Market Update Quiet day with the US closed for thanksgiving. In EGBs, UK gilts are trading lower following EU-UK draft agreement on Brexit, with the GBPEUR cross higher, 10Y gilt + 2bps @ 1.41%. German bunds outperforming along with peripherals, German 10Y 2bps lower, Italy 10Y BTP -4.5bps, bunds getting a boost from ECB minutes of Oct 24-25 meeting, which noted some weakening in latest eco data. In Canada, GOCs are slightly lower with light volumes expected due to US holiday. The Federal Govt outlined its fall economic statement yest, wich revealed a slightly lower budget deficit for this fy – $18.1bln vs $19bln last yr, even as tax revenues were $4.6bln higher than exp. Tax incentives for business worth $14bln over six years will add to deficits over the five yr horizon period. Provis unch from yest levels, Ont reopened its 2049 issue yesterday @ 82.5bps which steepened the Ont 48/28 box slightly (now 12.5bps). Ontario 10Y spd @ 70bps is the widest since June, 7bps wider since Nov 1st.
News headlines
Business Lauds Trudeau’s Tax Relief But Says More Could Be Done (Bloomberg) Justin Trudeau spent a windfall on billions in tax breaks for Canadian businesses. Their response is that he still has work to do. Finance Minister Bill Morneau unveiled a fiscal update Wednesday in Ottawa with C$14 billion ($10.5 billion) in temporary write-offs for capital investment, a pledge to slash red tape, some direct cash for businesses and a push to boost export markets. It was all meant as a bold response to warnings about Canada’s fading competitiveness, particularly after President Donald Trump cut U.S. corporate taxes.
Italy’s Weak Bond Sale Is Followed by Another Debt-Market Rally (Bloomberg) Institutional investors offered little reassurance to Italy’s leaders after a sale of inflation-linked bonds received the second-lowest orders on record. Orders for the issuance totaled 2.16 billion euros ($2.46 billion), well short of analysts’ estimates of as much as 8 billion euros ahead of the offering. Still, bonds traded in the secondary market rallied after Deputy Prime Minister Luigi Di Maio indicated that he sees room for dialogue on the nation’s budget plans that are in breach of the European Union’s spending rules.
ECB Waits for 2021 Projections While Noting Economic Fragilities (Bloomberg) European Central Bank officials acknowledged “uncertainties and fragilities” affecting the economy at their latest policy meeting, while agreeing that they weren’t enough to weaken confidence that the euro zone’s domestic strength will prevail. “It needed to be emphasized that the incoming data, while somewhat weaker than expected, remained overall consistent with with an ongoing broad-based expansion,” the ECB said in the record of its Oct. 24-25 policy meeting published Thursday. New forecasts in December — which will include an outlook for 2021 for the first — “would provide an occasion for a more in-depth assessment.”
Stocks Dip in Holiday-Thinned Trading; Pound Jumps: Markets Wrap (Bloomberg) European stocks declined on Thursday and U.S. equity futures edged lower in a subdued day of trading thanks to the American Thanksgiving holiday. The pound jumped and the euro strengthened after a draft deal on post-Brexit ties was tentatively agreed. The Stoxx Europe 600 Index gave up a chunk of Wednesday’s gains as almost every sector fell, though the intraday trading volume was below the 30-day average and the gauge came off its lows. Asian equity benchmarks swung between gains and losses before turning higher, with Japanese stocks getting an end-of-session boost on a report about a possible government rebate. Trading volumes in the region were also depressed.
Canada considering proposal to buy rail cars to move stranded crude (Reuters) The Canadian government is considering a request from Alberta to share the cost of buying rail cars to move an additional 120,000 barrels per day of crude oil from the nation’s oil-rich province, two sources with direct knowledge of the matter told Reuters. Under the terms of the proposal submitted by the Alberta government last week, the additional rail cars would be in service by October 2019 and would run until some time in 2022, the sources added.
China says U.S. accusations of unfair trade practices ‘groundless’ (Reuters) China rejected fresh U.S. accusations of perpetuating “unfair” trade practices and urged Washington on Thursday to stop making provocations, showing little sign of backing down days ahead a high-stakes meeting between leaders from both countries.
Canada is less attractive than West Africa, U.K., warns Canadian Natural’s vice-chair (BNN) Canadian Natural Resources’ executive vice-chairman is hinting his company is gearing up to deploy its financial heft beyond Canada’s borders as record-low oil prices and competitiveness concerns plague the country’s energy sector. “We’re basically in Canada, the U.K. and offshore west Africa. I will say that we’re doing our budget right now and clearly the U.K. and offshore Africa look much better than Canada for investments,” Steve Laut told BNN Bloomberg in an interview Tuesday. “We’re still working it out, but they look much better.”
Republican Senators tell Trump they want vote on USMCA this year (BNN) A dozen GOP Senators urged President Donald Trump to send lawmakers final legislative language for a U.S.-Canada-Mexico trade agreement as soon as possible so that it can pass before Democrats take control of the House next year. The lawmakers wrote in a Nov. 20 letter that they’re concerned that waiting until 2019 to send Congress draft legislative language will make passage “significantly more difficult,” as some Democrats have called for revisions. Senate Majority Leader Mitch McConnell of Kentucky so far hasn’t shown interest in considering the trade deal before the end of the year.
Overnight markets
Overview: US 10yr note futures are down -0.039% at 119-06, S&P 500 futures are down -0.27% at 2641.75, Crude oil futures are down -0.11% at $54.57, Gold futures are up 0.08% at $1229, DXY is down -0.22% at 96.502, CAD/USD is down -0.08% at 0.7564.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.239% | 2 Year | 2.814% |
| 5 Year | 2.304% | 5 Year | 2.89% |
| 10 Year | 2.366% | 10 Year | 3.063% |
| 30 Year | 2.422% | 30 Year | 3.316% |
US Economic Data
There is no US economic data for today
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