Market Update US tsys trading higher, near highs of o/n range on strong volume in TY futures (760k),the 10Y 3.04% (-2bps), curve ~2bps flatter 2s10s. Equity futures in the red, poised to extend yesterday’s selloff – Nasdaq futures -1.6%. Light day for eco only Phili Fed non-man, Oct Housing Starts. Core Euro bonds mixed – UK gilts lower after Carney said risk of no-deal Brexit remains high. GOCs higher, in line with tsys on FTQ bid, 10Y 2.335% (-1.7bps).
News headlines
Carney Backs May’s Brexit Plan With Case for Longer Transition (Bloomberg) Mark Carney gave his seal of approval to the transition deal agreed by Prime Minister Theresa May with the European Union, and signaled that he would welcome even longer for the U.K to adjust. In his first public comments on the government’s draft agreement, the Bank of England governor united with other central bank officials to warn of the dangers of leaving the European Union without a smooth exit.
Laptops, Phones and Sweaters in Crosshairs for Tariffs (Bloomberg) So far in the trade war with China, President Donald Trump has avoided putting tariffs on many consumer goods like cellphones, laptops, storage devices, toys, and some clothes. That may be about to change, if talks with Xi Jinping planned for the end of the month don’t lead to a deal. If Trump follows through on his threat to impose import taxes on these goods, $44.5 billion dollars worth of phones could be hit, as would more than $12 billion dollars worth of toys.
Credit Set for Worst Year Since 2008 as Crashes Roil Market (Bloomberg) Credit markets are set for the worst year since the global financial crisis as investors abandon hope of a late-2018 rally. High-yield and investment-grade notes are headed for losses in both euros and dollars, the first time all four asset classes have posted negative total returns since 2008, based on Bloomberg Barclays indexes. It’s been a exceptionally volatile month, with headlines on companies including CMC di Ravenna SC and Nyrstar NV triggering the biggest weekly jump in euro high-yield spreads in almost seven years, while dollar investment-grade spreads are at a two-year high amid a sell-off triggered by General Electric Co.’s woes.
Stocks Track Tech Slump in U.S.; Treasuries Gain: Markets Wrap (Bloomberg) Stocks fell from London to Shanghai and U.S. equity futures signaled the global rout led by technology shares would deepen Tuesday, adding pessimism to markets already anxious over trade. Treasuries advanced and the dollar edged higher. Contracts on all major U.S. equity indexes pointed to declines at the open, with megacap tech shares leading the drop. The Stoxx Europe 600 Index fell a fifth day as its technology sector headed toward a bear market. Equities slid across Asia after U.S. software developers and chip makers dragged the S&P down Monday.
Target third-quarter comparable sales, earnings fall, shares drop 11 percent (Reuters) Target Corp (TGT.N) reported third-quarter earnings and comparable sales below estimates on Tuesday, at a time when a strong economy has boosted consumer spending at rival retailers, sending its shares down 11 percent in premarket trade. Sales at stores open at least a year rose 5.1 percent, short of analysts’ estimates of a 5.21 percent increase, according to IBES data from Refinitiv. Excluding items, Target earned $1.09 per share, below the average estimate of $1.12 per share.
Bitcoin extends slide below $4,500, new 2018 low (Reuters) Bitcoin tumbled as much as 10 percent on Tuesday to below $4,500 BTC=BTSP, bringing the world’s best-known cryptocurrency’s losses to 30 percent within a week as a selloff in digital currencies intensified across the board. Other cryptocurrencies also skidded sharply, with Ethereum’s ether losing 10 percent ETH=BTSP and Ripple’s XRP XRP=BTSP down 13 percent in a largely sentiment-driven slide.
Bombardier jumps 23% as Citi says Quebec probe ‘appears routine’ (BNN) Bombardier Inc. shares jumped the most in a year after a Citigroup analyst said Friday’s 20 per cent drop was excessive because a regulatory review of the company’s executive stock-sale plan “appears routine.” Bombardier’s Class B stock jumped 23.95 per cent to $2.07 in Toronto on Monday, the biggest increase since last November. Bonds also rose, snapping a six-day decline.
Overnight markets
Overview: US 10yr note futures are up 0.052% at 119-12, S&P 500 futures are down -1.1% at 2666.5, Crude oil futures are down -0.61% at $56.85, Gold futures are up 0.1% at $1226.5, DXY is up 0.2% at 96.381, CAD/USD is up 0.17% at 0.7579.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.206% | 2 Year | 2.785% |
| 5 Year | 2.271% | 5 Year | 2.858% |
| 10 Year | 2.343% | 10 Year | 3.043% |
| 30 Year | 2.41% | 30 Year | 3.302% |
US Economic Data
| 8:30 AM | Housing Starts, Oct est 1225k (1201k prior) |
| Housing Starts MoM, Oct est 1.8% (-5.3% prior) | |
| Building Permits, Oct est 1260k (1241k prior) | |
| Building Permits MoM, Oct est -0.8% (-0.6% prior) |
Canadian Economic Data
There is no Canadian economic data for today.
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