Commentaires

Market Update Tsys trading higher after August PPI fell 0.1% vs +0.2% exp, 10Y 2.963% (-1.5bp), curve 1bp flatter. Equity futures slightly lower – S&P -1.75, Asian equities lower, Hang Seng at one-year lows, Euro stocks holding on to slight gains. Core EGBs higher led by 10Y bund @ 0.41% , just off recent highs. GOCs higher, in line with tsys – NAFTA in the headlines, yesterday afternoon positive news on talks impacting GOCs and the CAD -which continues to rall – 1.3062 (-50pps). The BOC auctions $400mln in reopened 2050 RRBs at noon with long breakevens at the lower end of ther range this yr -170bps. 

News headlines

China Bank Lending Slowed in August as Bond Issuance Surges (Bloomberg) China’s broadest measure of new credit expanded as companies issued more debt, though the expansion in new bank loans slowed, showing that banks are still cautious about extending credit and taking on risk. China’s credit growth has been sluggish for months as a multi-year campaign to slow debt growth squeezed shadow banking and hurt people’s appetite for risk. As the trade conflict with the U.S. intensifies, policy makers have loosened monetary policy and eased regulatory requirements on banks to encourage lending.

There’s Never Been a President This Unpopular With an Economy This Good (Bloomberg) President Donald Trump’s unpopularity is unprecedented given the strength of the economy. That’s according to a Bloomberg analysis of polling data. It shows that Trump is the first U.S. leader dating back to at least Ronald Reagan whose approval rating is consistently low and lagging consumers’ favorable assessment of the economy.

Trump Tariffs Spark Industry Campaign to De-Escalate Trade War (Bloomberg) Trade associations representing farmers, retailers and manufacturers are joining forces in a new multi-million-dollar campaign to oppose President Donald Trump’s tariffs, in the latest attempt by U.S. business to stop an escalating trade war. Groups lobbying for months to persuade the president that tariffs are the wrong approach have been largely ignored, as Trump slapped duties on billions of dollars of imports from steel to Chinese products. But a new coalition called Americans for Free Trade is joining Farmers for Free Trade to change the direction in Washington by highlighting stories of businesses, consumers and farmers in the heartland negatively affected by the duties.

Europe Stocks Rise, Asia Extends Drop; Euro Slips: Markets Wrap (Bloomberg) European stocks advanced on Wednesday and Asian shares extended a losing streak as traders turned their focus to the outlook for monetary policy amid lingering worries for global trade. Treasury yields edged lower after climbing a day earlier. Energy companies and miners were among the biggest winners in Europe as Bloomberg’s commodity index rose. Futures on the Dow, S&P 500 and Nasdaq advanced even as America’s East Coast battened down for Hurricane Florence. The MSCI Asia Pacific Index was on course for a 10th consecutive decline, the longest losing streak since 2002. Two-year Treasury yields held near a decade high and the dollar edged lower. The euro slipped after a report that the European Central Bank is set to lower its economic growth forecasts, while the pound fluctuated as Britain attempts to foster an amicable split from the EU.

Canada ready to allow U.S. dairy access in NAFTA talks (Reuters) Canada is ready to offer the United States limited access to the Canadian dairy market as a concession in negotiations to rework the North American Free Trade Agreement, two Canadian sources with direct knowledge of Ottawa’s negotiating strategy said on Tuesday. U.S. President Donald Trump said at the White House that trade talks with Canada were going well and that Ottawa wants to make a deal. Chrystia Freeland, Canada’s foreign minister, returned to Washington on Tuesday for talks with U.S. Trade Representative Robert Lighthizer.

Trump says NAFTA deal with Canada ‘coming along very well’ (BNN) The U.S. and Canada continued to look for ways to bridge their differences as talks resumed to update the North American Free Trade Agreement, with Ottawa insisting it won’t sign a bad deal. “We had a very productive, constructive conversation. The atmosphere continues to be cordial. There continues to be goodwill on both sides,” Foreign Affairs Minister Chrystia Freeland said Tuesday after meeting U.S. Trade Representative Robert Lighthizer in Washington. “It is a truism of trade negotiations that nothing is done until everything is done.”

