Market update
US tsys trading lower despite in line ECI, weaker per inc/spending data, US 10Y 2.175, curve ~2bps flatter. Month end index extension in the Barclays Tsy index (0.10yrs) should provide some support and could exert further flattening pressure. Core EGBs lower, bunds ~1bp tighter vs tsys after 10Y bund/tsy spd reached six month high yest @ 166 on diverging Fed/ECB. GOCs slightly higher – well bid in longs with 10/30s @ 77 from 81 pre FOMC. Little reaction to weaker GDP Provis well bid, int’l buying o/n.
News headlines
- Fed’s Lacker says U.S. labor market has tightened ‘considerably’ (CNBC) Richmond Federal Reserve President Jeffrey Lacker on Friday said he favored raising interest rates at the Fed’s policy meeting earlier this week because steady growth in the economy has helped labor markets to tighten “considerably.”
- BoJ holds course despite deepening gloom (FT) The Bank of Japan has kept monetary policy on hold even as it slashed its economic forecasts and said it did not expect to hit its 2 per cent inflation target until the start of 2017.
- China’s Onshore Yuan Posts Biggest Daily Gain Since 2014 (WSJ) China’s onshore yuan posted its biggest one-day gain since March 2014 on Friday, as the central bank appears to be boosting the currency before the International Monetary Fund’s meeting next month.
- Britain’s credit rating could be cut by two notches if it leaves EU, warns S&P (Telepgraph) Britain’s credit rating could be slashed below Austria and Finland’s if it leaves the European Union, Standard & Poor’s has warned. Moritz Kraemer, the agency’s chief sovereign rating officer, said Britain would be stripped of its top AAA rating with a one-notch downgrade if it voted to leave the bloc, and possibly double that if relations between Britain and Brussels soured.
- Bears hit City and Street for Halloween (FT) This weekend millions will dress up as ghouls, vampires, aliens, goblins and Justin Bieber to celebrate all things scary and horrific for Halloween. For the finance industry’s small cabal of “perma-bears” it is also celebration time.
Overnight markets
- Overview: IG24 5Y 74.554/75.220 (+0.328), US 10yr note futures are down -0.06% at 127-17, S&P 500 futures are up +0.20% at 2087.25, Crude oil futures are down -0.13% at 46.00$, Gold futures are down -0.58% at $1140.6, DXY is down -0.28% at 97.006.
US Economic Data
- Employment cost index increased 0.6% in 3Q 2015 better than 2Q 0.2%.
- Personal income came in at 0.1% MoM in September compared to August 0.4%.
- Personal spending grew 0.1% MoM in September versus previous month 0.4%.
- PCE came in at -0.1% MoM (0.2% YoY) in September versus August 0.0% MoM (0.3% YoY).
- PCE core increased 0.1% MoM (1.3% YoY) in September compared to 0.1% MoM (1.3% YoY) in August.
- ISM Milwaukee is expected at 44.0 in October versus 39.44 in September.
- Chicago purchasing manager index is forecast at 49.5 in October higher than September 48.7.
- University of Michigan confidence (Final) is expected at 92.5 in October 0.4 point higher than preliminary report.
Canadian Economic Data
- GDP in August increased 0.1% MoM (+0.9% YoY) compared to 0.3% MoM (+0.7% YoY) in July.
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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.
Tel : (514)-861-0240
Fax: (514)-861-3230