Market Update

US tsys trading higher on ‘risk off’ tone following latest N. Korea threats, US 10Y 2.25% (-2.7bps), tsy futures near highs on heavier than avg volume (350k TY futures), Dec Eurodollars higher USD down for 2nd day after FOMC rally on Wed, crude unch @ 50.45, gold close to one-month lows after yest 1.6% decline. GOCs higher, outperforming tsys by 2-3bps after August CPI came in weaker 0.1% vs 0.2% exp, 1.4% y/y vs 1.5%. Active day in corps yest with $1bln Enbridge hybrids 60NC10Y hybrids, $350mln 3.4Y CWB deposit note @ 120.1 and $250mln CIXCN 10Y @ 179.7.   Enbridge hybrids way oversubscribed, broke $1 higher, 10bps tighter (315/305 pxd @ 325).

News headlines 

S&P Strips Hong Kong of AAA Rating After China Downgrade (Bloomberg) S&P Global Ratings cut Hong Kong’s credit rating a day after it downgraded China for the first time since 1999, a move that reflects the “strong institutional and political linkages” between the special administrative region and the mainland, the ratings firm said.

Euro-Area Economy Is on Track for Best Quarter Since 2015 (Bloomberg) The euro-area economy may have grown at the fastest pace in more than two years in the third quarter after an unexpected upturn in September.

May to Reboot Brexit Plan by Requesting Transition Period (Bloomberg) U.K. Prime Minister Theresa May will reboot her Brexit strategy on Friday by proposing a period of transition after the split with the European Union even if that means continuing to send money to Brussels and observing its rules until 2021.

Despite tough talk, Canada seen unlikely to walk away from NAFTA (Reuters) Despite Canada’s threats to walk away from NAFTA talks if necessary, its limited success in diversifying exports leaves the nation too reliant on U.S. markets to play hardball, government insiders and trade experts say.

Canada annual inflation rate increases to 1.4 percent in August (Reuters) Canada’s annual inflation rate in August increased to 1.4 percent, up from 1.2 percent in July, fueled by the transportation and shelter indexes, Statistics Canada said on Friday. Canada July retail sales up 0.4 percent on autos, food. Canadian retail sales increased by 0.4 percent in July from June to C$49.13 billion ($40.02 billion), as sales grew at motor vehicles and parts dealers, and food and beverage stores, Statistics Canada said on Friday.

Oil prices steady as OPEC ministers discuss supply cut pact (Reuters) Oil prices were steady on Friday, as investors waited to see whether major producers meeting in Vienna would back an extension to output cuts beyond March next year.

Overnight markets 

Overview: US 10yr note futures are up 0.137% at 125-26, S&P 500 futures are down -0.23% at 2495.25, Crude oil futures are down -0.45% at $50.32, Gold futures are up 0.18% at $1297.1, DXY is down -0.27% at 92.011, CAD/USD is down -0.16% at 0.8125.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.574% 2 Year 1.431%
5 Year 1.8% 5 Year 1.866%
10 Year 2.106% 10 Year 2.257%
30 Year 2.453% 30 Year 2.794%

US Economic Data

9:45 AM Markit US Manufacturing PMI, Sep P, est. 53.0 (prior 52.8)
Markit US Services PMI, Sep P, est. 55.8 (prior 56)
Markit US Composite PMI, Sep P, (prior 55.3)


Canadian Economic Data

8:30 AM Retail Sales, m/m, Jul, 0.4%, est. 0.2% (prior 0.1%, revised 0.0%)
Retail Sales Ex Auto, m/m, Jul, 0.2%, est. 0.4% (prior 0.7% revised 0.4%)
CPI NSA, m/m, Aug, 0.1%, est. 0.2% (prior 0.0%)
CPI, y/y, Aug, 1.4%, est. 1.5% (prior 1.2% )
CPI Core – Common, y/y, Aug, 1.5%, (prior 1.4%)
CPI Core – Trim, y/y, 1.4%, Aug, (prior 1.3%)
CPI Core – Median, y/y, Aug, 1.7%, (prior 1.7%)


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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230