Market Update US tsys moving lower, 10Y 2.86 (+1.5bps), curve steepening, heavy volume in TY futures on roll (960k), weaker after stronger Wholesale inventories/Trade Balance data. ‘Risk on’ as the Turkish Lira pares losses, USD weakening, US equity futures higher, gold higher, crude continuing its run close to a seven-week high. The US auctions $37bln in 5Y notes this aft. GOCs lower, 1bp wider vs tsys – Nafta on the line with pressure on Trudeau to make a separate bilateral deal with the US.
News headlines
Markets Bet Canada Will Stay in Nafta as Trump Raises Pressure (Bloomberg) Investors are betting President Donald Trump’s trade threats against Canada will fizzle out. There are a few reasons why they might. Canadian stocks and the dollar, known as the loonie, extended gains Monday on news of the U.S.-Mexican agreement, shrugging off Trump’s threats that Canada might be frozen out and instead face auto tariffs. Shares of Canadian auto parts makers like Magna International Inc. and Linamar Corp. were among those to surge.
Trump Accuses Google of Rigging Search Results Against Him (Bloomberg) U.S. President Donald Trump accused Alphabet Inc.’s Google of rigging its search results to display only negative stories about him, calling it “a very serious situation” that “will be addressed.” “Google search results for ‘Trump News’ shows only the viewing/reporting of Fake New Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD, Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal, » Trump tweeted early Tuesday, in his latest claim of bias on the part of a news or social media company.
Trump Dents Hopes for a China Deal After Agreement With Mexico (Bloomberg) President Donald Trump said it’s not the right time for trade negotiations with China, denting expectations for a near term deal after a breakthrough agreement between the U.S. and Mexico. Speaking to reporters during his announcement Monday of the new Mexico accord, Trump said he is rejecting overtures from China to negotiate as he tries to achieve a less « one-sided » trade policy. « They want to talk, » Trump said. But « it’s just not the right time to talk right now, to be honest. »
Stocks Edge Higher After Mexico Deal; Dollar Slips: Markets Wrap (Bloomberg) U.S. futures and European stocks drifted higher as Asian shares advanced as investors digested conflicting developments on global trade. S&P 500 looked set to hover near its record high, while carmakers and miners were the biggest winners in the Stoxx Europe 600 Index, after the U.S. and Mexico moved closer to a deal on trade. Stocks in Japan extended a recent increase while those in China underperformed. The yuan climbed after the Chinese central bank strengthened the daily fixing against the greenback by the most in more than 14 months, even as President Donald Trump said it’s not the right time for trade negotiations with China.
Canada’s Scotiabank, BMO post higher quarterly profits (Reuters) Canadian lenders Bank of Nova Scotia and Bank of Montreal on Tuesday reported increased earnings in the third quarter, helped by strong growth in their domestic and international businesses. Bank of Nova Scotia, Canada’s third-biggest lender, reported a 5 percent increase in third-quarter earnings on Tuesday, helped by growth in its domestic and international businesses.
U.K. asks Carney to stay at Bank of England until 2020, Standard says (BNN) The U.K. Treasury asked Bank of England Governor Mark Carney to stay in his role for another year, according to a report in the Evening Standard newspaper published Tuesday. Carney has already extended his tenure at the central bank to the end of June 2019 to provide continuity through the Brexit negotiations. When he started at the BOE in 2013, he planned to stay for only five years. The newspaper didn’t say where it got the information.
Best Buy slumps after quarterly sales forecast disappoints investors (BNN) Best Buy Co.’s quarterly outlook fell short, a rare disappointment amid a solid summer for large U.S. retailers. Earnings will be 79 cents to 84 cents the third quarter, excluding some items, the electronics retailer said Tuesday, trailing the 91-cent average of analysts’ estimates. The shares dropped 5.1 per cent in early U.S. trading. The forecast overshadowed a solid second quarter at Best Buy, which beat projections on a key sales measure and also raised its forecast for the full year. Walmart Inc. and Target Corp. both posted their best quarterly sales increases in more than a decade, fueled by robust in-store traffic and web sales. During the summer, big-box retailers have benefited from a strong consumer environment, tax cuts and easing gas prices.
Overnight markets
Overview: US 10yr note futures are down 0% at 120-11, S&P 500 futures are up 0.16% at 2903, Crude oil futures are up 0.07% at $68.92, Gold futures are up 0.3% at $1219.6, DXY is down -0.25% at 94.542, CAD/USD is down -0.35% at 0.774.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.148% | 2 Year | 2.645% |
| 5 Year | 2.243% | 5 Year | 2.743% |
| 10 Year | 2.303% | 10 Year | 2.851% |
| 30 Year | 2.303% | 30 Year | 3.005% |
US Economic Data
| 8:30 AM | Advance Goods Trade Balance, Jul est -69.0b (-68.3b prior) |
| Wholesale Inventories MoM, Jul est 0.2% (0.1% prior) | |
| Retail Inventories MoM, Jul (0.0% prior) | |
| 9:00 AM | S&P CoreLogic CS 20-City MoM SA, Jun est 0.20% (0.20% prior) |
| S&P CoreLogic CS 20-City YoY NSA, Jun est 6.40% (6.51% prior) | |
| S&P CoreLogic CS 20-City NSA Index, Jun (211.94 prior) | |
| S&P CoreLogic CS US HPI NSA Index, Jun (202.95 prior) | |
| S&P CoreLogic CS US HPI YoY NSA, Jun (6.38% prior) | |
| 10:00 AM | Richmond Fed Manufact. Index, Aug est 17 (20 prior) |
| Conf. Board Consumer Confidence, Aug est 126.6 (127.4 prior) | |
| Conf. Board Present Situation, Aug (165.9 prior) | |
| Conf. Board Expectations, Aug (101.7) |
Canadian Economic Data
There is no Canadian economic data 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230