Commentaires

Market Update US tsys slightly higher, US 10Y 3.16%, TY futures near highs on o/n range on avg volume (330k). Equity futures lower, S&P fut -13.5, Nasdaq -44 despite blowout Q3 from Netflix.  Sep FOMC minutes this aft – focus on removal of ‘accommodative’ language from the stmt and further clues as to where the Fed believes ‘neutral’ lies. GOCs higher in line with tsys, Ontario in the mkt yest with well anticipated $600mln reopening of the 2.9%/2049 issue @78, spds unch 78/77 thou the Ont 48/28 box  is 0.6bps narrower @15.5 this morning. 

News headlines

Cannabis Goes Legal in Canada as Investors Ride Stocks Higher (Bloomberg) Canada’s drive to legalize marijuana kicks off early Wednesday with store openings on the Atlantic Coast, giving the country a massive head start in developing a global pot market that some analysts peg at $150 billion. Stores in St. John’s, Newfoundland are set to be the first to sell recreational cannabis, with some planning to open at 12:01 a.m. local time, followed by more than 100 outlets and websites opening across the country of 37 million people. It’s an historic moment for an industry that has rapidly moved from the fringe to the mainstream.

U.K. Inflation Slowdown Gives BOE Time Amid Brexit Perils (Bloomberg) U.K. inflation slowed more than expected in September, giving the Bank of England room to move slowly on the path of raising interest rates. While faster pay growth may be strengthening price pressures, the uncertainty from Britain’s imminent divorce from the European Union is also undermining the economy. BOE Governor Mark Carney says a limited and gradual series of rate hikes are needed to keep inflation in check, and markets expect the next move to come after the U.K. formally leaves the bloc in March.

Saudis Know to Act Fast on Khashoggi Probe, Pompeo Says (Bloomberg) Saudi Arabia understands the need to conclude its investigation into the disappearance of government critic Jamal Khashoggi in a timely and rapid fashion, Secretary of State Mike Pompeo said. “They told me they were going to conduct a thorough, complete, transparent investigation” and made a commitment to holding anyone connected to any wrongdoing accountable, Pompeo told reporters Wednesday as he headed to Turkey, where the journalist was last seen entering the kingdom’s consulate in Istanbul.

U.S. Futures Slip, Dollar Rises as Good Mood Fades: Markets Wrap (Bloomberg) U.S. equity futures declined on Wednesday and European stocks erased an advance as the investor confidence that powered gains a day earlier faded. The dollar strengthened and Treasuries were steady. Contracts across the three main U.S. gauges fell, pointing to a retreat at the open following Tuesday’s surge. Automakers dragged the Stoxx Europe 600 Index down after data showed car sales in the region plunged in September. The moves outweighed a gain for technology companies in the wake of solid results from chip maker ASML Holding NV. Caution was evident in the debt market, where Treasuries were stable and most European government bonds climbed.

Canada tariff exemptions offer auto industry relief (Reuters) Canada has excluded a long list of steel and some aluminum products from its 25 percent tariff on U.S. metal, offering short-term relief to the country’s auto sector, which relies heavily on U.S.-made steel. The exemptions, which reduce vehicle and parts manufacturers’ costs, show the Canadian government is willing to protect autos, a key export industry, even when that benefits U.S. steelmakers in the midst of a trade war.

U.S. oil service firms face tough quarter despite high crude prices (Reuters) Even as crude prices hover near four-year highs, U.S. oilfield service firms’ third-quarter results due out in coming days will reflect a shaky recovery, as their customers face drilling constraints and pressure to hold down spending. Oil producers are holding off finishing new wells, and cost pressures from tight labor markets and U.S. tariffs on imported steel are driving up service firms’ costs. Meanwhile, shale producers including Devon Energy Corp (DVN.N) and Oasis Petroleum Inc (OAS.N) are doing more work traditionally handled by service companies.

‘Latest whammy’: Ceci says WCS discount further hamstrings Alberta (BNN) A widening Canadian crude discount is not what Alberta needs right now as it puts recession in its rearview mirror, according to the province’s finance minister. “The recession was incredibly difficult on Alberta,” Joe Ceci told BNN Bloomberg in an interview on Tuesday, referring to the economic downturn that plagued his province between 2014 and 2016. “We’re through the recession, into recovery.” “This latest whammy… We certainly don’t need this,” he added. The “whammy” comes in the form of the more than US$45 per-barrel discount on Western Canadian Select compared to the benchmark West Texas Intermediate. WCS fell below US$20 per barrel last Thursday, reaching a more-than-two-year low, but has since rebounded to trade at US$26.12 as of 12:35 p.m. ET on Tuesday.

Netflix crushes subscriber growth estimates, renewing investor faith (BNN) Netflix Inc.’s Cinderella story isn’t over just yet. The world’s largest paid online TV network added far more subscribers than analysts forecast in the third quarter and issued an upbeat outlook for the current three months, rebounding from a slowdown. Netflix signed up 6.96 million customers in the quarter, according to a statement Tuesday, boosting its global total to 137.1 million. The results should extend Netflix’s () reign as one of the best-performing stocks on Wall Street, giving the company leeway to spend billions of dollars more on original programming. Netflix justifies its mushrooming budget for TV shows and movies as necessary to attract customers, especially in newer markets outside the U.S.