Loblaw beats Canadian banks in credit card survey (BNN) Canada’s biggest grocery chain is beating the banks at their own game. Loblaw Cos.’s President’s Choice Financial credit cards rank No. 1 for customer satisfaction, beating out cards issued by the country’s biggest banks, according to a study published Monday by J.D. Power. Despite being Canada’s biggest credit-card issuer, Toronto-Dominion Bank trails the pack. PC Financial scored 788 on a 1,000 point scale making the cards “among the best,” according to the survey. American Express Co.’s cards ranked second, with 780 points, followed by Canadian Tire with 774 points, and Capital One at 764. Each of the three rated “better than most. »

Overnight markets

Overview: US 10yr note futures are up 0.079% at 119-14, S&P 500 futures are down -0.06% at 2888, Crude oil futures are up 1% at $69.94, Gold futures are down -0.27% at $1198.9, DXY is down -0.03% at 95.218, CAD/USD is up 0.07% at 0.7648.

US Economic Data

Canadian Economic Data

Market Update US tsys trading weaker, yields 1-1.5bps higher across the curve with the 10Y 2.945% (+1.5bps). Volatile session for USD, DXY well off the lows now higher 95.29, after falling to 1 week low 94.90 earlier.  Tsys weaker in Europe along with bunds/gilts on solid European eco data (UK wages, German ZEW) and continued rally in EU peripheral spds. US supply today – $35bln 3Y auction. GOCs weaker in line with tsys, 10Y 2.30%. Provis opening unch, Quebec 2028 reopening @ 63.5 yest, now 63.5/63. 

News headlines

Canadian Crude Prices Collapse as Alberta Glut Grows Again (Bloomberg) Canadian crude prices are plunging once again as repairs were completed on Alberta’s second-biggest oil sands upgrader and production surged from a new mine. Synthetic crude, a light grade produced in upgraders, fell Thursday to the biggest discount to West Texas Intermediate futures since December 2013, data compiled by Bloomberg show. 

Harry Potter and the Bank of England’s Productivity Policy Maker (Bloomberg) Britain’s famous boy wizard may have the magic to revive the U.K. economy, according to the Bank of England’s newest policy maker Jonathan Haskel. The problem is weak productivity, and he says part of the solution might just be found in intangible things like Harry Potter’s spells. As the Monetary Policy Committee gathers in London this week ahead of their announcement Thursday, McKinsey & Co. warns that 90 percent of future U.K. growth will need to come from improvements in that area if the economy is to keep pace with historical rates.

Kremlin Takes After Trump With Swipe at ‘Undesirable’ Rate Hike (Bloomberg) Russian President Vladimir Putin’s government is wading back into central banking for a second week as the prospect of higher interest rates tests its patience. The drumbeat started soon after Governor Elvira Nabiullina said a week ago that the first rate hike since 2014 will be on the agenda when the central bank meets Sept. 14. The prime minister first urged policy makers to take a more “active position” in addressing borrowing costs that are still high relative to inflation. The Kremlin’s top economic aide, Andrey Belousov, then said that while he saw grounds for tightening, such a step would be “highly undesirable.”

Stocks Slip as Trade Mood Sours; Dollar Stronger: Markets Wrap (Bloomberg) U.S. equity futures fell with European shares after a mixed session in Asia, as fears returned over trade relations among the world’s two biggest economies. The dollar advanced, with the pound and euro barely holding Monday’s gains. Miners and carmakers dropped in the Stoxx Europe 600 Index and contracts on the Dow and S&P 500 erased earlier advances. China will ask the World Trade Organization for permission to retaliate against the U.S. due to its failure to modify anti-dumping methodologies, the WTO said. The pound lost some of the ground made after European Union chief Brexit negotiator Michel Barnier talked up a deal with the U.K.

