Market update
US tsys trading higher, US 10Y 2.257 (-1.7bps), curve 4bps flatter after FOMC minutes yest raised expectation for Dec rate hike. Core Euro bonds higher led by 10Y gilts (-2.5bps) after weaker Oct retail sales. Bund futures up for a ninth day, 10Y bund yield below 0.50%. Dovish comments from ECB Praet (see above) & minutes from Oct meeting revealing ongoing concerns with deflation risk. 10Y TIPs auction at 1:00PM with breakeven close to the lowest lvl since 2009 while the last 3 TIPS auctions have tailed. GOCs are higher , curve flatter yet lagging the sharp flattening move in the US by ~3bps. Provi spds tighter again this morning, after narrowing 1.5bps yest despite more than $2.5bln in supply (CHT, QC, muni…).
News headlines
- ECB Minutes Signal More Stimulus Possible in December (WSJ) European Central Bank officials were concerned at last month’s policy meeting that their stimulus measures hadn’t gained enough of a foothold in the European economy, according to the minutes of that meeting, prompting them to signal that more easy money steps were possible.
- ECB’s Solution to Oil Puzzle May Decide December QE Debate (Bloomberg) The European Central Bank’s decision on whether to inject fresh stimulus into the euro area next month may swing on a judgment over what’s causing a slide in oil prices. Both ECB President Mario Draghi and Executive Board member Peter Praet, the institution’s chief economist, have signaled concern that cheaper energy is a warning sign.
- Rate-Rise Bets Heat Up After Fed Minutes (WSJ) A key measure of bets that U.S. short-term interest rates will rise hit their highest level in nearly a year, as investors prepared for the first Federal Reserve rate increase since 2006.
- Retail Sales Fall as Britons Driving Growth Take Breather (Bloomberg) U.K. retail sales fell more than economists forecast last month as consumers took a breather after going on a spending spree in September.
- US oil back below $40 threshold (FT) US crude oil fell below $40 a barrel for the first time since August on Wednesday as rising inventories in the world’s largest oil consumers heightened concerns over the deepening global glut.
- BOJ keeps policy steady despite recession, sees capex rebound (Reuters) The Bank of Japan kept its monetary stimulus program unchanged on Thursday, with Governor Haruhiko Kuroda holding fast to his view that the corporate capital expenditure vital to economic growth will pick up – suggesting that no new monetary easing is imminent.
Overnight markets
- Overview: IG24 5Y 79.232/79.936(+1.391), US 10yr note futures are up +0.04% at 126-22+, S&P 500 futures are up +0.18% at 2083.5, Crude oil futures are down -1.77% at 40.03$, Gold futures are up +0.11% at $1069.9, DXY is down -0.27% at 99.384.
US Economic Data
- Initial jobless claims came in at 271K for the week ending November 14th, higher than expected (270K) and lower than prior week (276K).
- Continuing claims increased to 2175K from 2177K and was higher than expected (2167K).
- Philadelphia Fed came in at 1.9 in November above October level of -4.5.
- Leading index is forecast at 0.5% in October higher than September -0.2% decrease.
Canadian Economic Data
- Wholesale trade sales came in at -0.1% MoM in August equal to July -0.1% decrease and lower than expected (0.2%).
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230