Market Update
US tsys trading higher , 10Y yields down 2.5bps 2.29% on the back of sharp rally in UK gilts, German bunds, even as US equity futures extending gains after the S&P closed at a record high yest, crude is higher. Gilt yields 4-6 bps lower led by longs after the DMO announced plans to borrow an extra £4.25bln this year below dealer expectations of as much as £18bln to cover costs related to the decision to leave the EU. Tsys rallied late yest on Japanese earthquake and picked up steam in Europe on gains in EGBs. The US auctions $34bln in 5Y notes at 1:00pm and $13bln 2Y FRNs at 11:30. GOCs higher, tighter vs tsys after weaker core Sept Retail Sales (unch vs 0.5% exp). Provis unch yest in quiet trading with some steepening of the Ont 10s30s credit curve, this morning spds better bid, Ont longs trading up at 92 even as long Ont deal rumoured, Q/Ont 48 spd trading up at 2.6 bps at new lows! continues to grind tighter.
News headlines
U.S. stock futures point to extension of post-election rally (Reuters) U.S. stock index futures were higher on Tuesday, pointing to an extension of the post-election rally, a day after Wall Street closed at record levels on hopes that President-elect Donald Trump’s policies would prove market friendly. The small cap Russell 2000 index hit a record high on Monday, marking the first time since December 1999 that all four major Wall Street indexes closed at record levels on the same day.
OPEC experts resume talks on oil output cut, delegates upbeat (Reuters) OPEC experts discussing how to implement a plan to cut oil output are likely to reach agreement later on Tuesday, a Nigerian delegate said, a possible sign of progress in finalizing the group’s first supply-limiting deal since 2008. The High-Level Committee – a technical body comprised mainly of OPEC governors and national representatives who report to their respective ministers – started a second day of talks at OPEC headquarters in Vienna at about 0930 GMT (4:30 a.m. ET).
UK public finances better than expected (but still weak) (TheGuardian) Here we go! Britain borrowed less than feared last month, but is still on track to breach this year’s deficit target. Britain borrowed £4.796bn in October, the ONS says. That’s down from £6.4bn in October 2015. That is rather better than the £6bn which the City expected [this excludes the impact of the taxpayers’ stakes in the banking sector].
Metals rally helps knock dollar off 13 1/2-year high (Reuters) The dollar retreated from a six-month peak against the yen on Tuesday, while a push higher for copper and iron ore prices drove commodities-linked currencies higher, led by the Australian dollar. Two bullish weeks for the dollar since the election of Donald Trump looked to be subsiding before the Thanksgiving holiday, and traders said the widening of an oil rally to other commodities was encouraging a squeeze on pro-dollar positions.
Fed Hike Is Certainty for Bond Traders as Market Odds Reach 100% (Bloomberg) A Federal Reserve interest-rate increase next month is as certain as death and taxes for bond traders, as speculation mounts that Donald Trump’s reflationary policies will mean a quicker pace of monetary tightening. The market-implied odds of action at the central bank’s Dec. 13-14 meeting reached 100 percent for the first time, according to Bloomberg calculations based on futures.
George Weston’s restructuring costs fall, profit rises 72% (TheGlobeAndMail) George Weston Ltd. is reporting a big increase in third-quarter profit, mostly because of a decline in restructuring charges, compared with the same time last year. The parent company of Loblaw and Weston Foods says net income available to common shareholders was $254-million, up 72 per cent from $147-million in the comparable period last year.
Overnight markets
Overview: US 10yr note futures are up 0.1742% at 125-25, S&P 500 futures are up 0.23% at 2198, Crude oil futures are down -0.68% at $47.91, Gold futures are up 0.28% at $1213.2, DXY is up 0.06% at 101.11, CAD/USD is down -0.03% at 0.7454.
US Economic Data
| 10:00 AM | Richmond Fed Manufacturing Index, Nov, est. 0 (prior -4) |
| Existing Home Sales, Oct, est. 5.44m (prior 5.47m) | |
| Existing Home Sales, m/m, Oct, est. -0.6% (prior 3.2%) |
Canadian Economic Data
| 8:30 AM | Retail Sales, m/m, Sep, 0.6%, est. 0.6% (prior -0.1%, revised 0.1%) |
| Retail Sales Ex Auto, m/m, Sep, 0.0%, est. 0.5% (prior 0.0%, revised 0.2%) |
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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230