Market Update
Tsys little changed after8:30 data, 10Y 2.383% after yesterday’s 6bp selloff, prices moving off the lows despite firmer Oct core PCE, lower claims. UK gilts lower for a second day, off the lows after . Month end extensions in view with both the US & European Bloomberg-Barclays Indexes seeing greater than avg extensions for the year and compared to this time last yr – the US @ 0.11 vs 0.06 avg. GOCs unch vs tsys, long end better bid on the curve, 10s30s ~1.5bps narrower since yest. Provis trading up to start after closing 0.5bps tighter yest on no supply. Metro 3-part deal well subscribed, all tranches closing ~5bps tighter on the break.
News headlines
OPEC and Russia Ready to Extend Oil-Supply Cuts Through 2018 (Bloomberg) OPEC and Russia are ready to extend their oil production cuts until the end of next year to ensure global stockpiles keep falling and prices maintain recent gains. All OPEC members and Russia, the biggest producer outside the group to join the deal, agree the cuts should last until the end of 2018, according to delegates in Vienna to attend Thursday’s meeting. On Wednesday, a committee charged with overseeing the agreement on behalf of the whole group also recommended extending until the end of next year, two delegates said.
Euro-Area Inflation Misses Estimates as Unemployment Falls (Bloomberg) The European Central Bank got a reminder that the improving economy doesn’t guarantee a return of inflation to its goal, as unemployment unexpectedly dropped but consumer-price growth missed estimates.
Goldman Warns That Market Valuations Are at Their Highest Since 1900 (Bloomberg) A prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to translate into pain for investors, according to Goldman Sachs Group Inc.
Euro Flat, Bonds Up on Inflation Miss; Stocks Rise: Markets Wrap (Bloomberg) The euro fluctuated and most European bonds rose as consumer-price growth in the region missed estimates in November. Stocks shrugged off a weak session in Asia to advance as investors switched from some of this year’s best-performing sectors into more defensive names.
Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) The Senate tax bill is headed for a marathon debate this week after Republican leaders brought the measure to the floor Wednesday with the goal of holding a final vote by the end of the week.
Canadians doing business in China should be warned of possible trouble, former envoy says (Globe and Mail) A former Canadian ambassador to China says Ottawa should issue a prominent and official warning to Canadian business people that commercial disputes in China could result in their being detained and having their passports seized.
Enbridge to raise dividend by 10% amid share issue, asset sales (Globe and Mail) Enbridge Inc. is issuing $1.5-billion of shares and plans to sell at least $3-billion in assets as it seeks to fund major development projects and streamline its operations following its takeover of Spectra Energy.
Canada’s CIBC reports earnings ahead of market expectations (Reuters) Canadian Imperial Bank of Commerce (CM.TO) reported fourth-quarter earnings which were in line with market expectations, helped by strong growth in its Canadian commercial banking and wealth management business.
Overnight markets
Overview: US 10yr note futures are down -0.176% at 124-08, S&P 500 futures are up 0.32% at 2633.5, Crude oil futures are up 0.72% at $57.71, Gold futures are down -0.51% at $1279.7, DXY is up 0.1% at 93.258, CAD/USD is up 0.12% at 0.7764.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.434% | 2 Year | 1.77% |
| 5 Year | 1.625% | 5 Year | 2.118% |
| 10 Year | 1.885% | 10 Year | 2.395% |
| 30 Year | 2.234% | 30 Year | 2.831% |
US Economic Data
| 8h30 AM | Initial Jobless Claims, Nov 25th 238k est 240k (239 prior) |
| Continuing Claims, Nov 18th 1957k est 1890k (1904k prior) | |
| Personal Income, Oct 0.4% est 0.3% (0.4% prior) | |
| Personal Spending, Oct 0.3% est 0.3% (1.0% prior) | |
| Real Personal Spending, Oct 0.1% est 0.2% (0.6% prior) | |
| PCE Deflator MoM, Oct 0.1% est 0.1% (0.4% prior) | |
| PCE Deflator YoY, Oct 1.6% est 1.5% (1.6% prior) | |
| PCE Core MoM, Oct 0.2% est 0.2% (0.1% prior) | |
| PCE Core YoY, Oct 1.4% est 1.4% (1.3% prior) | |
| 9:45 AM | Chicago Purchasing Manager, Nov (51.7 prior) |
| Bloomberg Consumer Comfort, Nov 26th est 63.0 (66.2 prior) |
Canadian Economic Data
| 8:30 AM | Current Account Balance, 3Q -19.35b est -20.00b (-16.32b prior) |
| 11/30 | CFIB Business Barometer, Nov 59.3 (57.2 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