Market Update US tsy yields ~1-2.5 bps higher, equity futures higher (S&P fut +30), crude +1.8% 51.33. Risk on sentiment buoyed by narrowing in Italy/German bond spd, 10Y BTP -13bps @3.26%, FTSE MIB +2.5% on reports govt is studying lower deficit target after discussions with the EU. GOCs weaker, in line with tsys 10Y 2.36% – Cda/US spreads little changed after Friday’s CPI/retail sales data, with odds of a BOC rate hike at the January meeting hovering ~70%. Quiet on the data front until Friday with Q3 GDP expected to have risen 2.0%.
News headlines
Global Economy Heads Into Final Stretch With Diminished Momentum (Bloomberg) The global economy headed into the final stretch of 2018 in weakened shape, handing investors renewed reason to question how much central banks will be able to tighten monetary policy next year. Fresh data from the world’s third and fourth-largest economies on Monday added to the concern. A manufacturing gauge in Japan dropped to the lowest since early 2016, and business confidence in Germany fell for a third month.
U.K.’s Other Brexit Fight May Bar It From $1.7 Trillion WTO Deal (Bloomberg) U.K. businesses stand to lose access to a $1.7 trillion public procurement market if signatories to a World Trade Organization accord this week block Britain’s application for membership, which will lapse after it leaves the European Union in March. On Nov. 27, the U.K. will seek admission to the 46-nation Government Procurement Agreement in Geneva. Failure to rejoin the pact could prevent U.K. companies from bidding on government contracts in member nations, including the $837 billion U.S. market. Each member has the power to block admittance.
Ukraine Mulls Martial Law After Russia Flare-Up: Ukraine Update (Bloomberg) Ukraine’s parliament will vote on whether to impose martial law after Russia fired on its warships Sunday. Several sailors were wounded in the clash, which sparked the dramatic renewal of tensions between the ex-Soviet neighbors in the Kerch Strait, near Crimea, which President Vladimir Putin seized with his military four years ago. We’re following latest developments in real time. The time stamp is for Kiev.
Global Stocks Rebound With Oil; Italy Bonds Rally: Markets Wrap (Bloomberg) U.S. stock futures advanced alongside shares in Europe and Asia as investors looked more optimistically on the outlook for interest rates and trade in the wake of another miserable week in markets. Treasuries declined, while government bonds in Italy and Greece rallied. Banks and automakers led the Stoxx Europe 600 Index higher, with nearly all sectors in the green, after stocks rose in most of Asia except for China and Australia. The yen and dollar dipped as investors showed renewed appetite for risk. Italy’s bonds jumped as state officials began studying scenarios for a lower 2019 budget deficit target, while markets climbed in Greece after one of the nation’s banks revealed a plan to deal with troubled loans.
GM plans major announcement on global operations Monday (Reuters) General Motors Co (GM.N) is set to make a major announcement on Monday that will affect its global operations and threatens to shutdown a big vehicle assembly plant in the province of Ontario, a Canadian union said on Sunday. Unifor, which represents most unionized autoworkers in Canada, said it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019, a development that would affect production at the plant. The union statement came after a Canadian TV news channel said GM was planning to close all operations at the plant in Oshawa, near Toronto.
Battered bitcoin miners may start shutting down (BNN) Bitcoin miners hit hard by the cryptocurrency’s crash may be throwing in the towel. The bitcoin network’s hash rate, one way of gauging the computing power dedicated to mining the digital currency, dropped about 24 per cent from an all-time high at the end of August through Nov. 24, according to Blockchain.com. While the decline may have partially resulted from miners switching to other cryptocurrencies, JPMorgan Chase & Co. says some in the industry are losing money after bitcoin’s price tumbled. “This suggests that prices have declined to a point where mining is becoming uneconomical for some,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a Nov. 23 report, in reference to the falling hash rate.
Bank of Canada expands balance sheet list to mortgage bonds (BNN) The Bank of Canada plans buy for the first time government-backed mortgage bonds in a bid to broaden the range of high-quality assets in its operations to manage its balance sheet. The move, which is part of a decision of including government-guaranteed debt issued by federal Crown corporations, will allow Ottawa-based central bank to offset continued growth in bank notes, the central bank said in an statement Friday. It will also give it flexibility to further reduce its participation in primary Canadian government bond auctions to help boost the tradeable float and support liquidity in the secondary market.
Overnight markets
Overview: US 10yr note futures are down -0.079% at 119-06, S&P 500 futures are up 1.14% at 2659.5, Crude oil futures are up 1.75% at $51.3, Gold futures are up 0.16% at $1225.1, DXY is down -0.11% at 96.805, CAD/USD is down -0.17% at 0.7567.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.243% | 2 Year | 2.834% |
| 5 Year | 2.306% | 5 Year | 2.892% |
| 10 Year | 2.355% | 10 Year | 3.061% |
| 30 Year | 2.404% | 30 Year | 3.308% |
US Economic Data
| 8:30 AM | Chicago Fed Nat Activity Index, Oct 0.24 est 0.18 (0.17 prior) |
| 10:30 AM | Dallas Fed Manf. Activity, Nov est 24.5 (29.4 prior) |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Nov 23rd (56.6 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