Market update
US tsys trading extending o/n declines despite weaker Q3 GDP (1.5 vs 1.6) & core PCE (1.2 vs 1.4) – US 10Y 2.115 (+1.5bps), curve steeper longs giving back ~1.5bps of yest post FOMC flattening. Asian CB buying tsys across the curve overnite (MNI), Core Euro bonds much weaker led by 7bp rise in 10Y gilts, despite Euro bank weakness (-2%) weighing heavily on stocks. GOCs slightly lower, curve flatter outperforming tsys by ~1bp. Provis opening with bid tone after narrowing 1bp yest on higher Cda yields and m/e buying – supply a real possibility from Ont/Qc esp in longs with 10s/30s ~3 bps flatter.
News headlines
- U.S. Economy Grew at 1.5% Rate in Third Quarter (NYT) Despite still-healthy spending by consumers, the American economy slowed significantly last quarter, the government saidThursday. At an annualized rate of 1.5 percent, the tempo of growth in July, August and September represents a marked drop from the 3.9 percent pace of expansion in the spring.
- Deutsche Bank to cut 9,000 jobs and exit 10 countries in overhaul (FT) Deutsche Bank is to exit 10 countries and cut 9,000 jobs as part of a sweeping strategic overhaul designed to help restore the German lender’s profitability. In addition to the cuts in its own staff, Deutsche also aims to cut the army of consultants advising the bank by 6,000. Through selling its Postbank subsidiary, Deutsche will shed another 15,000 staff.
- Fed puts December rate hike firmly on the agenda (Reuters) The U.S. Federal Reserve kept interest rates unchanged on Wednesday and in a direct reference to its next policy meeting put a December rate hike firmly in play.
- Bombardier Inc to get US$1 billion from Quebec government to rescue troubled CSeries (FP) Bombardier Inc. will get a US$1 billion investment from the Quebec government as the tardy, over-budget CSeries jetliner drains cash at the country’s biggest aerospace company.
Overnight markets
- Overview: IG24 5Y 74.475/75.182 (+1.379), US 10yr note futures are down -0.18% at 127-31, S&P 500 futures are down -0.41% at 2076.0, Crude oil futures are down -1.20% at 45.39$, Gold futures are down -1.75% at $1155.5, DXY is down -0.33% at 97.459.
US Economic Data
- Initial jobless claims came in at 260K for the week ending October 24th, lower than expected (265K) but slightly higher than prior week (259K).
- Continuing claims decreased to 2144K from 21814K and was lower than expected (2160K).
- GDP annualized QoQ came in at 1.5% for 3Q 2015 versus 3.9% for the previous quarter.
- Personal consumption grew 3.2% for 3Q 2015 after 3.6% in 2Q 2015.
- GDP price index and Core PCE QoQ came in at 1.2% and 1.3% for 3Q 2015 compared to 2.1% and 1.9% during 2Q.
- Pending home sales are forecast at 1.0% MoM (7.3% YoY) in September versus August -1.4% MoM (6.7% YoY).
Canadian Economic Data
- Industrial product price decrease -0.3% MoM in September after going down -0.3 in August.
- Raw materials price index came in at 3.0% MoM in September versus -6.8% for previous month.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230