Commentaires

Market Update US tsys slightly higher, at lows of o/n range after having given up gains from Europe, 10Y 3.05%, off the lows after in line Q2 GDP and stronger August Durable Goods, thou Durable Goods ex transport weaker (0.1% vs 0.4%. Tsys rose with bunds/gilts on Italy budget concerns, 5Y BTP/bund spd +8bps. Still Italy managed to sell E4bln in 5 & 10Y bonds at a higher bid/cover than previous auction – 10Y b/c 1.44x vs 1.37x prev. GOCs higher, outperforming tsys by 1bp across the curve, 10Y 2.41% vs 2.47% high from Tuesday. Provis well bid, Ontarios lifted in 10s& longs, rumours of Quebec long yest never transpired. 

News headlines

Trump Says He Refused Meeting With Trudeau Over Trade Talks (Bloomberg) President Donald Trump said he rejected a one-on-one meeting with Canadian Prime Minister Justin Trudeau at the United Nations General Assembly because he’s dissatisfied with trade negotiations with Ottawa. “We’re very unhappy with the negotiations and the negotiating style of Canada,” Trump said in a news conference on Wednesday. “Canada has treated us very badly. Canada has a long way to go.”

Trade Tensions, Italian Uncertainty Put a Cloud on Europe’s Mood (Bloomberg) Euro-area economic confidence slid for a ninth month, the longest streak of declines since 2011, as protectionism and political uncertainty cast a cloud over the outlook. The latest drop in sentiment coincided with Germany having its growth outlook slashed and the WTO downgrading its view of global trade. The latter also warned that the U.S.-China tariff spat is already hurting corporate investment.

Powell Sees Bright Moment for Economy With More Hikes Ahead (Bloomberg) Ten years after the peak of the financial crisis, Jerome Powell’s Federal Reserve sees a U.S. economy capable of humming along without support from monetary policy. Unemployment is low. Inflation is stable and anchored. Financial conditions merit watching, but don’t look overly worrisome. And against that backdrop, policy makers are raising interest rates gradually despite renewed criticism from President Donald Trump.

Stocks Mixed After Fed; Euro, Italian Bonds Drop: Markets Wrap (Bloomberg) U.S. equity futures edged higher, while stocks in Europe and Asia slipped Thursday as investors digested the likelihood of more Federal Reserve interest-rate increases stretching into next year. The euro declined with Italian bonds as the country is due to decide on deficit targets. Futures on the S&P 500 pointed to a slightly firmer open after sharp losses late in the previous session. Banks led the way lower in the Stoxx Europe 600 Index, following a downbeat session in Asia after the Federal Reserve signaled tightening policy was here to stay. The dollar climbed and the single currency dropped, and though an auction of Italian bonds was well received, the debt fell alongside the country’s shares as political jockeying continued with 2019 budget targets in the balance. Britain’s pound fell as the EU was said to discuss no-deal contingencies.

U.S. says Canada not making concessions needed for NAFTA deal (Reuters) Canada is not making concessions needed to reach a deal with the United States for a trilateral NAFTA pact and is running out of time before Washington proceeds with a Mexico-only agreement, a top U.S. official said on Tuesday. U.S. President Donald Trump’s administration recently began increasing the pressure on Canada, urging it to conclude a deal by Sunday or face exclusion from a revised North American Free Trade Agreement. A spokesman for Canadian Foreign Minister Chrystia Freeland brushed off the latest remarks from the United States, saying Canada was not interested in focusing on timelines.

TSX set to open higher as oil prices rise (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Thursday as oil prices rose on prospects of a global supply shortfall due to U.S. sanctions on major crude exporter Iran. September futures on the S&P/TSX index SXFc1 were up 0.13 percent at 6:55 a.m. ET. The Toronto Stock Exchange’s S&P/TSX .GSPTSE edged up 9.78 points, or 0.06 percent, to 16,169.28 on Wednesday. Dow Jones Industrial Average e-mini futures 1YMc1 were up 0.08 percent at 6:55 a.m. ET, while S&P 500 e-mini futures ESc1 were up 0.11 percent and Nasdaq 100 e-mini futures NQc1 were up 0.31 percent.

RBC uses trash day reminders and tire changes to lure clients (BNN) There’s a company in Toronto that has built programs to help new immigrants, keep track of car maintenance and tell homeowners what day to haul their trash to the curb. But the firm isn’t a software developer — it’s one of Canada’s biggest banks. Royal Bank of Canada has spent more than two years building a fintech startup within its operations. RBC Ventures Inc. now has about 150 employees working on nine projects in various stages of development out of a glass office tower near Toronto’s waterfront, two blocks south of the bank’s headquarters.

Bed Bath & Beyond plunges amid surprise drop in same-store sales (BNN) U.S. consumers are opening their wallets again, but Bed Bath and Beyond Inc. (BBBY.O) is still struggling to lure them into its stores. The home-furnishings and cookware retailer reported a surprise drop in same-store sales — a key metric. Shares fell as much as 12 per cent in late trading Wednesday. Bed Bath & Beyond has been exploring ways to boost in-store traffic while increasing its struggling online presence. While Chief Executive Officer Steven Temares has said improvement is needed in e-commerce, in-store promotions will be the key to keeping shoppers loyal as competition heats up from powerful online rivals like Amazon.com Inc.

Overnight markets

Overview: US 10yr note futures are up 0.066% at 118-26, S&P 500 futures are up 0.09% at 2914, Crude oil futures are up 0.98% at $72.27, Gold futures are down -0.14% at $1197.4, DXY is up 0.38% at 94.55, CAD/USD is up 0.38% at 0.7652.

