey of economists. Liftoff is predicted for September next year, and the deposit rate is seen climbing to 0.25 percent, from minus 0.4 percent currently, by the end of 2020. No change in monetary policy is predicted at the Governing Council’s meeting on Thursday.
U.S. Futures Gain as Europe Struggles; Dollar Dips: Markets Wrap (Bloomberg) U.S. equity futures rose, pointing to a stronger open in New York as European shares dropped and Asian peers were mixed. Treasuries were steady as the dollar edged lower. Futures on the Dow Jones, S&P 500 and Nasdaq advanced. The Stoxx Europe 600 index declined as warnings from tire manufacturer Michelin and toolmaker Atlas Copco AB clouded the outlook for corporate earnings. Shares in Shanghai and Hong Kong gained earlier as financial regulators vowed to keep risks under control, though the MSCI Asia Pacific Index slipped with benchmarks in Tokyo, Mumbai and Taiwan. Europe’s peripheral debt fell and Italian stocks sank to a 19-month low as EU nations warned Italy’s populist government its budget won’t fly.
Canada added 28,800 jobs in September: ADP (Reuters) Canada added 28,800 jobs in September, helped by a pickup in hiring in the trade, education and health care industries, according to a report from ADP released on Thursday. The number of jobs added in August was revised higher to 42,700 from 13,600, ADP said. The report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies.
OPEC, allies struggle to fully deliver pledged oil output boost (Reuters) OPEC is struggling to add barrels to the market after agreeing in June to increase output, an internal document seen by Reuters showed, as an increase in Saudi Arabia was offset by declines in Iran, Venezuela and Angola. The Organization of the Petroleum Exporting Countries and allies agreed in June to boost supply as U.S. President Donald Trump urged producers to offset losses caused by sanctions on Iran and to dampen rising prices.
Canada not sending anyone to Saudi business summit and never intended to (BNN) The federal government has no intention of sending anyone to a major investment conference in Saudi Arabia next week at a time when Riyadh is the target of global outrage – and one source insists Ottawa never had plans to dispatch a delegation. Cabinet ministers, federal officials and embassy staff will skip the Future Investment Initiative in Riyadh, which is sometimes referred to as “Davos in the Desert,” a senior government insider said Thursday. Last year, then-natural resources minister Jim Carr attended the inaugural edition of the summit.
Overnight markets
Overview: US 10yr note futures are down -0.079% at 118-02, S&P 500 futures are up 0.37% at 2782.5, Crude oil futures are up 0.9% at $69.27, Gold futures are up 0.1% at $1231.3, DXY is down -0.01% at 95.892, CAD/USD is down -0.39% at 0.7672.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.328% | 2 Year | 2.887% |
| 5 Year | 2.423% | 5 Year | 3.038% |
| 10 Year | 2.511% | 10 Year | 3.19% |
| 30 Year | 2.534% | 30 Year | 3.38% |
US Economic Data
| 10:00 AM | Existing Home Sales, Sep est 5.29m (5.34m prior) |
| Existing Home Sales MoM, est -0.9% (0.0% prior) |
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, Aug est 0.3% (0.3% prior) |
| Retail Sales Ex Auto MoM, Aug est 0.1% (0.9% prior) | |
| CPI NSA MoM, Sep est 0.1% (-0.1% prior) | |
| CPI YoY, Sep est 2.7% (2.8% prior) | |
| Consumer Price Index, Sep est 134.4 (134.2 prior) | |
| CPI Core- Common YoY%, Sep est 2.0% (2.0% prior) | |
| CPI Core- Median YoY%, Sep (2.1% prior) | |
| CPI Core- Trim YoY%, Sep (2.2% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230