Market Update
US tsys trading lower on avg volume (382k), 10Y 1.84% (+5bps), tsy curve 1bp steeper 2s10s @19bps. Big data week highlighted by FOMC (25bp cut expected) & Payrolls. Equity futures continuing higher (S&P +12, Nasdaq +39) with the S&P500 poised to hit a record high – 35% of S&P firms reporting earnings this week, so far 80% have beaten on EPS and 65% on sales (MNI), with only 32% mentioning the word ‘recession’ in their earnings call according to CNBC. Core EGBs lower, pressured after Donald Tusk, president of the European Council, announced a 3 month extension to Brexit deadline until Jan 31st. In Canada, GOCs weaker in line with tsys, 10Y highest since Sep 16th. BOC decision Wednesday – no change in rates exp, risk is that outlook actually improves since Sep meeting considering improved data flow and progress on trade , USMCA.
News headlines
U.S. Futures Rise as Fed Meeting Nears; Bonds Fall: Markets Wrap (Bloomberg) U.S. index futures climbed while stocks in Europe struggled for traction at the start of a week in which big corporate earnings continue to roll in and the Federal Reserve is expected to cut interest rates. Treasuries dropped, pushing the 10-year yield to a six-week high.
TSX futures little changed as trade hopes offset weaker oil (Reuters) Futures for Canada’s main stock index barely moved on Monday, as a fall in oil prices was offset by increased expectations of a Sino-U.S. trade deal.
Hong Kong enters recession as protests again erupt in flames (Reuters) Hong Kong has fallen into recession, hit by five months of anti-government protests that erupted in flames at the weekend, and is unlikely to achieve any growth this year, the city’s Financial Secretary said.
IMF urges Lebanon reforms, protesters keep up pressure (Reuters) The International Monetary Fund said on Monday Lebanon should urgently implement reforms to restore confidence and economic stability, as protesters kept up the pressure on politicians they accuse of corruption by setting up new road blocks.
Italian Bonds Stumble as Cracks Start Showing in Political Calm (Bloomberg) Bond buyers just got a reminder that owning Italian debt isn’t quite the breeze it felt like in recent months.
Loonie erodes U.S. dollar’s high-yielding status as BoC, Fed decisions loom (BNN) When the Canadian and U.S. central banks announce policy decisions on Oct. 30, traders are betting that the divergent decisions will allow the loonie to blunt the U.S. dollar’s status as the highest yielding Group-of-10 currency.
France orders EDF to tackle nuclear project failings (Reuters) EDF must present an action plan within a month on how to tackle skills shortages and other problems that have caused delays at key nuclear projects and damaged the reputation of the industry, French Finance Minister Bruno Le Maire said on Monday.
Market Overview: US 10yr note futures are down -0.193% at 129-09, S&P 500 futures are up 0.29% at 3029, Crude oil futures are down -0.32% at $56.48, Gold futures are down -0.04% at $1504.7, DXY is down -0.12% at 97.718, CAD/USD is up 0.04% at 0.7656.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.679% | 2 Year | 1.642% |
| 5 Year | 1.598% | 5 Year | 1.654% |
| 10 Year | 1.568% | 10 Year | 1.831% |
| 30 Year | 1.701% | 30 Year | 2.319% |
US Economic Data
| 08:30 AM | Chicago Fed Nat Activity Index, Sep Survey: 0.00 Actual: -0.45 Prior: 0.10 |
| Wholesale Inventories MoM, Sep P Survey: 0.30% Actual: -0.30% Prior: 0.20% | |
| 10:30 AM | Dallas Fed Manf. Activity, Oct Survey: 1.0 Prior: 1.5 |
Canadian Economic Data
| 10:00 AM | Bloomberg Nanos Confidence, Oct 25 Survey: — Prior: 57.5 |
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