Canada’s Freeland to hold NAFTA talks on Tuesday as time runs short (Reuters) Canadian Foreign Minister Chrystia Freeland will meet U.S. Trade Representative Robert Lighthizer in Washington on Tuesday for another round of talks to renew the NAFTA trade pact, an official said on Monday, as time runs short to seal a deal. Freeland spokesman Adam Austen did not give details. After more than a year of negotiations, Canada and the United States are still trying to resolve differences over the North American Free Trade Agreement, which also includes Mexico.

China seeks WTO backing for sanctions on U.S. over dumping duties (Reuters) China will ask the World Trade Organization (WTO) next week for permission to impose sanctions on the United States, for Washington’s non-compliance with a ruling in a dispute over U.S. dumping duties, a meeting agenda showed on Tuesday. The request is likely to lead to years of legal wrangling over the case for sanctions and the amount. China initiated the dispute in 2013, complaining about U.S. dumping duties on several industries including machinery and electronics, light industry, metals and minerals, with an annual export value of up to $8.4 billion.

HBC, Austria-based Signa form joint venture in European retail (BNN) Hudson’s Bay Co. has completed a deal with an Austrian retail heavyweight that will see the two firms create a joint venture to operate existing businesses in Germany, Belgium and elsewhere in Europe. The Canadian retailer announced the agreement in a statement early Tuesday, saying it’s formed a « strategic partnership for its European retail and real estate assets » with Austria-based Signa Retail Holdings.

The trade war will likely cost China 700,000 jobs, JPMorgan says (BNN) The tariff battle with the U.S. will probably cost China 700,000 jobs, or more in the event of further escalation. The job losses would come if the U.S. imposes 25 per cent tariffs on US$200 billion in Chinese exports and China retaliates by devaluing its currency by 5 per cent and adding to levies on U.S. goods, according to economists led by Haibin Zhu at JPMorgan Chase & Co. If China doesn’t retaliate at all, 3 million people could lose their jobs, they wrote in a research note Tuesday. The study highlights the more profound impacts of the tariff battle on the world’s second largest economy, which is grappling with a slowing pace of growth and a massive debt pile. Things may get even worse: if the U.S. imposes 25 per cent tariffs on all Chinese imports and China retaliates with the levies already announced, the measures will mean 5.5 million lost jobs and 1.3 percentage points cut off gross domestic product growth.

Overnight markets

Overview: US 10yr note futures are down -0.118% at 119-17, S&P 500 futures are down -0.3% at 2871.5, Crude oil futures are up 0.24% at $67.7, Gold futures are down -0.15% at $1198, DXY is up 0.05% at 95.201, CAD/USD is down -0.01% at 0.7598.

US Economic Data

Canadian Economic Data

Market Update Tsys trading mildly higher, near top end narrow ranges on average volume, short end yld near 10yr highs. Generally quiet start to the week w/mixed direction from European Bonds. Turkey resumes slide after disappointing GDP, German bonds have reversed early gains, with Schatz, Bobl and Bund Dec18 futures all hitting one-month lows, but Italian BTPs continue to rally on more conciliatory budget signals from govt officials over the weekend. Headline watching/trade focus, otherwise limited data today, Atl Fed Pres Bostic fireside chat in Georgia midday, Fed enters media blackout this Friday at midnight. 

News headlines

Investors Lift Canadian Commercial Real Estate to Record Quarter (Bloomberg) Canadian commercial real estate investment reached new heights in the second quarter, boosted by a pair of big acquisitions and by the lure of attractive, income-producing property. Transactions reached C$16.5 billion ($12.5 billion). That’s 38 percent more than the previous record, set in the first quarter of last year, and more than twice the five-year quarterly average, CBRE Group Inc. said in a report Monday. Deal volume for the first six months was C$26.8 billion, a half-year record.