Overnight markets

Overview: US 10yr note futures are down -0.04% at 118-06, S&P 500 futures are down -0.36% at 2807.5, Crude oil futures are down -0.64% at $71.46, Gold futures are down -0.12% at $1229.5, DXY is up 0.39% at 95.423, CAD/USD is up 0.31% at 0.7707. 

US Economic Data

Canadian Economic Data

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update US tsys trading lower on ‘risk on’ session, yields 1.5-2bps higher, US 10Y 3.175%. Equities firmly higher on earnings, DOW +187, S&P +19. GS Q3 eps beat $6.28 vs $5.38 on stronger IB, stock +1.4% pre-mkt. Morgan Stanley +3.0% pre-mkt also on IB. Core EGBs mixed – gilts slightly lower, lagging the rally in bunds –   stalemate over Irish border impacting Brexit talks, while the 10Y bund yield rallied to a two-week low 0.48%. GOCs lower in line with tsys, GOC 10Y back above 2.50%. Provis tighter, Ont 28 63/62.5 (-0.5bps), rumours of Ontario long deal – Ont 48/28 box fairly steady @ 15.7bps yet with the latest steepening in the GOC 10s30s curve, long Ontarios are more appealing, the all in yield pick from Ont 28s -> 49s has gapped 5bps wider to 16.5bps over the past two weeks.

News headlines

U.K. Wage Pickup Takes Back Seat to Brexit for Bank of England (Bloomberg) The fastest wage growth in almost a decade is a sign that inflation pressures are building, but the Bank of England may not act until it gets clarity on Brexit. Data from the Office for National Statistics Tuesday showed average earnings excluding bonuses rose 3.1 percent in the three months through August, the most since January 2009.

Trump’s Trade War Means Boom Time for Some (Bloomberg) China’s exporters are gathered in their thousands in Guangzhou for the latest edition of the Canton Fair. We’re asking for their insights into how the escalating trade war with the U.S. is affecting their businesses and their outlook on the economy. Check back here over the next couple of days for rolling updates.

China Consumer Inflation Accelerates, Factory Prices Slow (Bloomberg) Chinese consumer inflation accelerated for a fourth month in September, with food prices jumping by the most since February, while the rise in households’ non-food costs slowed. The consumer price index rose 2.5 percent from a year earlier, according to data from the National Bureau of Statistics. That was the same as forecast in a Bloomberg survey of economists, and faster than the 2.3 percent report in August. The producer price index climbed 3.6 percent, compared with a 3.5 percent estimate and a 4.1 percent gain the previous month.

Stocks Gain, Treasuries Dip as Earnings Roll In: Markets Wrap (Bloomberg) Stocks climbed and Treasury yields ticked higher on Tuesday as investors looked ahead to the next wave of corporate earnings and further developments across a host of geopolitical issues. U.S. equity futures pointed up as Morgan Stanley and Goldman Sachs Group Inc. posted third-quarter results, beating estimates on some measures. European stocks also advanced, led by shares in Italy which rallied with the country’s bonds after the government reached an agreement on a budget. In Asia, Japan’s equities outperformed, while Chinese shares retreated. The yen declined, and the dollar edged up from close to a two-week low ahead of a U.S. Treasury currency-manipulation report expected this week.

Pompeo meets Saudi king over Khashoggi case, Turks to search consul’s residence (Reuters) U.S. Secretary of State Mike Pompeo met Saudi Arabia’s King Salman on Tuesday to discuss the disappearance of Saudi journalist Jamal Khashoggi, as Turkish police prepared to search the Saudi consul’s residence in Istanbul in a widening probe. Khashoggi, a U.S. resident and leading critic of the Saudi crown prince, vanished after entering the consulate on Oct. 2. Turkish officials say they believe he was murdered there and his body removed, which the Saudis strongly deny.

Canada home sales fall in September for first time in five months – CREA (Reuters) Resales of Canadian homes dipped 0.4 percent in September from August, the first decline since April, the Canadian Real Estate Association said on Monday. The industry group said actual sales, not seasonally adjusted, dropped 8.9 percent from a year earlier, while the group’s Home Price Index was up 2.3 percent from September last year.

Canada open to more trade with China now that USMCA is done: Trudeau (BNN) Canada is open to doing more business with China now that a trading agreement with the United States and Mexico has been finalized, says Prime Minister Justin Trudeau. « Obviously, China is the world’s second-largest economy and growing, and will remain an important place to do business and to look for opportunity, » Trudeau told the Fortune Global Forum in Toronto on Monday.

Overnight markets

Overview: US 10yr note futures are down -0.04% at 118-04, S&P 500 futures are up 0.53% at 2763.5, Crude oil futures are down -0.75% at $71.24, Gold futures are up 0.26% at $1233.5, DXY is down -0.08% at 94.985, CAD/USD is down -0.23% at 0.7717. 

US Economic Data

Canadian Economic Data

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230