Commentaires

Market Update US tsys lower, close to lows of o/n session on heavy volume in TY futures (568k) as equities rebound – S&P futures +12.5 China shares rise ~3.0%. European stocks slightly positive now, recovering from earlier losses which saw the Stoxx fall back to Monday’s low.  Quiet on US data front only Sep Existing Home Sales at 10:00.  Large move in BTPs overnite, the Italian 2Y surging to 1.70% from 1.50%, now 1.58% – ongoing conflict between the EU and Italy has intensified, with Italy insisting on higher budget deficit target. In Canada, GOCs lower, 10Y 2.51% before key Aug Retail Sales and Sep CPI, with the latter expected to slow to 2.7% y/y from 2.8% in Aug mostly due to a lower cont from gasoline. Focus will be on the three core measures which rose to a high since 2012 2.1% in August.

News headlines

China’s Economy Slows Amid Darker Outlook at Home and Abroad (Bloomberg) China’s economic growth slowed more than expected in the third quarter, as weak industrial output data and what the government called the « severe international situation » challenged efforts to stabilize the economy and reach its growth targets. Gross domestic product increased 6.5 percent in the three months through September from a year earlier, compared to 6.6 percent in a Bloomberg survey and down from the 6.7 percent pace in the previous quarter. That’s the slowest since the aftermath of the global financial crisis in 2009.

Italy Faces Off With EU as Pressure Mounts Over Budget (Bloomberg) The gloves came off in Italy’s fight with the European Union, as several of the bloc’s leaders attacked the populist government in Rome and the EU’s executive warned that its budget draft won’t fly. Markets took fright at the prospect of more upheaval in the euro area’s most indebted nation after Greece, with the Five Star Movement-League coalition setting itself on a collision course with Brussels over its spending plans.

The ECB May End its Negative Interest-Rate Policy in 2020 (Bloomberg) The European Central Bank will end its negative interest-rate policy in January 2020 and start paying for deposits eight months after that, according to a Bloomberg survey of economists. Liftoff is predicted for September next year, and the deposit rate is seen climbing to 0.25 percent, from minus 0.4 percent currently, by the end of 2020. No change in monetary policy is predicted at the Governing Council’s meeting on Thursday.

U.S. Futures Gain as Europe Struggles; Dollar Dips: Markets Wrap (Bloomberg) U.S. equity futures rose, pointing to a stronger open in New York as European shares dropped and Asian peers were mixed. Treasuries were steady as the dollar edged lower. Futures on the Dow Jones, S&P 500 and Nasdaq advanced. The Stoxx Europe 600 index declined as warnings from tire manufacturer Michelin and toolmaker Atlas Copco AB clouded the outlook for corporate earnings. Shares in Shanghai and Hong Kong gained earlier as financial regulators vowed to keep risks under control, though the MSCI Asia Pacific Index slipped with benchmarks in Tokyo, Mumbai and Taiwan. Europe’s peripheral debt fell and Italian stocks sank to a 19-month low as EU nations warned Italy’s populist government its budget won’t fly.

Canada added 28,800 jobs in September: ADP (Reuters) Canada added 28,800 jobs in September, helped by a pickup in hiring in the trade, education and health care industries, according to a report from ADP released on Thursday. The number of jobs added in August was revised higher to 42,700 from 13,600, ADP said. The report, which is jointly developed with Moody’s Analytics, is derived from ADP’s payrolls data of about 40,000 companies.

OPEC, allies struggle to fully deliver pledged oil output boost (Reuters) OPEC is struggling to add barrels to the market after agreeing in June to increase output, an internal document seen by Reuters showed, as an increase in Saudi Arabia was offset by declines in Iran, Venezuela and Angola. The Organization of the Petroleum Exporting Countries and allies agreed in June to boost supply as U.S. President Donald Trump urged producers to offset losses caused by sanctions on Iran and to dampen rising prices.

Canada not sending anyone to Saudi business summit and never intended to (BNN) The federal government has no intention of sending anyone to a major investment conference in Saudi Arabia next week at a time when Riyadh is the target of global outrage – and one source insists Ottawa never had plans to dispatch a delegation. Cabinet ministers, federal officials and embassy staff will skip the Future Investment Initiative in Riyadh, which is sometimes referred to as “Davos in the Desert,” a senior government insider said Thursday. Last year, then-natural resources minister Jim Carr attended the inaugural edition of the summit.

Overnight markets

Overview: US 10yr note futures are down -0.079% at 118-02, S&P 500 futures are up 0.37% at 2782.5, Crude oil futures are up 0.9% at $69.27, Gold futures are up 0.1% at $1231.3, DXY is down -0.01% at 95.892, CAD/USD is down -0.39% at 0.7672. 

