Market Update Tsys trading weaker, 10Y 3.115(+3bps), above volume in TY futures (530k), prices back to the lows of yest morning before equities sold off late Monday.  US equity futures higher, (S&P +14, Nasdaq +33), Euro stocks paring earlier losses now positive. BTPs wider vs bunds, 10Y +9bps after weak Q3 Italy GDP. In earnings, GE (-2.0% pre-mkt) slashed its dividend 92% to $0.01 from $0.12, missed on Q3 eps $0.14 vs $0.12, $22.8bln loss largely due to writedown of power business. Relatively quiet day on US data front with Consumer Confidence at 10:00 and S&P CoreLogic Home Prices. Yesterday the US Treasury announced it expects to borrow $425bln in Q4 vs $440bln initial est.  GOCs lower, in line with tsys, 10Y 2.41% (+2bps), 10Y reaching 2.38% yest afternoon a five-week low. Dollarama (BBB) was in the mkt with $500mln (upsized from $400mln guidance) 5Y @ 130, bonds closed wider 132/130.

News headlines

Trump says he expects ‘great deal’ with China, but more tariffs if not (Reuters) U.S. President Donald Trump said he thinks there will be “a great deal” with China on trade, but warned that he has billions of dollars worth of new tariffs ready to go if a deal isn’t possible. 

Oil prices fall on rising supply, trade tensions (Reuters) Oil prices fell on Tuesday, depressed by concerns that the U.S.-China trade dispute will dent economic growth and by signs of rising global supply despite upcoming sanctions against Iran. 

Mood sours as euro zone economic growth slows while Italy stagnates (Reuters) The euro zone economy grew less than expected in the third quarter as the public mood turned darker, with signs of distress in Italy highlighting concerns that the bloc’s third-ranked state is becoming one of its weakest links.

China’s yuan finishes onshore trading at weakest since 2008 (Reuters) China’s yuan closed at its weakest in over a decade on Monday, losing 0.16 percent to end the domestic session at 6.9560 per dollar CNY=CFXS, stirring speculation over whether the central bank will tolerate a slide beyond the key level of 7 per dollar.

Treasury Expects to Issue Over $1 Trillion in Debt in 2018 ( WSJ) The U.S. Treasury Department estimates it will issue more than $1 trillion in debt this year as higher government spending and sluggish tax revenues push the deficit higher. The Treasury said Monday it expects net marketable debt to total $425 billion in the fourth quarter, which would bring total debt issuance in 2018 to $1.338 trillion, compared with $546 billion in 2017. That would be the highest annual debt issuance since $1.586 trillion in 2010, when the U.S. economy was still crawling out of a recession.

Buffett’s Berkshire Hathaway breaks from tradition with two fintech investments (CNBC) Berkshire Hathaway has invested about $600 million in two fintech companies focused on emerging markets — Paytm and StoneCo, The Wall Street Journal reports.Both investments were led by one of Berkshire’s two portfolio managers, Todd Combs, not Warren Buffett. While Berkshire has stayed away from early-stage tech investments, these companies dominate their local markets, a theme that does fit into Buffett’s playbook.

General Electric cuts dividend, splits loss-making power unit (Reuters) General Electric Co slashed its quarterly dividend to just 1 cent per share and said it would split its power unit into two businesses as new Chief Executive Larry Culp took his first steps to revive the struggling conglomerate.

Apple expected to unveil iPads with facial recognition (Reuters) Apple Inc on Tuesday is expected to unveil updates to its Mac computers and iPads that include facial recognition features that have been available in the iPhone lineup at an event in Brooklyn.

Overnight markets

Overview: US 10yr note futures are down -0.21% at 118-23, S&P 500 futures are up 0.5% at 2656.75, Crude oil futures are down -0.94% at $66.41, Gold futures are down -0.28% at $1224.2, DXY is up 0.29% at 96.861, CAD/USD is down -0.07% at 0.7619.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 2.282% 2 Year 2.841%
5 Year 2.36% 5 Year 2.949%
10 Year 2.418% 10 Year 3.117%
30 Year 2.457% 30 Year 3.363%

US Economic Data

9:00 AM S&P CoreLogic CS 20-City MoM SA, Aug est 0.10% (0.19% prior)
  S&P CoreLogic CS 20-City YoY NSA, Aug est 5.80% (5.92% prior)
  S&P CoreLogic CS 20-City NSA Index, Aug (213.76 prior)
  S&P CoreLogic CS US HPI NSA Index, Aug (205.35 prior)
  S&P CoreLogic CS US HPI NSA, Aug (6.00% prior)
10:00 AM Conf. Board Consumer Confidence, Oct est 135.9 (138.4 prior)
  Conf. Board Present Situation, Oct (173.1 prior)
  Conf. Board Expectations, Oct (115.3 prior)

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230