Market Update

Tsys mixed, long end outperforming, new lows for 2s10s new low 58.73 overnite, 10Y 2.36%. Equities firmer (S&P fut +7.5), gold recovering somewhat after yesterday’s $15 decline, the largest since Sep. Crude reversing earlier gains now flat @ 56.33. Core EGB curves flatter as well, gilt curve 2bps flatter led by the long end- UK Budget tomorrow with some analysts expecting a cut in gilt issuance for 2017-18 fy from this year’s GBP 114.2bln. German 10Y bund yield 1bp lower @ 0.35%, long end leading with 30Y @ new low 1.20% – gross EGB supply falls to only E2.2bln (Finland 10Y and Germany 30Y) from over E35bln last week, seasonal slowing of issuance into y/e.  GOCs higher outperforming tsys in 10s by ~1.5bps  after spike  in CGBS , longs lagging on the curve. Yest saw Can/US end 1-2bps cheaper led by the long end after more 30Y provi/corp supply – $300mln Manitoba 48s @  86 (onts +12), deal went so-so, $430mln CU longs @ 124 (guidance 126 +/- 3) broke 1wider.

News headlines 

Yellen Says She’ll Leave Fed Once Powell Is Sworn In as Chairman (Bloomberg) Federal Reserve Chair Janet Yellen said she will step down from its Board of Governors once her successor is sworn into the office, widening the scope for President Donald Trump to shape the U.S. central bank’s leadership for years to come.

AT&T, U.S. Prepare to Battle in Court Over Time Warner Merger (Bloomberg) A defiant Randall Stephenson told antitrust enforcers that AT&T Inc. would see them in court after the Justice Department sued to block the company’s $85.4 billion bid to buy Time Warner Inc.

Brexit-Hit Banks to Start Moving Staff Abroad in Early 2018 (Bloomberg) U.K. politicians are fighting to get a deal early next year that will ease businesses’ panic about Brexit. For some industries, it’s probably too late. Barring some major breakthrough, global banks will implement their relocation plans early next year to guarantee they’re able to have new offices inside the European Union running by the time the U.K. exits, people with knowledge of the matter said. There’s little Prime Minister Theresa May can do to stop lenders from executing their contingency plans, if they haven’t already, said one of the people.

Merkel Tells Her German Rivals: Back Me or Face Voters Again (Bloomberg) German Chancellor Angela Merkel said she’s ready to face voters again to break the country’s political stalemate, betting they won’t blame her for failed talks on forming a coalition.

Global Stocks Gain as Bonds Rise; Dollar Slips: Markets Wrap (Bloomberg) Stocks pushed higher, while bonds across Europe followed a rise in Treasuries after the European Central Bank was said to be likely to make only small adjustments to its guidance on monetary policy next year.

Turkey Lifts Bank-Funding Cost as Lira Drops to All-Time Low (Bloomberg) The Turkish lira weakened to a record low and bonds tumbled, pressuring policy makers to find ways of staunching a market rout that’s putting them at odds with President Recep Tayyip Erdogan.

Royal Bank of Canada Designated a Global Systemically Important Bank (Newswire) Royal Bank of Canada (RY on TSX and NYSE) today announced it has been named a Global Systemically Important Bank (G-SIB) by the Financial Stability Board (FSB), based in Basel, Switzerland. This designation reflects the size and scale of RBC’s global operations.

Nebraska OKs ‘alternative route’ for Keystone XL pipeline (CBC) TransCanada Corp.’s Keystone XL pipeline won approval Monday from regulators in Nebraska, but state regulators did not OK the company’s preferred route. Instead, the commission approved the so-called « mainline alternative route » for the pipeline, which is a slightly different path from the preferred route proposed by TransCanada. Pipeline opponents were cheered by the result.

Overnight markets

Overview: US 10yr note futures are up 0.05% at 124-24, S&P 500 futures are up 0.32% at 2590.25, Crude oil futures are up 0.14% at $56.5, Gold futures are up 0.23% at $1278.2, DXY is up 0.05% at 94.126, CAD/USD is down -0.12% at 0.7809.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.471% 2 Year 1.759%
5 Year 1.667% 5 Year 2.095%
10 Year 1.942% 10 Year 2.358%
30 Year 2.286% 30 Year 2.765%

US Economic Data

8:30 AM Chicaco Fed Nat Activity Index, Oct 0.65 est 0.20 (0.17 prior)
10:00 AM Existing Home Sales, Oct est 5.40m (5.39m prior)
  Existing Home Sales MoM, Oct est 0.2% (0.7% prior)

Canadian Economic Data

8:30 AM Wholesale Trade Sales MoM, Sep -1.2% est 0.6% (0.5% 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