cti2015header-morning comments web

Market Update

US Treasuries opened Fri NY weaker after Thurs holiday, Wed NY decline; 10Y note now 2.381% vs. 2.357% Wed 3pm ET. TOKYO saw decent Tsys volume: Asian-real money and commercial banks sellers of 5Ys, Asian real-money buying of 10’s as well as selling away, Asian bank portfolio buying of 7Y, 10Y and 10’s and credit desk selling of 30Ys. US swaps saw paying in 5s from Asian bank ALM desks and exotic payers of 10’s/30’s steepeners, Asian real-money receiving in the belly as well as asset swap buying. Asia real$ bought Tsys, trailing improved EGB levels, mild risk-off sentiment into the weekend, stops triggered/technical buying as Dec Bund 10Y futures broke above 161.40 (Nov 24 high). Ongoing heavy roll volume in Dec to Mar Tsys across the curve, March takes top step next Wednesday.

News headlines 

U.S. stock futures rise; focus on retail as Black Friday kicks off (Reuters) U.S. stock index futures were higher on Black Friday, with the focus on retailers to see if they will propel or hit pause on Wall Street’s record-setting rally. Trading is expected to be relatively quiet with the U.S. stock market scheduled to close at 1:00 p.m. ET. The market was shut on Thursday for the Thanksgiving holiday.

Gold Recovers From Nine-Month Low as Dollar’s Rally Fizzles (Bloomberg) Gold pared a third weekly drop as the dollar halted a rally that sent bullion prices to a nine-month low and pushed silver into a bear market. Bullion’s first gain in four days cut this week’s loss to 1.5 percent. Prices have tumbled as strong economic data and the prospect of more spending after Donald Trump’s U.S. election win boosted bets for higher interest rates. Investors are selling out of gold-backed funds at the fastest pace in three years.

U.K. Economy Shows No Sign of Brexit Effect as Spending Rises (Bloomberg) Consumers and businesses increased their spending in the third quarter as the U.K. economy registered a resilient performance following the Brexit vote. Household spending rose 0.7 percent from the second quarter and business investment increased 0.9 percent, the Office for National Statistics said on Friday. Growth overall was unrevised at 0.5 percent, with trade providing the strongest contribution. A separate report from the Confederation of British Industry showed retail sales grew at their fastest annual pace in more than a year in November.

For OPEC’s Rivals, Success Lies in Oil Market Far, Far Away (Bloomberg) Rivals of OPEC seeking to reach its most-prized oil customers are finding that the long way around is better than any shortcut to success. As the group seeks to implement a deal to limit output, the glut that was exacerbated by its prior strategy of keeping taps open has spawned a market structure that’s benefiting competitors in sales to Asia. Cargoes from Europe’s North Sea will reach South Korea in coming months, while U.S. Eagle Ford shale crude as well as Mexican oil arrived at Yeosu port in November. Japanese and Thai refiners have bought West Texas Intermediate from BP Plc.

China’s October coal imports from North Korea up on month after falling in September (Reuters) China’s coal imports from North Korea rose in October after falling more than a quarter in September from the previous month amid a push from the United States to punish North Korea for its recent nuclear test. Coal imports from North Korea climbed 1.22 percent in October to 1.82 million tonnes compared with September, data from China’s General Administration of Customs showed on Friday.

Japan economic indicators seen steady but slow in October: Reuters poll (Reuters) Japan’s industrial output was expected to show little change in October, a Reuters poll found, suggesting uninspiring domestic and external demand hampered a steady recovery in production. Industrial production was seen likely to slip 0.1 percent in October from the previous month, the Reuters poll of 20 analysts showed, after a 0.6 percent rise in September and a 1.3 percent growth in August.

Overnight markets 

Overview: US 10yr note futures are down -0.1122% at 125-7, S&P 500 futures are up 0.23% at 2205.75, Crude oil futures are down -1.11% at $47.43, Gold futures are down -0.29% at $1189, DXY is down -0.21% at 101.49, CAD/USD is down -0.03% at 0.7414.

US Economic Data 

8:30 AM Advance Goods Trade Balance, Oct, est. -59.0b. (prior -56.1b, revised -56.5b)
Wholesale Inventories, m/m, Oct p, est. 0.2% (prior 0.1%)
Retail Inventories, m/m, Oct, (prior 0.3%)
9:45 AM Markit US Services PMI , Nov P, est. 54.8 (prior 54.8)
Markit US Composite PMI, Nov P, (prior 54.9)

Canadian Economic Data 

There is no major economic data release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230