Market Update

Tsys trading weaker, unwinding brief FTQ bid following N. Korea missile launch, trading lower since Europe with core EGBs, US 10Y 2.37% (+4.3bps), little reaction to upwardly revised Q3 GDP (3.3% vs 3.0% prev). Gilts yields 10bps higher, bunds weaker on stronger Grman CPI.  GOCs lower, continuing outpeformance vs tsys, another 1.5bps tighter in the 10Y at -52bps. At noon the BOC auctions $700mln in 2050 RRBs. Real yields at 0.60% are ~18bps lower since  the last auction on Sept 13th, while breakevens have been trading in a narrow 5bp range since July. The 2050/47 real yield spd has narrowed to 0.8bps, the low end of the range since the 2050 RRB was first auction in May. Provis a touch softer yest in wake of new Ont 49 issue @ 70.5, now 71/70.

News headlines 

Revenue Trigger Looms as Source of Friction: Tax Debate Update (Bloomberg) The Senate tax bill is headed for a marathon debate this week as Republican leaders plan to hold a floor vote as early as Thursday — but first, the measure had to go through the Budget Committee, where key GOP lawmakers were raising objections.

Trump’s Clash With Democrats Raises Risk of Government Shutdown (Bloomberg) Republicans in the U.S. Congress were cheered on Tuesday after President Donald Trump helped them get a bit closer to passing a tax overhaul in the Senate. But Trump also may have ensnarled negotiations to keep the federal government funded after money runs out on Dec. 8 by stiff-arming Democratic leaders before a scheduled White House meeting on spending.

U.K. and EU Agree on Outline Brexit Bill as Irish Block Remains (Bloomberg) U.K. and the European Union negotiators reached an outline deal on the Brexit divorce bill, clearing a hurdle in negotiations and ramping up pressure to find a compromise on the thorny issue of the Irish border. The pound surged.

Why Investors Are Unfazed by North Korea’s Missile Launch (Bloomberg) North Korea launched an intercontinental ballistic missile near Japan, but investors and analysts were unfazed by the latest provocation.

Stocks Gain With Tax, Data in Focus; Pound Rises: Markets Wrap (Bloomberg) Stocks in Europe gained, following equities from the U.S. to Asia higher as optimism over U.S. tax reform and euro-area economic growth overshadowed concerns about North Korea’s latest missile launch. The British pound strengthened after the U.K. cleared a major Brexit hurdle.

RBC quarterly profit jumps 12 per cent, beats expectations (Globe and Mail) Royal Bank of Canada saw a 12 per cent jump in its fourth-quarter net income to $2.84-billion, which pushed its net income for the full 2017 year to a record $11.47-billion.

Canada’s British Columbia lowers budget surplus forecast (Reuters) The Canadian province of British Columbia cut its 2017-18 budget surplus forecast to C$190 million ($148 million), due to tax adjustments and as the cost of fighting its worst-ever wildfire season bites, the provincial Finance Minister said on Tuesday.

Overnight markets

Overview: US 10yr note futures are down -0.175% at 124-24, S&P 500 futures are up 0.06% at 2627.5, Crude oil futures are down -0.43% at $57.74, Gold futures are down -0.58% at $1291.6, DXY is up 0.12% at 93.384, CAD/USD is up 0.21% at 0.7787.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.428% 2 Year 1.758%
5 Year 1.611% 5 Year 2.089%
10 Year 1.864% 10 Year 2.367%
30 Year 2.223% 30 Year 2.805%

US Economic Data

7:00 AM MBA Mortgage Applications, Nov 24th -3.1% (0.1% prior)
8:30 AM GDP Annualized QoQ, 3Q 3.3% est 3.2% (3.0% prior)
  GDP Price Index, 3Q 2.1% est 2.2% (2.2% prior)
  Personal Consumption, 3Q 2.3% est 2.5% (2.4%  prior)
  Core PCE QoQ, 3Q 1.4% est 1.3% (1.3%  prior)
10 :00 AM Pending Home Sales MoM, Oct est 1.0% (0.0% prior)
  Pending Home Sales NSA YoY, Oct est 3.0% (-5.4% prior)
14:00 PM U.S. Federal Reserve Releases Beige Book

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