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 continuing lower from yesterday’s post FOMC minutes slide led by the front end, curve bear flattening with the 2Y 2.905 (+1.5bps), 10Y 3.20%. No reaction to stronger than exp Phili Fed index (22 Equities weaker as well, China CSI Comp fell -2.4% to the lowest since Dec 2014. Core EGBs lower, curves bear steepening in contrast to tsys. 10Y gilt (1.58% +1bp) rallying since mid morning – Retail sales were weaker than exp, Theresa May is said to be willing to extend the Brexit transition period. Italian BTPs under pressure after a larger than exp buyback operation. GOCs either side of unch, 10Y 2.51% – the J29/10Y roll 0.4bps tighter from yesterday’s pre auction levels, now 0.8/0.7 (1.2) 

News headlines

Trump Attacks the Weak Link Powell Can’t Ignore in Fed Rate Plan (Bloomberg) Donald Trump has attacked the soft underbelly of the Federal Reserve’s campaign to raise interest rates, exposing what Jerome Powell himself probably recognizes is a potential vulnerability. Amid his recent avalanche of criticism, the president has repeatedly lambasted the Fed chairman and his colleagues for hiking rates when inflation isn’t a problem.

What to Watch in China GDP Report: Trade, Autos, Manufacturing (Bloomberg) With China’s economic expansion expected to slow as trade wars heat up, a closer look at the data may offer a better look at what’s really happening in the world’s second-largest economy. Gross domestic product probably expanded 6.6 percent from a year earlier in the third quarter, according to a Bloomberg survey of economists ahead of the report, due Friday morning in Beijing. Forecasters also expect data on retail sales and fixed-asset investment to show growth held steady in September, while growth of industrial production probably ticked a notch lower.

Bank of Korea Holds Fire on Rates as Risks to Economy Grow (Bloomberg) The Bank of Korea left its key interest rate unchanged, citing an escalating U.S.-China trade war as among rising risks to Asia’s fourth-largest economy. It trimmed growth forecasts for this year and next. Governor Lee Ju-yeol made clear that for now price stability and caring for the economy — the BOK’s primary goals by law, he noted — would take priority over trying to curb financial imbalances such as record household debt and soaring house prices. Still, he said, those imbalances are a growing concern and the time to focus on them is coming near.

Fed Minutes Weigh on Stocks, Bonds; Yuan Slips: Markets Wrap (Bloomberg) U.S. equity futures fell and benchmark Treasury yields climbed back toward seven-year highs after minutes showing the Federal Reserve may favor more rate hikes next year. The dollar was steady. S&P 500 futures pointed to a softer open after a flat session on Wednesday, while stocks in Europe bucked earlier losses in Asia to climb on the back of positive earnings. The 10-year Treasury yield rose to 3.21 percent after minutes showed Fed officials appeared to favor an eventual move in rates above the level they see as neutral for the economy. The yuan weakened against the greenback as the U.S. Treasury refrained from naming China a currency manipulator, while at the same time escalating scrutiny of the country’s exchange-rate policy.

Blackstone concedes defeat to Canada’s Oxford in battle for Australia’s Investa (Reuters) Private equity giant Blackstone Group (BX.N) has quit a takeover battle for Australian office-block owner Investa Office Fund (IOF.AX) after it was gazumped by Canadian landlord Oxford Properties Group’s A$3.35 billion ($2.4 billion) bid. Blackstone told Investa it would not match the offer, Investa said on Thursday, all but handing the sought-after target to Oxford as office rents boom, especially in Sydney where Investa’s 20 towers are concentrated.

Futures lower as oil price drop weighs on energy shares (Reuters) Futures for Canada’s main stock index were marginally lower on Thursday, as a drop in oil prices led to losses in energy shares. Oil slipped below $80 a barrel as an increase in U.S. crude inventories suggested ample supply, while Saudi-U.S. tension and falling Iranian exports lent support. December futures on the S&P/TSX index were slightly down 0.08 percent at 7:10 a.m. ET. The Toronto Stock Exchange S&P/TSX composite index closed down 49.84 points, or 0.32 percent, at 15,529.90 on Wednesday.

U.S. spares China from yuan-manipulator label amid trade war (BNN) The Treasury Department stopped short of declaring China a currency manipulator in its semi-annual report on foreign-exchange rates, averting an escalation of a trade war while serving notice that the U.S. will closely watch the yuan after its recent slide. “Of particular concern are China’s lack of currency transparency and the recent weakness in its currency,” Treasury Secretary Steven Mnuchin said in a statement. “We will continue to monitor and review China’s currency practices, including through ongoing discussions with the People’s Bank of China.”

Overnight markets

Overview: US 10yr note futures are down -0.159% at 117-28, S&P 500 futures are down -0.49% at 2802.5, Crude oil futures are down -1.42% at $68.76, Gold futures are up 0.04% at $1227.9, DXY is up 0.02% at 95.594, CAD/USD is up 0.17% at 0.7666. 

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, 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