Market update
US tsys little changed, US 10Y 2.25%, curve ~1bp flatter, 30Y bond just above 2.0%. Bunds rallying on dovish Draghi comments (see above). GOCs unch, 1bp wider vs tsys after weaker Sep retail sales, higher than exp core CPI. Provi spds opening tighter, ont 46 103/102, PQ 48 109/108.
News headlines
- Dovish Draghi rhetoric keeps pressure on euro (FT) The euro moved further towards month lows on Friday, and German two-year debt hit record lows, after Mario Draghi repeated his willingness to use “all the instruments available” to help reach his 2 per cent inflation target.
- Wage pressures coming? U.S. companies start to sound the alarm (Reuters) Early indications of wage pressures in pockets of corporate America have begun emerging in recent weeks, suggesting labor costs could be a bigger headwind for U.S. companies in 2016.
- Goldman Says the Years of Emerging-Markets Doldrums Are Over (Bloomberg) After three years of disappointment, emerging markets are about to turn the corner, Goldman Sachs Group Inc. predicts. As growth picks up and weaker currencies help alleviate economic imbalances, “2016 could be the year EM assets put in a bottom and start to find their feet,” strategists led by Kamakshya Trivedi wrote in a note Thursday.
- What junk bond credit spreads reveal (FT) The yield premium on US high-yield bonds has been moving up steadily this year ahead of a possible Federal Reserve interest rate rise, and as falling commodity prices put pressure on miners and oil companies.
- Bond ETF Withdrawals Surge as Investors Brace for Higher Rates (Bloomberg) Investors in U.S. exchange-traded funds are selling bonds this month for the first time since June as they prepare for the Federal Reserve to raise interest rates. They’ve pulled $1.12 billion from U.S. fixed-income funds in November. While the Fed has emphasized it plans to move at a gradual pace, the figures highlight the extent to which bond investors are seeking protection as they prepare for the first increase to borrowing costs in almost a decade.
Overnight markets
- Overview: IG24 5Y 79.047/79.763 (-1.995), US 10yr note futures are up +0.05% at 126-27, S&P 500 futures are up +0.32% at 2086.0, Crude oil futures are down -1.26% at 40.03$, Gold futures are up +0.25% at $1081.7, DXY is up +0.26% at 99.248.
US Economic Data
- Kansas City Fed manufacturing index is forecast at 0 in November higher than October level (-1).
Canadian Economic Data
- Retail sales went up -0.5% MoM in September, worse than expectations of a 0.1% increase, after increasing 0.5% the previous month.
- CPI is down 0.1% MoM (+1.0% YoY) in October (0.1% MoM and 1.0% YoY Expec) versus September -0.2% MoM (1.0% YoY).
- CPI core came in at 0.3% MoM (2.1% YoY) in October (0.2% MoM and 2.0% YoY Expec) compared to previous month 0.2% MoM (2.1% YoY).
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