Market Update
– US tsys trading lower, just off the lows of the session, US 10Y 1.575 (+1.5bps),little reaction to better than exp August Durable goods taking their cue from selloff in core European bonds, with gilts and bunds both lower & steeper. Gains in German stocks on rebound in Deutsche Bank shares, as well as supply from Germany (2Y) % France (long inflation indexed bond) weighing on bunds. Crude back above $45 on signs Saudi Arabia is willing to cut production, hope for a deal with Iran in Algiers. GOCs lower in line with tsys, 5s10s ~0.5bps steeper after eight straight days of narrowing (9bps). 10s30s steeper bias with off the run long rolls wider – 41/37 roll looks cheap as we pointed out in yest research piece. Provis opening unch after widening slightly yest mostly in 5yrs.
News headlines
–Stocks Rally as Deutsche Bank Slump Ends, Oil Gains Before Talks (Bloomberg) European stocks advanced as investors took heart from a pickup in shares of beleaguered lender Deutsche Bank AG. Crude oil climbed before a meeting of major producers in Algiers, and the dollar strengthened. A gauge of European banks climbed for the first time in four days as Deutsche Bank agreed to sell its U.K. insurance unit and Chief Executive Officer John Cryan ruled out a capital increase. Oil stabilized around $45 a barrel before the gathering OPEC members to discuss ways to boost oil prices, including potential output constraints. A gauge of the dollar rose from a two-week low.
–Oil climbs after industry data shows U.S. inventory draw (Reuters) Oil prices rose on Wednesday, after sharp losses in the previous session, as industry data showed a surprise draw in U.S. crude stocks, although worries over a lack of agreement among producers to curb output kept a lid on gains. Brent crude rose 28 cents to $46.25 a barrel by 0905 GMT after settling down $1.38 on Tuesday. U.S. West Texas Intermediate (WTI) crude was up 20 cents at $44.87 a barrel after closing $1.26 a barrel lower the previous day.
–German government prepare Deutsche Bank rescue plan: Die Zeit (Reuters) The German government and financial authorities are preparing a rescue plan for Deutsche Bank (DBKGn.DE) in case the lender would be unable to raise capital itself to pay for costly litigation, German weekly Die Zeit reported. According to the draft plan, Deutsche Bank would be enabled to sell assets to other lenders at prices that would ease the strain on the lender and not put an additional burden on the bank, the paper said.
–Federal Liberals approve Petronas LNG project in B.C. — with numerous conditions (Financial Post) Prime Minister Justin Trudeau’s government has approved Petroliam Nasional Bhd’s $36 billion Pacific NorthWest liquefied natural gas project on British Columbia’s Pacific coast. Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc made the announcement near Vancouver late Tuesday. It was Prime Minister Justin Trudeau’s first decision on a major energy project after a pro-environment campaign swept him to power last year.
–China’s economy less healthy in third quarter than data suggest-private survey (Reuters) China’s economy was less healthy in the third quarter than a recent spate of upbeat data suggest, with growth coming exclusively from manufacturing and property while the services and retail sectors faltered, a private survey showed. Manufacturing posted its fastest expansion nationally, with 53 percent of companies seeing revenue gains, up 3 percent from a year earlier, a quarterly survey of more than 3,100 firms by China Beige Book International (CBB) showed.
–BlackBerry Misses Sales Estimates; Stops Making Smartphones (Bloomberg) BlackBerry Ltd. reported fiscal second-quarter sales that missed analyst estimates and said it will stop making its iconic smartphones and focus on its software business. The shares rose in premarket trading in New York.
Overnight markets
– Overview: US 10yr note futures are down -0.0594% at 131-15, S&P 500 futures are up 0.02% at 2153.25, Crude oil futures are up 0.6% at $44.94, Gold futures are down -0.14% at $1328.6, DXY is down -0.01% at 95.427.
US Economic Data
-8:30 AM: Durables Goods Orders, Aug P, 0.0%, est. -1.5% (prior 4.4%, revised 3.6%)
Durables Ex Transportation, Aug P, -0.4%, est. -0.5% (prior 1.3%, revised 1.1%)
Cap Goods Orders Nondef Ex Air, Aug P, 0.6%, est. -0.1% (prior 1.5%, revised 0.8%)
Cap Goods Orders Ship Nondef Ex Air, Aug, -0.4%, est. 0.1% (prior -0.5%, revised -0.7%)
Canadian Economic Data
-There is major economic data release 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, David Leclair-Legault
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230