Market update
US tsys opening lower, curve flatter, US 10Y 2.235 (+1.4bps). Euro stocks at three month highs, Euro at lows since April, Core European bonds higher. German retail sales weaker than exp but CPI surprised to the upside. Event risk this week with Fed Yellen testimony on Wed, ECb Thursday and US payrolls Friday. GOCs are lower, spds unch vs tsys. Provis 0.5bps wider, Ont 46s 106/105, Ont 25 96/95, Qc 48 112/111. The BOC auctions $700mln in Dec 47 RRBs this wed with B/Es (44/45) @ 1.545, ~15 bps off the lows of August.
News headlines
- Euro mired under $1.06 as ECB action looms (FT) The euro is stuck under $1.06 and the region’s equities are mainly higher at the start of the week when the European Central Bank could take more action at its policy meeting on Thursday.
- Divergent Paths for U.S., European Central Banks (WSJ) Developments in the U.S. and Europe this week are set to widen the gap between the likely path of interest rates in the two regions and add to currency-market turbulence that has produced a 12% increase in the value of the dollar against the euro since the start of the year.
- Swiss 10-year yield hits new low of -0.41% (FT) How low can you go? No, really. This is getting bizarre. Switzerland’s 10-year yield has hit a new record low of minus 0.41 per cent, as anticipation further easing at the ECB’s Thursday meeting drags European bond yields even deeper into negative territory, writes Joel Lewin.
- There’s a Big Drop in U.S. Treasury Debt Supply Coming in 2016 (Bloomberg) Lost in the debate over the U.S. Treasury market’s resilience as the Federal Reserve starts to raise interest rates is one simple fact: supply is falling — and fast.Net issuance of U.S. notes and bonds will tumble 26 percent next year, according to estimates by primary dealers that are obligated to bid at Treasury debt auctions. The $433 billion of new supply would be the least since 2008.
- IMF Move Would Pressure China on Management of Yuan (WSJ) The International Monetary Fund is on the verge of labeling China’s yuan a reserve currency. Now Chinese officials will have to prove they can treat it like one.
Overnight markets
- Overview: IG24 5Y 80.372/81.105 (-0.113), US 10yr note futures are down -0.11% at 126-11+, S&P 500 futures are up +0.17% at 2093.5, Crude oil futures are up +0.96% at 42.11$, Gold futures are up +0.32% at $1059.6, DXY is up +0.12% at 100.14.
US Economic Data
- ISM Milwaukee is expected at 48.0 in November versus 46.6 in October.
- Chicago purchasing manager index is forecast at 54.0 in November lower than October 56.2.
- Pending home sales are forecast at 1.0% MoM (4.5% YoY) in October versus September -2.3% MoM (2.5% YoY).
- Dallas Fed is forecast at -10.0 in November higher than October -12.7.
Canadian Economic Data
- Canada 3Q current account balance came in at -$16.2B vs -$15.2B expected and -$16.6B for 2Q.
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