Market Update
Tsys trading higher, 10Y 1.71% (-2.5bps), prices pulling back since uptick in Asia trade which saw 10Y trade below 1.70%. No reaction to as expected Q2 GDP, core prices higher (1.9% vs 1.7%). Equity futures higher, S&P +6, crude lower for 3rd day 56.40. Fed 14-day term repo operation saw $72.8bln in bunds for $60bln offering. Core Euro bonds mixed on now news, bunds lower as equity futures move higher. GOCs higher in line with tsys, 10s30s 2bps wider, even as 2s10s has moved back to recent narrows -20bps. BOC switch operation buying back off the run longs for Dec 51s for $400mln max.
News headlines
U.S. Futures, Europe Stocks Climb With Treasuries: Markets Wrap (Bloomberg) U.S. equity futures edged higher with Asian stocks on Thursday while European shares jumped as investors awaited the next developments in a week dominated by political dramas and a lack of clarity over trade. In a sign of the mixed sentiment, Treasuries also climbed, continuing a choppy few days.
Futures rise on U.S.-China trade optimism (Reuters) Futures for Canada’s main index were higher on Thursday, as sentiment was lifted by positive comments from China on the trade talks with the United States.
China says in close communication with U.S. over October trade talks (Reuters) China and the United States are still discussing details about upcoming trade talks in October, making preparations to ensure “positive progress” is made during the negotiations, the Chinese commerce ministry said on Thursday.
U.S. Fed should target repo rate to reduce market volatility: ex-Fed officials (Reuters) Recent money market volatility shows the Federal Reserve needs to retool how it manages an essential part of the financial system to minimize disruptive market swings that pose risks to the economy, two former Fed officials said on Thursday.
BOJ’s Kuroda warns of overseas risks, signals readiness to adjust policy (Reuters) Japan’s central bank governor signaled on Thursday readiness to ease monetary policy further, vowing to guide policy appropriately “without any preset conditions in mind”.
Oil Steady as Investors Weigh Trade Hope Against Saudi Recovery (Bloomberg) Oil was steady as investors weighed prospects of a thaw in the U.S.-China trade war against indications Saudi Arabia is recovering quicker than expected from the biggest attacks ever on its energy industry.
Its leash lengthened, China’s yuan flirts with trade war role (Reuters) China, having let the yuan cross the once sacred red line of 7 per dollar, will allow its currency to fall further and may even risk U.S. anger by using it as a bargaining chip in already thorny trade talks, market participants believe.
In Michigan steel towns, tariffs meant to revive industry cost jobs (Reuters) Some steelworkers who cheered U.S. President Donald Trump’s tariffs on foreign steel last year are now being laid off, an unintended consequence of his America First policy as United States Steel Corp (X.N) reacts to sagging demand from automakers reeling from higher steel prices.
Market Overview: US 10yr note futures are up 0.06% at 130-01, S&P 500 futures are up 0.21% at 2992.5, Crude oil futures are up 0.09% at $56.54, Gold futures are down -0.04% at $1511.7, DXY is up 0.03% at 99.064, CAD/USD is down -0.2% at 0.7551.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.584% | 2 Year | 1.676% |
| 5 Year | 1.423% | 5 Year | 1.6% |
| 10 Year | 1.389% | 10 Year | 1.715% |
| 30 Year | 1.558% | 30 Year | 2.163% |
US Economic Data
| 08:30 AM | GDP Annualized QoQ, 2Q T Survey: 2.00% Actual: 2.00% Prior: 2.00% |
| Personal Consumption, 2Q T Survey: 4.70% Actual: 4.60% Prior: 4.70% | |
| GDP Price Index, 2Q T Survey: 2.40% Actual: 2.40% Prior: 2.40% | |
| Core PCE QoQ, 2Q T Survey: 1.70% Actual: 1.90% Prior: 1.70% | |
| Wholesale Inventories MoM, Aug P Survey: 0.10% Actual: 0.40% Prior: 0.20% | |
| Initial Jobless Claims, Sep 21 Survey: 212k Actual: 213k Prior: 208k | |
| Continuing Claims, Sep 14 Survey: 1666k Actual: 1650k Prior: 1661k | |
| 09:45 AM | Bloomberg Consumer Comfort, Sep 22 Survey: — Prior: 62.7 |
| 10:00 AM | Pending Home Sales MoM, Aug Survey: 1.00% Prior: -2.50% |
| 11:00 AM | Kansas City Fed Manf. Activity, Sep Survey: -4 Prior: -6 |
Canadian Economic Data
| 06:00 AM | CFIB Business Barometer, Sep Survey: — Actual: 59.3 Prior: 60.6 |
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