Market Update

US tsys trading slightly higher led by the long end, low volume in TY futures (215k), US equity futures unch,  quiet conditions before FOMC decision this aft. A third rate cut is priced in for the Fed today, what will be in focus is outlook for additional ‘adjustments’.  Tsy quarterly refunding statement & Q3 GDP at 8:30.   Tsy refunding not expected to see changes in auction sizes, potential issuance linked to repo market, a ‘SOFR’ FRN and a 20Y tsy fixed issue.  Core EGBs outperforming, 10Y gilt 2.5bps lower – the UK will hold a general election Dec 12th  in another referendum on Brexit.  GOCs higher, in line with tsys, 10Y 1.58%. BOC at 10:00am expected to leave rates unch at 1.75%, in view of last week’s upbeat BOC survey, inflation tracking at BOC target.

News headlines

Stocks Drift as Traders Await Fed Decision, Powell: Markets Wrap (Bloomberg) U.S. equity-index futures drifted alongside stocks in Europe on Wednesday while Asian shares were mixed as markets largely entered a holding pattern in the countdown to the Federal Reserve’s policy decision. Treasuries ticked higher and the dollar slipped.

TSX futures slip ahead of Fed, BoC rate decisions (Reuters) Canada’s main stock index futures inched lower on Wednesday, ahead of policy decisions from the U.S. Federal Reserve and the Bank of Canada.

Outlier status leaves Bank of Canada atop the interest rate heap (BNN) The Bank of Canada is widely expected to hold interest rates steady for an eighth-straight meeting on Wednesday, probably leaving the country with the highest policy rate among the world’s major economies.

Fed prepares to pause after third rate cut (BNN) Jerome Powell may be getting ready to pause this year’s monetary easing campaign.

With balance sheet in background, markets focus on Fed’s rate decision (Reuters) When Federal Reserve officials conclude their two-day policy meeting on Wednesday, they may at last have succeeded in divorcing the actions they take in managing the U.S. central bank’s massive balance sheet from interest rate decisions.

U.S. economy likely lost further ground in third quarter (Reuters) The U.S. economy likely slowed further in the third quarter, held back by a moderation in consumer spending and declining business investment, which could spur the Federal Reserve to cut interest rates again to keep the expansion on course.

In U.S.-China talks, Beijing’s refusal to spell out farm buys is big sticking point (Reuters) U.S. President Donald Trump’s demand that Beijing commit to big purchases of American farm products has become a major sticking point in talks to end the Sino-U.S. trade war, according to several people briefed on the negotiations.

France outshines Germany as euro zone economic gloom deepens (Reuters) Strong domestic stimulus is helping France shrug off a global slowdown even as export-dependent Germany heads closer to a recession, starkly divergent data on the euro zone’s two leading economies showed on Wednesday.

Market Overview: US 10yr note futures are up 0.048% at 129-11, S&P 500 futures are up 0.03% at 3036.75, Crude oil futures are up 0.11% at $55.6, Gold futures are up 0.4% at $1496.6, DXY is down -0.04% at 97.652, CAD/USD is down -0.04% at 0.7644.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.697% 2 Year 1.634%
5 Year 1.611% 5 Year 1.65%
10 Year 1.588% 10 Year 1.823%
30 Year 1.729% 30 Year 2.316%

US Economic Data

07:00 AM MBA Mortgage Applications, Oct 25  Survey: —  Actual: 0.60% Prior: -11.90%
08:15 AM ADP Employment Change, Oct  Survey: 110k  Actual: 125k Prior: 135k Revised 93k
08:30 AM GDP Annualized QoQ, 3Q A  Survey: 1.60%  Prior: 2.00%
          Personal Consumption, 3Q A  Survey: 2.60%  Prior: 4.60%
          GDP Price Index, 3Q A  Survey: 1.90%  Prior: 2.40%
          Core PCE QoQ, 3Q A  Survey: 2.20%  Prior: 1.90%
02:00 PM FOMC Rate Decision (Upper Bound), Oct 30  Survey: 1.75%  Prior: 2.00%
          FOMC Rate Decision (Lower Bound), Oct 30  Survey: 1.50%  Prior: 1.75%

Canadian Economic Data

10:00 AM Bank of Canada Rate Decision, Oct 30 Survey: 1.75%  Prior: 1.75%

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, Émile Bordeleau

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