Market update
US tsys higher after mixed data – stronger claims & durable orders, weaker core PCE – curve ~3bps flatter US 10s 2.227 (-1.2 bps), longs below 3.0% (2.98, -2.3bps). US tsy curve 5/30 2bps flattest since August. Core Euro bonds outperforming on Reuters story (see above) on negative deposit rates & expanded bond buying. GOCs unch, curve flatter out to ten yrs, longs lagging – BOC auctions $1.4bln in reopened Dec 48s with the 48/45 roll @ 2.5ps. The long roll is ~1.5bps wider since last auction on May 20th as 45s have narrowed vs off the run longs (the 45/41 roll ~1.5bps flatter since May 20th. Provis opening unch, provi supply unlikely yet Alta, MP still rumoured.
News headlines
- ECB discusses two-tiered bank charges, broader bond buys – officials (Reuters) Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting, according to officials.
- BOJ minutes reveal output gap worry; Japan raises minimum wage (CNBC) Some members of the Bank of Japan’s (BOJ) policy board believe that an output gap was one reason the country was taking longer to meet inflation targets, minutes of the central bank’s latest meeting showed Wednesday.
- Falling Corporate Profits Blur U.S. Growth Outlook (WSJ) Profits at U.S. companies during the third quarter posted their largest annual decline since the recession, underscoring the competitive pressure from a strong dollar and weak global demand that could limit businesses’ ability to support stronger economic growth in the coming months.
- Copper’ plunges to US$2 for first time since 2009: ‘Things are quite horrible and about to get worse’ (FinancialPost) Copper goes by the nickname “Dr. Copper,” because the red metal is viewed as a barometer for the global economy. And unfortunately, it hasn’t been saying anything cheery of late.
- Dark clouds start to gather over Black Friday in the US (FT) The idea of shutting up shop on the biggest day of the American retail calendar — Black Friday — is considered by most stores to be utter madness.But that is exactly what REI, the privately held outdoor sports chain, will do on Friday, when it is giving its staff a paid day off, encouraging them to spend it outside.
- Deficits as far as the eye can see (FinancialPost) As Yogi Berra observed, it’s tough to make predictions, especially about the future. But one of the most time-honoured traditions we can count on is that a new government will invariably discover to its amazement that the cupboard is bare, finances are in tatters and its ability to fulfill its promises are compromised.
Overnight markets
- Overview: US 10yr note futures are up +0.04% at 126-30, S&P 500 futures are up +0.16% at 2088, Crude oil futures are down -1.49% at 42.27$, Gold futures are down -0.31% at $1070, DXY is up +0.46 % at 99.971.
US Economic Data
- Mortgage applications decreased by a seasonally adjusted 3.2% in the week ending November 20 to 419.9. That follows a gain of 6.2% to 433.9 in the preceding week
- Personal spending in October ticked 0.1% higher, compared to the estimated rise to 0.3% from Sep’s 0.1%.
- Personal income printed at 0.4% as estimated from Sep’s 0.1%.
- Core personal consumption expenditure (PCE) price index printed in line with the estimates and unchanged at 1.35 year-on-year.
- Core PCE MoM stalled, missing the estimate of 0.1% rise.
- Durable goods orders figure printed at 3.0%, compared to the estimated rise to 1.5% in October from Sep’s -1.2%
- FHFA house price index for September 2015 US rose 0.8% vs 0.4% exp m/m
- Initial claims for state unemployment benefits declined 12,000 to a seasonally adjusted 260,000 for the week ended Nov. 21
- 4wk moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, was unchanged at 271,000 last week.
- Continuing claims, came in at 2.207 million for the week ended November 14, the most recent week for which the government has data. This was up 34,000 from the previous week.
- New home sales likely picked up in October after a steep drop in September, a government report is expected to show. Economists expect a 6.8 percent increase to 500,000 homes in the U.S. Census Bureau’s report
- The University of Michigan’s final index on consumer sentiment for November is due at 10am
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