cti2015header-morning comments web

Market Update

Tsys trading lower, yields 1-3 bps higher, US 10Y 2.35 after Q3 GDP came in better than exp at 3.2% – the strongest qtr in two yrs, with upward revisions to PCE & residential fixed invest. Crude taking another leg lower on less hope of a production cut at Wed meeting after Iran oil minister said country won’t cut production. Core Euro bonds mixed with long end UK gilts weighed by new long 2056 linker supply for £ 2.25bln, thou the order book was said to be in excess of £11bln. Tsys could see support in the next couple of days from m/e extension buying as well as talk of a huge sale imbalance from equities to fixed income according to GS.  In Canada, GOCs lower after 8:30 data, curve 1bp steeper with the 10Y 1.56% vs last Tuesday’s 1.62% intraday high. BOC Poloz speech highlighting the strength of Cdn service sector had little impact, he noted there is still considerable uncertainty. Provis unch, supply talk from QC (longs) & Ontario – both are already well spoken for.

News headlines  

U.S. stock futures slightly higher ahead of economic data (Reuters) U.S. stock index futures were slightly higher on Tuesday, a day after stocks posted their worst performance in nearly a month, with investors awaiting a raft of economic data including GDP numbers. Wall Street closed lower on Monday, dragged down by financial and consumer discretionary sectors, as some investors booked profits on the heels of a record-setting week.

Oil Retreats Below $47 Before OPEC Meeting as Rand Falls on Zuma (Bloomberg) Oil retreated back below $47 as OPEC members failed to bridge differences on production cuts, while a rally in metals ran out of steam. The rand plunged after President Jacob Zuma survived a leadership threat. Commodity and energy producers were the biggest decliners in the Stoxx Europe 600 Index. Crude slid as Iraq and Iran raised objections over the distribution of output reductions and Russia said it’s not planning to attend crucial talks with the Organization of Petroleum Exporting Countries on Wednesday. Copper slumped for the first time in seven days and the Bloomberg Dollar Spot Index ended a two-day loss.

Euro-Area Confidence Rises as ECB Reviews Asset-Purchase Program (Bloomberg) Euro-area economic confidence inched up ahead of a much-anticipated European Central Bank decision that will take place amid signs of brightening prospects for the 19-country region. An index of executive and consumer sentiment increased to 106.5 in November from a revised 106.4 in October, the European Commission in Brussels said on Tuesday. That compares with a forecast of 106.8 in a Bloomberg survey.

Services, not manufacturing or resources, driving economic recovery: Stephen Poloz (Financial Post) Stephen Poloz, the governor of the Bank of Canada, told a Toronto-based think-tank that services, and not manufacturing or resources, will drive Canada’s near term economic growth. Poloz spoke at a meeting of the C.D. Howe Institute in Toronto on Monday night. He said manufacturing and natural resources remain important parts of the Canadian economy, but it’s been 60 years since the number of Canadians employed in the goods sector surpassed those working in services.

‘A key test’: Canadian oil executives await Trudeau’s grand bargain on pipelines (Financial Post) Many in Canada’s business community will be watching if Prime Minister Justin Trudeau’s pipeline decisions, expected as early as Tuesday, deliver on his “grand bargain” — carbon pricing for pipeline approvals. “This is a key test of whether the Trudeau government is going to balance the needs of a resource-based economy with those of a climate agenda,” said John Manley, president and CEO of the Business Council of Canada.

Scotiabank profit climbs 9% to $2.01 billion, beating market expectations (Financial Post) Bank of Nova Scotia, Canada’s third-biggest lender, reported a better-than-expected rise in fourth-quarter earnings, driven by a strong performance from its domestic and international banking businesses. The bank is reporting $2.01 billion of net income for the three months ended Oct. 31, up from $1.84 billion a year earlier.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.1492% at 125-15, S&P 500 futures are up 0.02% at 2201.25, Crude oil futures are down -3.74% at $45.32, Gold futures are down -0.75% at $1184.8, DXY is up 0.13% at 101.46, CAD/USD is up 0.42% at 0.7426.

US Economic Data 

8:30 AM GDP Annualized, q/q, 3Q S, 3.2% , est. 3.0% (prior 2.9%)
Personal Consumption, 3Q S, 2.8%,  est. 2.3% (prior 2.1%)
GDP Price Index, 3Q S,  1.4%, est. 1.5% (prior 1.5 %)
Core PCE, q/q, 3Q S, 1.7%, est. 1.7% (prior 1.7%)
10 :00 AM Consumer Confidence Index, Nov, est. 101.5 (prior 98.6)

Canadian Economic Data 

8:30 AM Current Account Balance, 3Q, -18.30b,  est. -16.50b (prior -19.86b, -19.02b)



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