Market update
US tsys higher after Q3 GDP came in as exp (2.1%), curve sharply steeper as 2s outperform and prior to this aft $35bln 5Y note & $13bln 2Y FRN auctions. Since the last 5Y auction the 5/30 curve has narrowed ~6bps while 2s/5s is barely 2bps flatter so this aft auction may be opportunity to take off flatters before m/e, despite the relatively large 0.13Y extension in the Barclays universe. The 10Y note @ 2.22% is at the bottom end of the range vs ~2.37% after Sep payrolls. GOCs are unch, provis offered (+1bp) despite Ont/QC blackout, Alberta 5& 10 rumoured
News headlines
- German Business Confidence Rises in Sign of Robust Economy (Bloomberg) German business confidence unexpectedly rose in a sign that Europe’s largest economy is robust enough to weather risks including a global slowdown and Volkswagen AG’s emissions scandal.
- OPEC Seen Holding the Line as $40 Crude Looms Over Vienna (Bloomberg) It’ll take more than $40 crude to make OPEC change its mind, analysts said before the group’s Dec. 4 meeting in Vienna.
- Hedge funds’ oil shorts reach peak for the year (FT) Hedge funds’ bets against the oil price have risen to the highest level this year ahead of next week’s Opec meeting, in the expectation the cartel’s most powerful members will stick with their policy of keeping output high.
- Global debt defaults near milestone (FT) Global debt markets are on the cusp of an unwelcome development with the number of companies defaulting on their obligations set to reach the century mark, driven largely by struggling US shale gas providers.
- Liquidity deteriorates for US Treasuries (FT) Trading in the world’s biggest government bond market has become increasingly challenging as the large banks that support transactions focus on slimming down their balance sheets.
Overnight markets
- Overview: US 10yr note futures are up +0.04% at 126-27, S&P 500 futures are down -0.40% at 2076, Crude oil futures are up +3.04% at 43.01$, Gold futures are up +0.96% at $1076.80, DXY is down -0.17 % at 99.628.
US Economic Data
- Gross domestic product — the sum of the nation’s economy — rose at a 2.1% annual clip from July through September, fresh government figures show. Initially GDP was reported to have risen by 1.5%.
- Consumer spending, the main engine of U.S. economic growth, rose 3% instead of 3.2%. Exports edged up 0.9%, less than the prior 1.9% estimate, while imports rose a somewhat stronger 2.1%. Business investment was mixed. Spending fell 7.1% on structures but rose 9.5% on equipment.
- Inflation as measured by the PCE index increased at a 1.3% annual clip.
- The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.9% in the 12 months ended in September, stronger than a 4.6% increase in the same period ending in August.
Canadian Economic Data
- There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230