Market Update Tsys paring earlier losses, now slightly higher before PCE data, 10Y 2.877 (-0.7bps), lagging the move higher in core EGBs. Bunds rallied on regional inflation data, Turkish Lira fell to two week low, EU peripheral spds wider. US equity futures lower, China CSI 300 fell 1.0%, European stocks lower even as European autos rallied on news EU would include cars among US goods which can imported duty free. In Canada, GOCs lower in line with tsys before Q2 GDP – likely to figure in next week’s BOC rate decision thou expectations for a hike are still hovering around 20%
News headlines
Nafta Talks to Continue as Trump Says They’re on Track for Deal (Bloomberg) Talks to update Nafta are edging toward their next deadline with signs of optimism from President Donald Trump and other key figures, as the U.S. and Canada push to resolve enough differences to trigger a countdown to sign a new deal. Key U.S. and Canadian government figures met again Wednesday, book-ended by meetings of lower-level trade officials set to work through the night. Trump and Canadian Prime Minister Justin Trudeau signaled Wednesday an accord could be reached.
Turkish Lira Extends Slumps as Investors Wait for Policy Action (Bloomberg) The lira headed for a fourth day of declines as the latest measures by the central bank failed to stop selling pressure. The dollar gained as much as 3.7 percent to 6.7107 against the lira, which was the worst performer among emerging markets. Trade was thin during a public holiday in Turkey.
U.S. Farm Trade Surplus to Shrink as Chinese Tariffs Bite (Bloomberg) Agriculture, one of the few areas of the U.S. economy that sells more abroad than it buys, will see its trade surplus shrink next year as shipments to China collapse amid a trade war between the two nations, according to a government forecast. The world’s biggest agricultural exporter will see a surplus of $18 billion in the fiscal year beginning Oct. 1, down 7.7 percent from the current year, the U.S. Department of Agriculture said Wednesday in a quarterly forecast.
Stocks Drop as Trade Worries Linger; Dollar Rises: Markets Wrap (Bloomberg) U.S. equity futures and European stocks followed Asian shares lower on Thursday, as simmering trade and geopolitical issues weighed on sentiment. The dollar edged higher and gold fell. Contracts for the S&P 500, Dow and Nasdaq all pointed to a drop at the open, after America’s benchmark gauge on Wednesday closed above 2,900 for the first time. Telecom companies led the retreat as almost every sector fell on the Stoxx Europe 600 Index. Treasuries and most European bonds drifted. Sterling and the euro slipped after the European Union’s chief negotiator warned the bloc must be prepared for a disorderly Brexit.
On Canadian dairy farms, fear and frustration as U.S. demands trade concessions (Reuters) Marie-Pier Vincent, a fourth-generation Quebec dairy farmer, worries it will be even harder to make ends meet if Canada allows more tariff-free imports of milk products from the United States under a reworked North American Free Trade Agreement.
Futures fall on China trade worries (Reuters) Stock futures pointed to a lower opening for Canada’s main equity index on Thursday, as concerns about uncertainty over an escalating trade war between China and the United States eclipsed optimism around the U.S.-Mexico trade deal. Talks between Canada and the United States are intensifying as the two countries push to hammer out a deal on a revamped North American Free Trade Agreement by a Friday deadline, with both sides upbeat about progress made so far.
Air Canada warns 20,000 app accounts may have been breached (BNN) Air Canada said it has locked all of its 1.7 million user accounts on its mobile app after the airline discovered that about 20,000 customers’ personal information may have been “improperly accessed.” In a notice on Air Canada’s website, the country’s largest air carrier said it detected unusual login behaviour on its app between Aug. 22 to 24. The company said it is contacting potentially affected customers directly. “We immediately took action to block these attempts and implemented additional protocols to block further repeated unauthorized attempts,” Air Canada said on its website. “As an additional security precaution, we have locked all Air Canada mobile app accounts to protect our customers’ data.”
U.S. trade commission says Canadian newsprint doesn’t harm U.S. industry (BNN) An independent U.S. federal agency ruled that Canadian paper imports don’t hurt American producers, delivering a surprise decision that eliminates tariffs that had raised prices and squeezed margins at struggling newspapers. The U.S. International Trade Commission said in a statement Wednesday that its decision ends the yearlong government investigation into allegations that Canada was dumping uncoated groundwood paper into the U.S. and offering its producers unfair subsidies. The paper is commonly used to print newspapers. “No antidumping or countervailing duty orders will be issued on imports of this product from Canada,” the commission said in the statement.
Overnight markets
Overview: US 10yr note futures are up 0.052% at 120-05, S&P 500 futures are down -0.15% at 2910.5, Crude oil futures are up 0.7% at $70, Gold futures are down -0.06% at $1210.8, DXY is up 0.02% at 94.621, CAD/USD is up 0.13% at 0.7736.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 2.136% | 2 Year | 2.665% |
| 5 Year | 2.245% | 5 Year | 2.77% |
| 10 Year | 2.315% | 10 Year | 2.875% |
| 30 Year | 2.318% | 30 Year | 3.017% |
US Economic Data
| 8:30 AM | Personal Income, Jul est 0.4% (0.4% prior) |
| Personal Spending, Jul est 0.4% (0.4% prior) | |
| Real Personal Spending, Jul est 0.2% (0.3% prior) | |
| PCE Deflator MoM, Jul est 0.1% (0.1% prior) | |
| PCE Deflator YoY, Jul est 2.3% (2.2% prior) | |
| PCE Core MoM, Jul est 0.2% (0.1% prior) | |
| PCE Core YoY, Jul est 2.0% (1.9% prior) | |
| Initial Jobless Claims, Aug 25th est 212k (201k prior) | |
| Continuing Claims, Aug 18th est 1725k (1727k prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Aug 26th (58.6 prior) |
Canadian Economic Data
| 6:00 AM | CFIB Business Barometer, Aug 61.6 (56.8 prior) |
| 8:30 AM | Quarterly GDP Annualized, 2Q est 3.1% (1.3% prior) |
| GDP MoM, Jun est 0.1% (0.5% prior) | |
| GDP YoY, Jun est 2.3% (2.6% 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
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230