Market Update

US tsy yields sharply lower on bear steepening move, heavy volume in TY1 futures (~700k) with the US 10Y 2.285 (+5bps), curve US$ higher, Euro stocks +0.50%, crude steady near $52. Core Euro bonds weaker, in line with tsys, 10Y bund yield seven-week high 0.46%. Weakness in tsys/EGBs attributed to delayed reaction to Yellen’s comments yest and progress on tax reform, also Saudi Arabia set to price $12.5bln jumbo USD deal this aft. GOCs lower in line with tsys, yields 2.5-5.5bps higher led by 10s @2.183 (+7.3bps) – a three year high. Poloz highly anticipated speech at noon. Provis quiet yest, spreads unch with supply expected thou issuers may take a pause given the move in yields and Poloz this aft.

News headlines 

 Atlanta Fed’s Bostic ‘comfortable’ with December hike if economy performs (Reuters) The Atlanta Federal Reserve Bank’s new president, Raphael Bostic, said on Tuesday that recent weak inflation probably means labor markets are still healing from the 2007 to 2009 financial crisis, and he would want “clear evidence” prices were firming before committing to another interest rate increase.

Fed’s Yellen says gradual hikes should continue, despite weak inflation (Reuters) The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank’s struggles to forecast one of its key policy objectives.

U.S. slaps steep duties on Bombardier jets after Boeing complaint (Reuters) The U.S. Commerce Department on Tuesday slapped preliminary anti-subsidy duties on Bombardier Inc’s CSeries jets after rival Boeing Co accused Canada of unfairly subsidizing the aircraft, a move likely to strain trade relations between the neighbors.

Morneau Won’t Budge on Deficits Despite Canada’s Red-Hot Growth (Bloomberg) Canada’s hot economy won’t push Bill Morneau off his deficit spending plans, with the finance minister pledging continued cash for infrastructure and other programs to make the nation’s expansion sustainable in the long-term.

Dollar Gains on Yellen, U.S. Tax Plan; Bonds Slump: Markets Wrap (Bloomberg) The dollar extended gains and bonds fell after Federal Reserve Chair Janet Yellen boosted expectations for an interest-rate rise in December. Stocks advanced as President Donald Trump prepares to lay out his tax-cut plan.

Overnight markets 

Overview: US 10yr note futures are down -0.384% at 125-17, S&P 500 futures are up 0.19% at 2500.25, Crude oil futures are up 0.23% at $52, Gold futures are down -0.67% at $1293, DXY is up 0.47% at 93.399, CAD/USD is up 0.41% at 0.8068.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.631% 2 Year 1.463%
5 Year 1.874% 5 Year 1.899%
10 Year 2.181% 10 Year 2.289%
30 Year 2.511% 30 Year 2.83%

US Economic Data

7:00 AM MBA Mortgage Applications, Sep 22 -0.5% (-9.5% prior)
8:30 AM Durable Goods Order, Aug. 1.7 est 1.0% (-6.5% prior)
Durable Ex Transportation, Aug 0.2 est 0.2% (0.6% prior)
Cap Goods Orders Nondef Ex Air, Aug 0.9 est 0.3% (1.0% prior)
Cap Goods Ship Nondef Ex Air, Aug 0.7 est 0.1% (1.2% prior)
10:00 AM Pending Home Sales MoM, Aug est -0.5% (-0.8% prior)
Pending Home Sales YoY, Aug est -0.5% (-0,5% prior)

Canadian Economic Data

There is no economic data scheduled 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, Hugues Savard

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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