Market Update

Tsys little changed , 10Y 2.40%, on heavy volume in TY futures (>400k). Busy week ahead with FOMC decision Wednesday and Oct payrolls Friday. The next Fed chair is also expected to have announced this week. Payrolls are forecast to have risen 300k this month, largely a rebound from hurricane related weakness in Sep. GOCs higher in line with tsys, 10Y 1.97% at seven week low (Sep8th), with empty data calendar today but Aug GDP tomorrow (exp 0.1%/3.5% y/y). Last week saw Can/US spreads move to new three month narrows across the curve, while the CAD fell to the lowest since early July. With the output gap essentially closed, the BOC focused on downside risks to growth such as Nafta, elevated household debt. While near term odds of a rate hike have been pared down substantially over the past couple of weeks , mkts continue to anticipate a rate hike by July of next year. Provinicial spreads opening 0.5-1bp wider from Fri,  more 10Y supply expected (Ont, QC, BC…)

News headlines 

Trump Leans Toward Powell for Fed With Announcement Next Week (Bloomberg) President Donald Trump stoked the sense of drama surrounding his choice for the next Fed chairman Friday as he tweeted out a video teasing an announcement he said would come next week.

White House Braces for First Actions in Mueller’s Russia Probe (Bloomberg) The first public glimpse into Special Counsel Robert Mueller’s probe of alleged collusion by Donald Trump’s campaign with Russian meddling in the presidential election may come Monday, with the disclosure of possible charges against one or more people.

HSBC’s Asia Push Bearing Fruit for Gulliver Before Hand-Off (Bloomberg) HSBC Holdings Plc’s $100 billion bet on Asia is bearing fruit, driving its third consecutive increase in quarterly revenue just months before Chief Executive Officer Stuart Gulliver hands the reins to John Flint.

Catalonia’s Parallel World Runs Into Harsh Spanish Reality (Bloomberg) As children return to school and parents to their jobs, it could be like any other week in the Spanish region of Catalonia. But for those who support President Carles Puigdemont and his separatists, it’s the first working day of Europe’s newest republic.

U.S. Stocks Bounce Back on Earnings, Budget Vote: Markets Wrap (Bloomberg) Most U.S. stocks climbed amid a raft of robust earnings reports, speculation about the Federal Reserve’s next leader and congressional action on taxes. The S&P 500 Index rebounded from yesterday’s drop as results from Twitter Inc. to Ford Motor Co. topped estimates. Biotechnology shares buckled, pulling the Nasdaq 100 Stock Index lower, after Celgene Corp.’s cut to its forecast sent drugmakers tumbling. The dollar rose to the highest in 15 weeks, while oil hovered above $52 a barrel.

Bond Traders Confront Fears in Week That May Change Everything (Bloomberg) The next five trading days will bring a torrent of market-moving information: President Donald Trump is poised to finally announce his nominee to lead the Federal Reserve; U.S. central bankers have an interest-rate decision to make; the first possible charges from special counsel Robert Mueller’s probe into Russian meddling in the 2016 presidential election; a House committee is set to release a tax bill; and the Treasury will unveil plans to issue more debt to make up for lost funding from the Fed. Oh, and investors will also get the latest reading on the nation’s job market and the central bank’s preferred inflation gauge.

U.S. Economy Notches Solid 3% Growth, Despite Hurricanes (Wall Street Journal) The U.S. economy posted its best six-month stretch of growth in three years despite two hurricanes, a sign that it might be breaking out of its long-running slow-growth trend, with the help of soaring stock prices and rising business and consumer confidence.

Morneau Shepell​ sees no impact from pension legislation (Reuters) Morneau Shepell Inc (MSI.TO), the human resources management company at the heart of conflict-of-interest allegations against Canadian Finance Minister Bill Morneau, said on Friday it would not benefit from pension or tax legislation proposed by the Liberal government.

U.S. regulator wants to loosen leash on Wells Fargo: sources (Reuters) A leading U.S. regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter.

Overnight markets 

Overview: US 10yr note futures are up 0.163% at 124-26, S&P 500 futures are down -0.19% at 2573.5, Crude oil futures are up 0.04% at $53.92, Gold futures are down -0.01% at $1271.7, DXY is down -0.27% at 94.659, CAD/USD is up 0.23% at 0.779.

Cda Benchmarks Yield Tsy Benchmarks Yield
2 Year 1.421% 2 Year 1.592%
5 Year 1.651% 5 Year 2.023%
10 Year 1.978% 10 Year 2.405%
30 Year 2.33% 30 Year 2.922%

US Economic Data

8:30 AM Personal Income, Sep 0.4% est 0.4% (0.2% prior)
Personal Spending, Sep 1.0% est 0.9% (0.1% prior)
Real Personal Spending, Sep 0.6% est 0.5% (-0.1% prior)
PCE Deflator MoM, Sep 0.4% est 0.4% (0.2% prior)
PCE Deflator YoY, Sep 1.6% est 1.6% (1.4% prior)
PCE Core MoM, Sep 0.1% est 0.1% (0.1% prior)
PCE Core YoY, Sep 1.3% est 1.3% (1.3% prior)
10:30 AM Dallas Fed Manf. Activity, Oct  est 21.0 (21.3 prior)

Canadian Economic Data

10:00 AM Bloomberg Nanos Confidence, Oct 27th (57.7 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