Commentaires

Market Update US tsys higher, yields ~2bps lower across the curve, 10Y 3.147%, heavy volume in TY futures (720k). Prices off the highs after 15k block trade in TY futures @6:50am. Equity futures slightly lower, well off mid morning lows (S&P -2.25 from -25). US tsy auctions $39bln in 5Y notes at 1:00ET. Fed Beige Book as well as several Fed speakers scheduled (Bostic, Brainard). Core EGBs higher despite rally in Italy BTPs – the EU flash PMI fell to a two-year low 52.7 this month. GOCs higher, lagging the rally in tsys, 10Y 1bp lower @ 2.44%.  BOC expected to raise rates 25bps this morning, focus will be on any growth revisions, as well as possible removal of ‘gradual’ language. At the Sept decision the BOC referred to uncertainty on trade as a reason for holding rates steady, this has cleared somewhat since the signing of the USMCA. Mkts are pricing in an additional three rate hikes by the end of 2019 to 2.50%.

News headlines

Trump directly attacks Fed Chairman Powell, saying ‘Obama had zero’ interest rates. (CNBC) President Donald Trump directly accused Federal Reserve Chairman Jerome Powell of endangering the U.S. economy by raising interest rates, according to The Wall Street Journal. Trump accused Powell of endangering the U.S. economy by raising interest rates. The U.S. president indicated that he sees the current performance of the economy as a competition between himself and President Barack Obama.

Saudi oil chief says OPEC is in ‘produce as much as you can’ mode. (BNN Bloomberg) Saudi Arabia gave the strongest indication yet that it’s trying to stop oil prices from rising further, saying that OPEC and allies are in a “produce as much as you can mode” to assure customers that they can meet demand and remove any uncertainties about looming shortages.

Inside S&P 500, most stocks in correction or bear market. (Reuters) According to Reuters, 353 S&P 500 stocks have fallen into a correction — down 10% from their peaks — and 179 of those are in a bear market — down at least 20% from their peak.

Deutsche Bank ‘on track’ for 1st full-year profit since 2014. (Financial Post) Deutsche Bank’s net profit fell 65 per cent in the third quarter but CEO Christian Sewing said the bank made progress cutting costs and would show its first full-year profit since 2014.

Ford hires new China chief to tackle daunting turnaround task. (Reuters) Ford Motor Co (F.N) has hired a new chief for its troubled China operations, ending a nine-month search after the previous head suddenly quit and tasking him with fixing a deep sales slump in the world’s biggest car market.

Saudi Arabia reassures boycotting banks, prince to address forum. (Reuters) Saudi Arabia said on Wednesday it would not penalize foreign banks boycotting an investment forum in a message of reassurance for a gathering overshadowed by a global outcry over slain journalist Jamal Khashoggi.

Worries on demand, profit outlook and trade dent global tech shares. (Reuters) Global tech stocks have lost about $1 trillion or 9 percent of market value this month, Refinitiv data showed, hurt by worries over slowing global demand, valuations and trade tensions between the United States and China. The losses were also exacerbated by a rise in U.S. yields, which shot up to a near 7-1/2 year high this month and prompted investors to leave risky sectors and move into higher yielding bonds. An analysis of 1,701 global technology firms – each with a market value of more than $100 million – showed that their combined market value was down to about $10.58 trillion on Oct. 23 from $11.64 trillion on Oct. 1.

Boeing raises guidance as plane sales swell. (Reuters) Boeing (BA.N) topped analysts’ forecasts for quarterly profit on Wednesday and raised its forecasts for annual profit as it continued to benefit from a boom in global air travel and demand for airplanes.

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 tsy yields 3-5bps lower in strong ‘risk off’ rally, with the US 10Y 3.145% (-5.5bps), heavy volume in TY futures more than 2x avg (752k). Huge declines in global equities overnight – Hang Send -3%, CSI 300 -2.66%. US equity futures extending losses with the DOW -380, S&P -40 after Caterpillar -6.8% reported lower full-year guidance despite beat on revenue & eps.  Core Euro bonds also higher, thou trailing the advance in tsys, 10Y bund/tsy spd 3bps tighter . GOCs higher, lagging the adance in tsys by ~2bps, 10Y 2.44% three-week low. BOC decision & MPR tommorrow consensus is for 25bp rate hike , focus on statement and whether BOC will drop the ‘gradual approach’ language since some degree of uncertainty was lifted after the Oct signing of the USMCA deal.

News headlines

Hot Economy Puts Onus on Bank of Canada Amid Trudeau’s Deficits (Bloomberg) For the first time in a decade, Canada’s policy makers are worrying the economy is running too hot instead of too cold. The federal government and Bank of Canada are set to release key reports that will paint a picture of an economy running at full steam, with the jobless rate at near-historic lows, consumer spending and housing holding up in the face of rising interest rates, and businesses starting to invest again. A booming U.S. economy, coupled with averting a trade war with Canada’s biggest trading partner, is only stoking growth.