U.K. Economy Posts Fastest Growth in Almost a Year on Services (Bloomberg) The U.K. economy grew at the fastest pace in almost a year between May and July, as construction output rebounded and a heatwave boosted retail sales and the powerhouse services sector. Gross domestic product increased 0.6 percent from the three months through April, the most since August last year, the Office for National Statistics said Monday. That’s more than economists forecast and up from 0.4 percent in the second quarter.

Trump Scrutiny Would Intensify if Democrats Win House Majority (Bloomberg) For President Donald Trump, the nightmare scenario if Democrats win control of the U.S. House would be the death of his legislative agenda, aggressive investigations of his inner circle, and potential impeachment. For Democratic leaders, the vision they’re presenting is far tamer: a limited three-prong agenda of health care legislation aimed at cutting costs and drug prices, an infrastructure spending initiative, and an overhaul of ethics laws aimed at stamping out corruption in Washington.

U.S. Futures, Europe Stocks Shrug Off Asia Malaise: Markets Wrap (Bloomberg) Stocks were mixed at the start of the week, with U.S. equity futures rising alongside European shares following losses in Asia as investors weighed the prospect of further escalation in an American trade war with China. The dollar and Treasuries drifted, while Italian bonds rallied. The Stoxx Europe 600 Index fluctuated in early trading before finding its feet as Italy’s benchmark surged, buoyed by official government comments over the weekend that the country’s budget will be pragmatic and within EU fiscal rules. Equities sank in Shanghai and Hong Kong, with the latter’s benchmark index nearing a bear market in the wake of President Donald Trump’s threat to step up his trade showdown with China. Emerging-market shares slid. Oil rebounded from the biggest weekly loss in two months on speculation of a crude-supply shortage.

Canada’s Freeland sees ‘very good progress’ in NAFTA trade talks (Reuters) Canada’s top trade negotiator said on Friday she and her U.S. counterpart were making “very good progress” in talks to save the North American Free Trade Agreement amid increasing Canadian optimism that a deal could be reached, even if a conclusion did not appear imminent.

Canada job losses surprise, but rate hike still expected (Reuters) The Canadian economy unexpectedly shed over 50,000 jobs in August due to losses in part-time work, Statistics Canada data showed on Friday, but investors still expected the Bank of Canada to raise interest rates next month. The downbeat data came a day after by hawkish comments from a senior Bank of Canada official, capping a week in which the central bank left interest rates unchanged at 1.50 percent and said more increases are needed.

Trump urges Ford, Apple to bring jobs home amid tariff spar (BNN) President Donald Trump insists his trade war with China will spur more manufacturing jobs in the U.S. Two of the companies he’s targeted — Apple Inc. and Ford Motor Co. — disagree. In a tweet Sunday, Trump said Ford’s decision not to import a new sport-utility vehicle from China means the Focus Active “can now be built in the U.S.A.” The automaker has already said it has no plans to restart production elsewhere. Ford said Aug. 31 the Trump administration’s 25 per cent levy on China-built autos undermined the profitability of the car.

Tesla erupts in chaos after senior executives leave, Musk tokes up (BNN) The turmoil at Tesla Inc. () has reached a fever pitch, with the news that two senior executives are leaving Elon Musk’s electric-car maker emerging hours after he smoked marijuana during a podcast interview streamed live online. Chief Accounting Officer Dave Morton gave notice Tuesday that he was resigning less than a month into the job, according to a Friday filing. Tesla’s stock plunged, then extended declines after Gabrielle Toledano, the head of human resources who’s been on a leave of absence, told Bloomberg News that she won’t rejoin the company.

Overnight markets

Overview: US 10yr note futures are down 0% at 119-21, S&P 500 futures are up 0.37% at 2885.25, Crude oil futures are up 0.47% at $68.07, Gold futures are down -0.23% at $1197.6, DXY is down -0.07% at 95.3, CAD/USD is up 0.16% at 0.7583.

US Economic Data

Canadian Economic Data