Market Update
US tsys lower , yields 1.5bps-2bps higher with the 10Y 2.335%, weakening along with European bonds on stronger German Nov IFO business sentiment, stronger European equities. Next week looks to be heavy in the US in terms of corporate and tsy issuance: corp issuance expected to pick up after quiet week , estimates of $27-30bln according to MNI, while the US issues 2, 5 & 7Y notes for $88bln. In Canada, GOCs lower in line with tsys, 10Y 1.91%. Third quarter GDP, scheduled for next Friday, is forecast to have declined to 1.6% from 4.6% in Q2. Yesterday’s weak Sep retail sales lowered the ISFD ‘nowcast’ estimate for Q3 from 1.91% to 1.75%. Odds of a rate hike on Dec 6th have dropped to 14% based on OIS, the lowest yet, from 80% in Sep. The GOC curve (using 2s10s) is also the steepest relative to the US since March 2009. Provis opening unch, don’t expect supply with the US half day.
News headlines
Flynn’s Lawyers Have Stopped Cooperating With Trump’s Legal Team (Bloomberg) The legal team for former National Security Adviser Michael Flynn has stopped sharing information with President Donald Trump’s lawyers about the special counsel’s investigation into Russian interference in the 2016 election, said two people familiar with the probe.
Black Friday Retailers Looking to Extend Moment of Optimism (Bloomberg) As Black Friday shoppers descend on stores this weekend, retailers are experiencing something that’s been in short supply: optimism. Brick-and-mortar chains are coming off a generally positive earnings season, with companies such as Wal-Mart Stores Inc. seeing their shares reach record highs. Even the beleaguered department-store industry is finding reasons for hope. Macy’s Inc. and its peers rallied earlier this month after giving an upbeat outlook.
German Business Optimism Climbs to Record as Economy Booms (Bloomberg) German companies are more confident than ever as they tap into the global economic upswing. A measure of the nation’s business confidence set a new record high in November. The Ifo institute’s index climbed to 117.5 from a revised 116.8, beating economists’ estimates for the gauge to remain unchanged.
After Sudden Rout, China Stock Traders Question Beijing Put (Bloomberg) What happened to the Beijing put? That’s what investors in China are asking themselves after a gauge of large-cap stocks plunged 3 percent on Thursday, rattling a market that’s grown accustomed to state support when losses get extreme. While there were signs over the past week that the government was looking to cool gains in high-flying shares like Kweichow Moutai Co. — along with concerns over rising corporate bond yields — the severity of Thursday’s slump caught some traders off guard.
Stocks in Europe Gain as Bonds Decline; Oil Rises: Markets Wrap (Bloomberg) Stocks in Europe gained and the euro headed for a two-month high, while bonds fell as Germany moved closer to ending a political impasse and business confidence in the region’s biggest economy improved. The dollar steadied after three days of losses.
TSX futures rise as U.S. crude hits two-year high (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Friday as U.S. oil prices soared to a two-year high with North American markets tightening on the partial closure of the Keystone pipeline.
Canada September retail sales rise less than expected, pointing to slower growth (Reuters) Canadian retail sales rose far less than expected in September as higher gasoline prices were offset by a decline in purchases of vehicles and clothing, pointing to cooler economic growth and reinforcing expectations the central bank is on hold until next year.
Overnight markets
Overview: US 10yr note futures are down -0.075% at 125-01, S&P 500 futures are up 0.29% at 2602, Crude oil futures are up 1.24% at $58.74, Gold futures are down -0.33% at $1292.5, DXY is down -0.24% at 92.998, CAD/USD is up 0.03% at 0.7862.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.451% | 2 Year | 1.74% |
| 5 Year | 1.643% | 5 Year | 2.059% |
| 10 Year | 1.908% | 10 Year | 2.333% |
| 30 Year | 2.253% | 30 Year | 2.755% |
US Economic Data
| 9:45 AM | Markit US Manufacturing PMI, Nov est 55.0 (54.6 prior) |
| Markit US Services PMI, Nov est 55.3 (prior 55.3) | |
| Markit US Composite PMI, Nov (55.2 prior) |
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