U.S. GDP Report Expected to Give Trump a Win Ahead of Midterms (Bloomberg) The U.S. economy is poised for its best back-to-back quarters of growth since 2014, handing President Donald Trump a $20 trillion talking point just in time for the midterm congressional elections. The report due Friday, the last data before the Nov. 6 vote, will show gross domestic product expanded at a 3.4 percent annualized pace in the July-September period after a 4.2 percent gain in the prior quarter, according to the median estimate of economists surveyed by Bloomberg. Consumer spending and business investment probably drove growth, and inventory accumulation also contributed.

Italy May Force the EU Into an Unprecedented Budget Rebuke (Bloomberg) The European Commission will likely decide Tuesday on whether to formally demand a member state to take back, revise and resubmit its budget, a step it has never taken before. Vice President Valdis Dombrovskis and economic affairs chief Pierre Moscovici have already stated that Italy’s budget is in serious breach of European Union rules and asked the populist government to change tack. Italy, so far, has refused.

U.S. Futures Tumble as Caterpillar, 3M Disappoint: Markets Wrap (Bloomberg) U.S. futures extended losses, with contracts on the Dow Jones Industrial Average off more than 400 points, after results from Caterpillar and 3M added to concern that global growth is faltering. The yen, gold and Treasuries all rose on demand for haven assets. The sell-off in U.S. equities put the S&P 500 Index on track for its 12th loss in 14 days as investors grow concerned that the trade war and rising interest rates have put an end to runaway expansion of corporate profits. Caterpillar sank 6 percent in early trading after flagging concern over rising materials costs, while 3M dropped 5 percent after cutting its forecast.

Mexico to consider all actions in response to Canadian steel tariffs (Reuters) Mexico will consider all possible actions in response to Canadian steel tariffs, including the possibility of going to the World Trade Organization, Deputy Economy Minister Juan Carlos Baker said on Monday. Mexico’s government has rejected Canada’s move to impose new quotas and tariffs on imports of seven categories of steel from many countries, including Mexico.

Canada’s FSD Pharma to buy Israeli medical cannabis firm Therapix (Reuters) Canada’s FSD Pharma Inc signed a letter of intent to acquire Israel’s Therapix Biosciences Ltd for $48 million in stock, combining two complementary businesses focused on the research and development of cannabinoid treatments. Therapix shareholders will receive about 130 million class B subordinate shares of FSD Pharma, nearly 10 percent of the company, FSD said on Tuesday. The price per share of Therapix is $13.7, triple its close of $4.4 on Monday.

Trump giving Xi someone to blame for China’s slowing economy (BNN) U.S. President Donald Trump sought to pressure Beijing to open its markets by undermining its economy. Instead, he may be providing Chinese counterpart Xi Jinping with the perfect cover story if things get worse. China’s economy has shown signs of slowing in recent months, expanding in the third quarter at the weakest pace since the depths of the financial crisis in 2009. The slowdown — predicted by the ruling Communist Party and market observers long before Trump’s rise — has nonetheless fanned anxiety among a population that has grown accustomed to decades of breakneck growth.

Conservatives say Energy East would solve dependence on foreign oil (BNN) The federal Conservatives are invoking the risk of dependence on oil from countries like Saudi Arabia as an argument to revive the Energy East pipeline, even though the pipeline was intended to carry oil almost entirely for export. Pierre Paul-Hus, a Quebec MP, told reporters Monday that it is time to stop being « hypocritical » about energy supply. He said Conservative Leader Andrew Scheer’s proposal to sit down with TransCanada is aimed at making Canada self-sufficient in oil. Study of the project, which was opposed by many Quebec municipalities, revealed that it would have served almost exclusively to export Alberta oil to foreign markets. TransCanada abandoned the pipeline one year ago after the National Energy Board modified the environmental assessment process. In a speech Sunday aimed at beginning the countdown to the Oct. 21, 2019 federal election, Scheer said a Conservative government would seek to revive the project. The pipeline, opposed by environmentalists and Indigenous groups among others, was a key issue in the last federal campaign, especially in Quebec.

Overnight markets

Overview: US 10yr note futures are up 0.318% at 118-12, S&P 500 futures are down -1.34% at 2719.5, Crude oil futures are down -1.85% at $68.08, Gold futures are up 1.32% at $1240.8, DXY is down -0.16% at 95.857, CAD/USD is up 0.04% at 0.763. 

