Market Update
The week ahead should be rather quiet due to the Thanksgiving holiday market closure Thursday followed by an early close Friday. As far as Fed speaker engagements, looks like New York Federal Reserve President John Williams is the only one on tap with three separate events Monday. Williams will participate in moderated discussion and answer audience questions at 10h45. US Tsy yields continue to inch higher, led by the longer end. The 2-year benchmark yield trades at 2.820% up from 2.794% while the 10-year has edged up to 3.087% from a low of 3.054%. The curve is slightly steeper with the 2s10s spread widening to 26.4bps from a low of 25.1bps. There has been more movement in the 2s30s which has traded up 2bps. Inflation breakevens have been relatively stable with the 5-year trading at 1.881% and the 10-year at 2.029%.
News headlines
Trudeau Seeks Redemption From Business Leaders in Budget Update (Bloomberg) Prime Minister Justin Trudeau gets one of his last chances this week to mend frosty ties with Canada’s business community as next year’s election nears. Trudeau’s finance chief, Bill Morneau, will unveil a fiscal update Wednesday in Ottawa that provides a shot at redemption after warnings about the country’s fading competitiveness. It will likely include incentives for capital investment but not an across-the-board reduction in corporate taxes.
EU Set to Tighten Rules on Foreign Investment to Fend Off China (Bloomberg) The European Union is hammering out the first bloc-wide rules to prevent foreign investments from threatening national security, as Chinese acquisitions foster political unease. Negotiators representing EU governments and the European Parliament may agree on draft legislation to screen foreign direct investments on Nov. 20, according to Franck Proust, a French member of the 28-nation assembly.
Corporate America’s Debt Boom Looks Like a Bust for the Economy (Bloomberg) Despite strong incentives in the Republican tax plan for American executives to expand, invest and ultimately boost the U.S. economy’s growth potential, a lot of the debt companies are issuing appears to be motivated by something else. Non-financial corporate debt stands at 45.6 percent of gross domestic product, near the highest in post-war record keeping. Despite that, non-residential investment — a broad category in the national accounts that includes everything from office buildings to software — has only been bouncing around the 13 percent of GDP range since 2012.
Stocks Mixed as Treasuries Decline, Dollar Steadies; Market Wrap (Bloomberg) U.S. equity futures fell while shares drifted in Europe and climbed in Asia as investors digested signs that America-China trade tensions are set to persist. Treasuries declined, the dollar steadied and gold fell. Telecommunications shares helped support the Stoxx Europe 600 Index, though the gauge was limited by a plunge in Renault SA following misconduct allegations against the carmaker’s leader. Equities posted modest increases in Tokyo, Hong Kong, Shanghai and Taiwan. European bonds mostly edged lower, with Italian securities erasing earlier gains made when Deputy Premier Luigi Di Maio said his government is ready for dialog with the European Commission over the country’s budget.
Nissan to fire Ghosn over financial misconduct allegations (Reuters) Nissan Motor Co Ltd (7201.T) said it planned to oust Chairman Carlos Ghosn after alleging he had used company money for personal use and committed other serious acts of misconduct. Japanese media reported that Ghosn, who is also chairman and chief executive of Nissan’s French partner Renault (RENA.PA) and one of the best known figures in the global car industry, had been arrested.
Canada’s Trudeau uses Trump card to attack main political rival (Reuters) Donald Trump is so unpopular in Canada that Prime Minister Justin Trudeau is using the specter of the U.S. president to attack his conservative rival ahead of a national election set for next year. Trudeau, whose ruling Liberals have a 12-seat majority in the 338-seat parliament, calls Conservative Party leader Andrew Scheer a climate change “ideologue” who stokes “fear and division” on immigration.
Bombardier drop caps worst week in 30 years as stock plan probed (BNN) Bombardier Inc. () plunged to its worst week in at least 30 years after regulators said they were reviewing the company’s executive stock-sale program in the wake of an earlier share rout. Quebec’s Autorite des Marches Financiers ordered the suspension of all such transactions until further notice. Bombardier said it would fully cooperate with the probe of the stock-disposition plan, which was adopted in August.
Trump optimistic about trade deal after receiving China response (BNN) President Donald Trump said he is optimistic about resolving the U.S. trade dispute with China after receiving a response from Beijing to his demands, ahead of a widely anticipated meeting with Chinese President Xi Jinping in Argentina later this month. Trump told reporters Friday that the Chinese response was largely complete but was missing four or five big things. “China wants to make a deal, they sent a list of things they are willing to do which is a large list and it is just not acceptable to me yet, but at some point I think that, we are doing extremely well with respect to China,” Trump said.
Overnight markets
Overview: US 10yr note futures are down -0.013% at 119-05, S&P 500 futures are down -0.35% at 2733.5, Crude oil futures are up 0.09% at $56.51, Gold futures are down -0.16% at $1221, DXY is down -0.01% at 96.456, CAD/USD is up 0.18% at 0.7591.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.221% | 2 Year | 2.814% |
| 5 Year | 2.299% | 5 Year | 2.892% |
| 10 Year | 2.37% | 10 Year | 3.079% |
| 30 Year | 2.427% | 30 Year | 3.339% |
US Economic Data
| 10:00 AM | NAHB Housing Market Index, Nov est 67 (68 prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Nov 16th (57.6 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230