Market Update

Tsys trading higher after very low volume o/n session (205k TY futures), equity futures giving up early gains (S&P -2.0, Nasdaq -2.75), US 10Y 1.75% (-1.5bps). Amazon down 6.5% pre-mkt on earnings miss and lower guidance. University of Michigan sentiment at 10:00 – the preliminary reading for October saw a drop in long-term inflation expectations to a record low 2.2%. Next week data picks up with focus on expected 25bp rate cut from the Fed on Wednesday. GOCs mixed curve slightly flatter with the 10Y 1.52%. BOC meeting next week with no change in rates or outlook expected, despite downgrading of Q3 growth forecasts after wholesale trade volumes fell 1.3% in August.

News headlines

Muted data and Brexit woes douse stocks rally (Reuters) Geopolitical tensions, muted economic data and mixed earnings stymied global stocks and weighed on crude oil prices on Friday with sterling hovering just above one week lows amid a new bout of Brexit anxiety.

Weak euro zone economy justifies ECB’s latest stimulus: Wunsch (Reuters) A recent string of dismal economic indicators justifies the European Central Bank’s move last month to provide more stimulus, and the bank can ease more if it needs to, Governing Council member Pierre Wunsch said. While ultra-loose policy raises valid concerns about financial stability, the move was still necessary and gives incoming ECB boss Christine Lagarde time to prepare for a broader review of the bank’s strategy, Wunsch, Belgium’s central bank governor, told Reuters in an interview.

U.S. Fed seen cutting rates next week and then hitting pause button (BNNBloomberg) Federal Reserve officials will signal they’re likely to take a break from cutting interest rates after lowering them again next week, according to a majority of economists surveyed by Bloomberg.In an Oct. 21-24 poll of 40 economists, 85 per cent said they anticipate the Federal Open Market Committee will reduce rates by a quarter percentage point when it wraps up a two-day meeting in Washington on Wednesday. That would lower the target range for the Fed’s benchmark rate to 1.5 per cent to 1.75 per cent.

Alberta counting on oil and pipeline surge to balance the books: budget (FP) Following spending cuts across the private sector, the Alberta government tabled a budget Thursday that makes deep cuts to the public sector, but that relies on a surge in oil and gas revenues to balance the books in four years. Alberta Finance Minister Travis Toews said his province has had “a spending problem” as he tabled a budget that included a 2.8 per cent cut to operating expenses over the next four years and a 7.7 per cent reduction in the size of the public service in the same period. Next year, the province expects to cut 764 jobs.

Canadian home prices, sales to resume climb after brief lull: CMHC (FP) The outlook is upbeat for housing in Canada next year with construction starts, sales and prices expected to rebound on the back of economic and demographic support, according to the country’s largest public mortgage provider. Housing starts will range between 194,000 and 204,300 next year, showing a return to form after two years of declines, Canada Mortgage and Housing Corp. said in its annual housing market outlook.

China says willing to increase ags, industrial goods imports from Brazil (Reuters) China is willing to increase its imports of agricultural and industrial goods from Brazil in order to enhance bilateral trade, Chinese Vice Premier Hu Chunhua said on Friday.

Johnson says of Brexit: we should be leaving on October 31 (Reuters) Prime Minister Boris Johnson said on Friday it was up to the European Union to decide a delay to Brexit but that Britain should be leaving on Oct. 31. “At the moment it is up to the EU, as you know, to decide whether or not they are going to give us an extension. As things stand we can leave on Oct. 31,” Johnson said. “We should be leaving on Oct. 31.”

Amazon profit declines for first time in two years; shares drop (BNNBloomberg) Amazon.com Inc.’s effort to get packages from warehouse to doorstep in a single day helped push the retail giant to its first year-over-year quarterly profit decline since early 2017.

Market Overview: US 10yr note futures are down -0.012% at 129-27, S&P 500 futures are up 0.02% at 3005, Crude oil futures are down -0.09% at $56.18, Gold futures are up 0.52% at $1512.5, DXY is up 0.03% at 97.665, CAD/USD is down -0.04% at 0.7654.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.635% 2 Year 1.586%
5 Year 1.545% 5 Year 1.585%
10 Year 1.519% 10 Year 1.766%
30 Year 1.631% 30 Year 2.262%

US Economic Data

10:00 AM U. of Mich. Sentiment, Oct F  Survey: 9600.00%  Prior: 9600.00%
     U. of Mich. Current Conditions, Oct F  Survey: —  Prior: 11340.00%
     U. of Mich. Expectations, Oct F  Survey: —  Prior: 8480.00%
     U. of Mich. 1 Yr Inflation, Oct F  Survey: —  Prior: 2.50%
     U. of Mich. 5-10 Yr Inflation, Oct F  Survey: —  Prior: 2.20%
02:00 PM Monthly Budget Statement, Sep  Survey: $83.0b  Prior: $119.1b

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, Émile Bordeleau

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