Market Update

Tsys trading mixed, curve flatter, US 10Y 2.33% (-1bp), heavy volume in TY futures (>600k) mostly due to roll, equities steady (Euro equities -0.2%, S&P futures -1) Tsy 2s10s curve reaching new lows in front of supply, bear flatteners put on in Europe, long tsys bid along with bunds. Flattening trend in tsy curve is poised to continue this week – double auction today with $26bln 2Y at 11:30 and $34bln 5Y at 1:00pm, while the Bloomberg Nov index extension for USTs is 0.11yrs longer than the avg (0.09) yrs due to Nov being a refunding month.  Coe EGBs higher led by long bunds, paying flows in 2 & 5Y EUR swaps, firmer EU peripheral spds. In Canada, GOCs unch, lagging the rally in tsys by ~1bp in longs. Provis opening unch, spds 2-2.5bps tighter on the week. Relatively busy week in terms of data – Tuesday BOC FSR  and Q3 GDP & employment on Friday.

News headlines 

The GOP Tax Plan Is Entering Its Make-or-Break Week (Bloomberg) The $1.4 trillion item on President Donald Trump’s wish list — a package of tax cuts for businesses and individuals that he has said he wants to sign before year’s end — is headed into the legislative equivalent of a Black Friday scrum next week.

Germany’s Standoff Eases as Wrangling Shifts to Coalition Terms (Bloomberg) Germany’s political stalemate showed signs of easing as the Social Democrats started haggling over terms of a renewed coalition with Chancellor Angela Merkel’s conservative bloc rather than outright blocking an alliance between Germany’s two biggest parties.

U.K. Faces Brexit Deadline on Ireland as Varadkar Clings On (Bloomberg) Prime Minister Theresa May has a week to find a compromise on the conflicting Brexit demands from the north and south of Ireland, just as a political scandal threatening the Irish government could further undermine her chances of success.

Technology Stocks Drag Asia Lower as Morgan Stanley Downgrades (Bloomberg) Asian stocks retreated from Friday’s record after Morgan Stanley downgraded Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., saying their shares had risen too much.

Stocks Decline as Metal Prices Drop; Dollar Slips: Markets Wrap (Bloomberg) European equities retreated as a slump in industrial metals weighed on mining stocks. The dollar extended a decline and Treasuries edged higher as investor focus returned to the U.S. economy and tax reform at the start of a week packed with potential market catalysts.

Canada posts larger September budget deficit as expenditures increase (Reuters) Canada’s budget deficit increased in September compared with the previous year as government spending on programs increased at a faster rate than revenues, the finance department said on Friday.

OSC adjourns hearing on Rhone investment in Hudson’s Bay (Reuters) The Ontario Securities Commission (OSC) adjourned a hearing on Friday of activist fund Land and Buildings’ appeal against a conditional approval for a $500 million investment in luxury retailer Hudson’s Bay Co from Rhone Capital.

TSX futures lower as oil prices slip (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Monday, as oil prices slipped with U.S. crude easing from two-year highs on prospects of higher output.

Overnight markets

Overview: US 10yr note futures are up 0.025% at 125-00, S&P 500 futures are down 0% at 2601, Crude oil futures are down -1.14% at $58.28, Gold futures are up 0.54% at $1298.8, DXY is down -0.18% at 92.614, CAD/USD is down -0.22% at 0.7883. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.442% 2 Year 1.757%
5 Year 1.628% 5 Year 2.07%
10 Year 1.884% 10 Year 2.331%
30 Year 2.23% 30 Year 2.746%

US Economic Data

10:00 AM New Home Sales, Oct est 625k (667k prior)
New Home Sales MoM, Oct est -6.3% (18.9% prior)
10:30 AM Dallas Fed Manf. Activity, Nov est 24.0 (25.6 prior)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Nov 24th (59.5 prior)


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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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