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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 slightly higher, upper-end of narrow range in TY futures on heavy volume (430k), US 10Y 3.19%. ‘Risk on’ rally in global equities after China moves to shore up economy (tax cut, verbal pledge to support non-state firms…). S&P futures moving steadily higher thru the morning, now +12, USD higher, crude unch at one-month lows (69.12).  UK gilts bid, with the 10Y yield at three-week low 1.55% (-3bps)- possible cabinet revolt against PM May over her Brexit plans. GOCs higher, outperforming tsys by 0.5bps in 10s, 10Y 2.48%. BOC decision this Wed – 25bp rate hike priced in, odds slightly lower after CPI (96%).  Quebec back in issuance mode with possible 10 or 30Y deal today. 

News headlines

Trump’s EU Trade Talks Quickly Become Contentious (Bloomberg) The European Union and U.S. are reviewing their trade ties, spurred by U.S. accusations that the bloc is duping American businesses. But don’t expect a complete overhaul of their more than $1 trillion commercial relationship anytime soon. Even though President Donald Trump notified Congress Oct. 16 that the U.S. intends to begin official trade talks with the 28-nation EU, formal negotiations are yet to get underway and quarreling between the two sides signals an arduous process lays ahead.

China Says U.S. Should `Think Twice’ About Leaving Missile Pact (Bloomberg) China called on the U.S. to reconsider pulling out of a three-decade-old arms control treaty with Russia, saying the move would generate “multiple negative effects.” President Donald Trump said Saturday he planned to pull out of the Intermediate-Range Nuclear Forces Treaty, known as INT, claiming that Moscow had breached the agreement on intermediate-range conventional and nuclear weapons. The New York Times reported the move was in part to enable the U.S. to counter a Chinese arms buildup in the Pacific.

European Union, Singapore Sign Free-Trade and Investment Pacts (Bloomberg) The European Union and Singapore signed free-trade and investment protection agreements in Brussels on Friday in a bid to improve bilateral business ties amid rising global trade conflicts. The EU and Singapore will remove tariffs, reduce technical barriers, and provide better opportunities in services and government procurement under the deals, the Singapore government said in a statement Friday.

Stocks Jump After China Rally; Italian Bonds Climb: Markets Wrap (Bloomberg) U.S. equity futures advanced alongside European stocks after Chinese officials pledged to support the world’s second-biggest economy, helping to kick start a rally in Asia. The dollar and Treasuries were steady, while Italian bonds climbed. Insurance and mining shares led gainers on the Stoxx Europe 600 Index as both the regional benchmark and S&P 500 futures contracts headed for the first increase in four sessions. In China, the Shanghai Composite Index surged more than 4 percent, the biggest increase since March 2016, in the wake of verbal interventions from authorities at the end of last week and plans to cut personal income taxes. Chinese President Xi Jinping vowed “unwavering” support for the country’s private sector.

Bombardier sues Mitsubishi jet program over trade secrets (Reuters) Canadian airplane maker Bombardier Inc (BBDb.TO) has sued the aircraft unit of Japan’s Mitsubishi Heavy Industries Ltd (7011.T), saying former Bombardier employees passed on trade secrets to help Mitsubishi’s oft-delayed regional jet project. Bombardier filed the lawsuit late Friday in a federal court in Seattle against Mitsubishi Aircraft Corporation, Seattle-based Aerospace Testing Engineering & Certification Inc (AeroTEC) and several former Bombardier employees.

Canadian airlines urge Ottawa to delay carbon tax rollout; warn fares could rise (BNN) Canadian airlines are urging Ottawa to exempt them from the Jan. 1 imposition of a federal carbon tax, which they warn will boost airfares and push passengers across the border to rival carriers and airports. The National Airlines Council of Canada sent a letter to three federal ministers Friday cautioning the government about the reduction the levy would cause to revenues as well as marginal domestic routes. « A carbon tax is probably the worst tool that you can envisage for aviation if you want to reduce emissions, » said lobby group president Massimo Bergamini in an interview.

Bank of Canada likely to raise rates despite soft data: Economists (BNN) There is little doubt the Bank of Canada will raise interest rates next week, despite a pair of soft economic reports Friday, as the overall economy remains strong and the weight of trade uncertainty has finally been lifted, according to some analysts and economists. “I don’t believe that this is going to materially change the Bank of Canada’s longer term perspective, that this is an economy operating at capacity and that normalization of interest rates is required,” Frances Donald, head of macroeconomic strategy at Manulife Asset Management, said in an interview with BNN Bloomberg’s Jon Erlichman after retail and inflation data was released Friday.

Overnight markets

Overview: US 10yr note futures are up 0.053% at 118-01, S&P 500 futures are up 0.42% at 2779.25, Crude oil futures are up 0.03% at $69.14, Gold futures are down -0.32% at $1224.8, DXY is up 0.11% at 95.816, CAD/USD is down -0.13% at 0.764. 

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