Market Update

Risk on trade in mkts has tsys on the backfoot, more than reversing yesterday’s rally with the 10Y 2.355 (+3.5bps) after the US senate passed the budget vote paving the way for tax reform. S&P futures +4.75, crude lower as US inventories rose and news Iraq is working to restore oil flows from the Kirkuk region. GOCs outperforming tsys by 3-5 bps after both  August retail sales and Sep CPI disappointed with retail sales volumes  falling the most since March 2016. CPI rose to 1.6% due to higher gasoline prices which was expected. ex-gasoline CPI rose 1.1%

News headlines 

Trump Advisers Lean Toward Taylor or Powell for Fed (Bloomberg) President Donald Trump’s closest advisers are steering him toward choosing either Stanford economist John Taylor or Federal Reserve Board Governor Jerome Powell to be the next Fed chief, according to several people familiar with the process.

U.S. Senate Adopts Budget, Giving Momentum to Trump’s Tax-Cut Plans (Bloomberg) The Senate adopted a fiscal 2018 budget resolution Thursday that House GOP leaders agreed to accept, a show of unity aimed at speeding consideration of President Donald Trump’s plan to enact tax cuts.

Abe’s Coalition May Lose Two-Thirds Majority, Poll Shows (Bloomberg)  Japanese Prime Minister Shinzo Abe’s ruling coalition is projected to lose its two-thirds majority in Sunday’s general election, a Nikkei poll showed, potentially slowing the premier’s push to revise the nation’s pacifist constitution.

Shanghai Stocks Soar on City’s Free-Trade Port Plan (Bloomberg) Traders are snapping up stocks with Shanghai in their name after the city’s Communist Party chief confirmed plans to set up a free trade port that would aim to ease restrictions for incoming cargo.

Dollar, Stocks Get Lift From Tax Move; Bonds Fall: Markets Wrap (Bloomberg)  The dollar climbed and Treasuries fell after the latest developments in Washington buoyed optimism about tax reform and odds rose that an insider may become the next Fed chief. European stocks edged higher on the back of rising metal prices and positive corporate earnings.

Merkel Settles the Brexit Game: Ball in Both EU and U.K. Courts (Bloomberg)  German Chancellor Angela Merkel — preoccupied with the aftermath of her own election, and the need to form a coalition — ignored the back and forth. But at a key summit in Brussels she took on the role of chair umpire.

Catalan Banks Say Business Normal After Calls to Pull Cash (Bloomberg) CaixaBank SA and Banco Sabadell SA said business was normal after Catalan separatists called on supporters to make cash withdrawals, singling out lenders that have moved their legal domiciles out of the region.

Canada finance minister says will adopt blind trust, divest assets (Reuters) Canada’s Finance Minister Bill Morneau said on Thursday he will place his assets in a blind trust and divest all his stock in a publicly traded family business, amid opposition allegations that these holdings put him in a conflict of interest.

UK business minister travels to Canada for talks on Bombardier deal (Reuters)  British Business Secretary Greg Clark will hold talks in Canada on Friday to discuss Airbus SE’s plans to buy a majority stake in Bombardier’s C-Series jetliner program aimed at helping it avoid high U.S. import tariffs.

Overnight markets 

Overview: US 10yr note futures are down -0.262% at 124-30, S&P 500 futures are up 0.2% at 2565.5, Crude oil futures are down -0.55% at $51.01, Gold futures are down -0.41% at $1284.7, DXY is up 0.14% at 93.399, CAD/USD is up 0.57% at 0.7964. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.451% 2 Year 1.564%
5 Year 1.686% 5 Year 2%
10 Year 2.016% 10 Year 2.366%
30 Year 2.356% 30 Year 2.882%

US Economic Data

10:00 AM Existing Home Sales, Sep est 5.3m (5.35m prior)
Existing Homes Sales MoM, Sep est -0.9% (-1.7% prior)
10/20-10/23 Monthly Budget Statement, Sep est 6.0b (33.4b prior)

Canadian Economic Data

8:30 AM CPI NSA MoM, Sep 0.2% est 0.3% (0.1% prior)
CPI YoY, Sep 1.6% est 1.7% (1.4% prior)
Consumer Price Index, Sep 130.8 (130.5 prior)
CPI Core – Common YoY%, Sep 1.5%  (1.5% prior)
CPI Core – Trim YoY%, Sep 1.5% (1.4% prior)
CPI Core- Median YoY%, Sep 1.8% (1.7% prior)
Retail Sales MoM, Aug -0.3% est 0.5% (0.4% prior)
Retail Sales Ex Auto MoM, Aug -0.7% est 0.3% (0.2% 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