Market Update
US tsys higher, yields 1.5-3bps lower with the curve flatter, 10Y 2.78%(-2.2bps), no reaction to weaker Q3 GDP & Nov durable goods low volume in TY futures (287k), equities falling further in Europe, Stoxx at two year low, S&P futures +5 after being down 5pts before 8:30 data. Core EGBs also pearing losses, 10Y gilt +3.5bps, 10Y bund +1.5bps @ 0.24%, Italian BTPs outperforming since deficit agreement reached with EU. GOCs higher, 1bp wider vs tsys, 10Y 2.0% , after volatile session yest saw 10s hit 1.94% mid morning before equities turned higher and 10s ended unch @ 2.0%.
News headlines
Details of Ex-Canada Diplomat’s Detention in China Revealed (Bloomberg) The ex-Canadian diplomat detained in China this month as Beijing fumed over the arrest of a Huawei Technologies Co. executive is being denied a lawyer and limited to one consular visit a month, according to a person familiar with the situation. The conditions are among the first details of Michael Kovrig’s detention since the International Crisis Group senior adviser was taken into custody by China’s spy agency on Dec. 10. The case — along with that of another Canadian citizen detained on the same day — have plunged Canada’s ties with its second-largest trading partner into crisis.
China Pledges More Stimulus in 2019 as Economy Seeks Bottom (Bloomberg) China’s top policy makers confirmed that more monetary and fiscal support will be rolled out in 2019, as the world’s second-largest economy grapples with a slowdown that’s yet to show signs of ending. “Significant” cuts to taxes and fees will be enacted in 2019 and while monetary policy will remain “prudent,” officials will strike an “appropriate” balance between tightening and loosening, according to a statement published after the annual Economic Work Conference that concluded in Beijing Friday.
Shutdown Nears With Congress at Impasse Over Trump’s Border Wall (Bloomberg) The U.S. government is just hours away from a partial shutdown with Congress at an impasse over funding President Donald Trump’s border wall. Republicans in the House on Thursday night sought to meet Trump’s demands, adding $5 billion for border wall construction to the Senate’s version of a stopgap spending measure.
Stocks Drop as Miserable Week Nears End; Dollar Up: Markets Wrap (Bloomberg) The pain across equity markets continued on Friday, with European stocks following Asian shares lower and U.S. futures pointing to yet more declines at the open. The dollar reversed a drop as Chinese policy makers moved to shore up growth, and bonds retreated across Europe. The Stoxx Europe 600 Index slipped for a second day as most sectors fell, though it pared some of the drop. Futures for the S&P 500, Dow Jones and Nasdaq indexes all slid. The MSCI Asia Pacific Index dropped for the fourth session in six as benchmarks declined in most countries. West Texas crude extended losses toward $45 per barrel.
Canada adds jobs in November on widespread gains: ADP (Reuters) Canada added 39,100 jobs in November, with broad-based gains across industries led by a pick-up in hiring in the trade, transportation and utilities sector, according to a report from ADP released on Thursday. The report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies. The October data was revised to show jobs rose 1,800 rather than a 23,000 decline.
TSX futures little changed ahead of GDP data (Reuters) Stock futures for Canada’s main stock were almost flat on Friday, as investors awaited the gross domestic product and retail sales numbers for October, scheduled to be released later in the day. December futures on the S&P/TSX index SXFc1 were up 0.05 percent at 7:00 a.m. ET. Canada’s economy is likely to have expanded by 0.2 percent in October, against a marginal contraction of 0.1 percent in the previous month. The GDP and retail sales data is due at 8:30 a.m. ET.
Enerjet relaunching as new ultra-low-cost airline in 2019 (BNN) Calgary-based charter airline Enerjet announced Thursday that it will relaunch as a new ultra-low-cost carrier in 2019, backed by “significant financial commitments” from a group of prominent investors. The carrier said in a release that by this time next year it will offer “a simple, ultra-low-cost fare structure” and fly to an “extensive” network of Canadian and U.S. destinations, but did not specify which cities.
Overnight markets
Overview: US 10yr note futures are down -0.013% at 121-02, S&P 500 futures are down -0.31% at 2478.5, Crude oil futures are down -1.22% at $45.32, Gold futures are down -0.36% at $1263.3, DXY is up 0.4% at 96.663, CAD/USD is up 0.28% at 0.7383.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.93% | 2 Year | 2.658% |
| 5 Year | 1.943% | 5 Year | 2.65% |
| 10 Year | 2.002% | 10 Year | 2.788% |
| 30 Year | 2.154% | 30 Year | 3.016% |
US Economic Data
| 8:30 AM | GDP Annualized QoQ, 3Q est 3.5% (3.5% prior) |
| Personal Consumption, 3Q est 3.6% (3.6% prior) | |
| GDP Price Index, 3Q est 1.7% (1.7% prior) | |
| Core PCE QoQ, 3Q est 1.5% (1.5% prior) | |
| Durable Goods Orders, Nov est 1.6% (-4.3% prior) | |
| Durable Goods Ex Transportation, Nov est 0.3% (0.2% prior) | |
| 10:00 AM | Personal Income, Nov est 0.3% (0.5% prior) |
| Personal Spending, Nov est 0.3% (0.6% prior) | |
| U. Of Mich. Sentiment, Dec est 97.4 (97.5 prior) | |
| U. Of Mich. Current Conditions, Dec (115.2 prior) | |
| U. Of Mich. Expectations, Dec (86.1 prior) | |
| U. Of Mich. 1 Yr Inflation, Dec (2.7% prior) | |
| U. Of Mich. 5-10 Yr Inflation, Dec (2.4% prior) | |
| 11:00 AM | Kansas City Fed Manf. Activity, Dec est 13 (15 prior) |
Canadian Economic Data
| 8:30 AM | Retail Sales MoM, Oct est 0.5% (0.2% prior) |
| Retail Sales Ex Auto MoM, est 0.2% (0.1% prior) | |
| GDP MoM, Oct est 0.2% (-0.1% prior) | |
| GDP YoY, Oct est 2.2% (2.1% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230