Market Update

US tsys lower, yields 1-3 bps higher in bear steepening move, US 10Y 2.33% (+2bps), heavy volume in TY futures (565k) for a second day. Little reaction to upward revision in US Q2 GDP to 3.1% from 3.0%. Core Euro bonds lower, 10Y bund yield at two month high 0.50%, thou prices off the lows after German national CPI 0.1% as exp.  In Canada, GOCs mixed, 2s10s  5bps steeper since  Poloz speech yest, 2s rallying ~9bps  after Poloz said rate hikes were not on a preset course. Busy day in corps again yest with Alberta Powerline Ltd $1.108bln long deal, followed by the announcement that Metro was in talks to acquire Jean Coutu for $24.50 per share. This morning CIBC 3Y USD fixed & FRN, fixed @ ~70bps (GOCs + 67)

News headlines 

Trump Pitches Tax Plan as Historic Cut to Boost U.S. Hiring (Bloomberg) The 10-year Treasury yield rose to 2.348 percent, the highest in two months, as President Donald Trump promoted what he called “the largest tax cut” in U.S. history. The president and Republican leaders put on a show of unity when launching the plan, and stocks surged on hopes that the cuts, which include dropping the corporate rate to 20 percent, will become enshrined in legislation this year.

Loonie weakens as Bank of Canada’s surprise caution leaves bulls reeling (Financial Post) Bank of Canada Governor Stephen Poloz looked to temper recent optimism over the Canadian economy in a speech Wednesday, signalling a more open-ended monetary outlook that could see interest rates move “in either direction” amid fears over rising household debt levels.

Japan Election Turmoil Sets Up Two-Horse Race: Abe Versus Koike (Bloomberg) Japan’s main opposition party agreed to merge with a new group created by Tokyo Governor Yuriko Koike, setting her up as the main challenger to Prime Minister Shinzo Abe as he dissolved parliament ahead of an Oct. 22 election.

U.S. Second-Quarter Growth Revised Upward to 3.1% Annual Pace (Bloomberg) U.S. second-quarter growth was revised up slightly without altering the bigger picture of a consumer- driven economy that also got a healthy contribution from business spending during the period, Commerce Department data showed Thursday.

Toronto, London Among Riskiest Housing Bubble Cities, UBS Says (Bloomberg) Toronto and London are among the cities most at risk of a housing bubble as economic optimism and low borrowing costs push up property values in urban areas worldwide, according to UBS Group AG.

Metro in talks with Jean Coutu about possible merger (CBC) Grocery giant Metro says it is “engaged in exclusive discussions” regarding a possible merger with the Quebec-based Jean Coutu pharmacy chain. Metro announced Wednesday the two are discussing a deal in which it would acquire Jean Coutu at a price of $24.50 per share, to be paid 75 per cent in cash and 25 per cent in shares.

Overnight markets 

Overview: US 10yr note futures are down -0.112% at 125-10, S&P 500 futures are down -0.16% at 2500.5, Crude oil futures are up 0.88% at $52.6, Gold futures are up 0.02% at $1288, DXY is down -0.16% at 93.215, CAD/USD is down -0.11% at 0.8023. 

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.562% 2 Year 1.475%
5 Year 1.804% 5 Year 1.924%
10 Year 2.149% 10 Year 2.335%
30 Year 2.526% 30 Year 2.89%

US Economic Data

8:30 AM GDP Annualized QoQ, 2Q 3.1%  est 3.0% (3% prior)
Personal Consumption, 2Q 3.3% est 3.3% (3.3% prior)
GDP Price Index, 2Q 1.0% est 1.0% (1.0% prior)
Core PCE QoQ, 2Q 0.9% est 0.9% (0.9% prior)
Initial Jobless Claims, Sep23 272K est 270K (259K prior)
Continuing Claims Sep16 1934K est 1993K (1979K prior)
Wholesale Inventories MoM, Aug est 0.4% (0.6% prior)
9:45 AM Bloomberg Consumer Comfort, Sep24 (50.6 prior)
11:00 AM Kansas City Fed Manf. Activity, Sep est 15 (16 prior)

Canadian Economic Data

7:50 AM CFIB Business Barometer, Sep 56.9 (59.8 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