US Economic Data

Canadian Economic Data

Market Update

US tsys higher, yields 0.5-1.5bps lower, 10Y below 3.10% (3.08 -1.5bps), curve flatter, moderate volume in TY futures before FOMC decision this afternoon. Core EGBs higher led by gilts rallying on Brexit uncertainty, JPM recommendation to buy 10Y gilts, 10Y gilt 1.605% (-2.4bps). US equity futures higher taking their cue from rally in Asian stocks after China announced it would cut import tariffs on Nov 1st FOMC expected to raise rates 25bps to 2.0-2.25% (77% odds of additional hike in Dec based on FF futures), focus on the ‘dot plot’ and any revision to the 2019 year end forecast. GOCs higher in line with tsys, 10Y 2.45%, from yesterday’s 2.47% intraday high, 10s30s trading close to flat , strong bid in longs yest afternoon.  Provis unch from yest close, Ontarios managed to tighten 1bp after a succesful 10Y reopening yest aft

News headlines

Lighthizer Says U.S. Won’t Wait for Canada on New Nafta Pact (Bloomberg) The U.S. is moving forward on its bilateral trade deal with Mexico even if Canada is left out because negotiators can’t resolve their sharp differences over dairy and a dispute resolution system, U.S. Trade Representative Robert Lighthizer said. The Trump administration soon plans to present to Congress a text of the U.S.-Mexico trade agreement that was announced last month to revise portions of the North American Free Trade Agreement, Lighthizer said at an event in New York on Tuesday. The timeline is important because current Mexican President Enrique Pena Nieto wants to sign the deal before he’s succeeded by Andres Manuel Lopez Obrador in December, Lighthizer said.

Nafta Blowup Could Sink the Loonie by 10 Percent, JPMorgan Says (Bloomberg) Should the U.S. follow through on threats to withdraw from the North American Free Trade Agreement, the Canadian dollar would absorb much of the blow. That’s the view of JPMorgan Chase & Co., who forecast that the loonie could crumble nearly 10 percent against the dollar in the worst case “NoFTA” scenario. A U.S. withdrawal would likely entail 25 percent tariffs on autos and dairy, disrupting supply chains and forcing the Bank of Canada to slash interest rates, according to analysts including Daniel Hui.

China to Cut Tariffs on Imports Including Machinery, Textiles (Bloomberg) China will cut import tariffs on goods including machinery, paper, textiles and construction materials from Nov. 1, in a move that would lower costs for consumers and companies as a trade war with the U.S. deepens. The decision will lower tariffs for 1,585 products, cutting the tax burden on consumers and companies by about 60 billion yuan ($8.7 billion), state radio reported, citing a meeting of the State Council. This will lower the average most-favored nation tariff rate to 7.5 percent from 9.8 percent.

U.S. Stock Futures Climb Before Fed; Oil Slips: Markets Wrap (Bloomberg) U.S. equity futures advanced alongside Asian stocks while European equities held steady as markets largely entered a holding pattern before the Federal Reserve’s rate decision. The dollar edged higher and Treasuries advanced. Contracts on the S&P 500, Nasdaq and Dow all climbed, while the Stoxx Europe 600 Index drifted. Automakers underperformed in the wake of BMW’s outlook cut and news of a CEO change at Daimler. Japan’s Topix ended just below its highest point in almost eight months, while stocks rallied in Hong Kong as traders returned from a holiday and Chinese shares rose after MSCI Inc. said it’s considering increasing the country’s weight in its global indexes.

In a U.S. manufacturing hub, no illusions about tariffs and jobs (Reuters) In a town where a 30-feet tall chair is the chief landmark, and which is synonymous with a U.S. furniture industry decimated over the years by imports from China, many greet the possibility of tariffs on Chinese goods with a shrug. No wonder. Of three once bustling Thomasville furniture plants in the city limits, one is being demolished and cleared for parkland, another may become the site of a new police station, and a third is being converted into apartments.

Facebook faces political hurdle in China, where it seeks toehold (BNN) Facebook Inc. finds itself entangled in yet another political spat — this time with China, a market the social media giant is seeking to enter. Police in Hong Kong, a semi-autonomous part of China, have asked the company to remove the official page of the pro-independence National Party, which was slapped with an unprecedented government ban this week. The prohibition pledges fines and imprisonment for those aiding the group. Hong Kong officials made their request of Facebook after the measure was announced on Monday, according to the South China Morning Post.

Teck’s Frontier oil sands project inks ‘participation agreement’ with Mikisew Cree (BNN) The company proposing the $20.6-billion Frontier Oil Sands Mine says it has achieved its target of signing deals with all of the Indigenous groups who live near the northern Alberta megaproject. Doug Brown, director of public affairs for Vancouver-based Teck Resources Ltd., says it has successfully concluded negotiations with the Mikisew Cree First Nation of Fort Chipewyan, a small community near the project site north of Fort McMurray. The news of a 14th deal being signed emerged as joint federal-provincial review hearings for the project began Tuesday in Fort McMurray.

Overnight markets

Overview: US 10yr note futures are up 0.092% at 118-18, S&P 500 futures are up 0.13% at 2925, Crude oil futures are down -0.57% at $71.87, Gold futures are down -0.25% at $1202.1, DXY is up 0.22% at 94.341, CAD/USD is up 0.05% at 0.7716.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today

Market Update

US tsys weaker, off the lows, with the 10Y 3.10% (+1bp), 10s&30s near the four-year high level reached in May (3.11 & 3.25), on heavier than avg volume in TY futures (435k). ‘Risk on’ tone overnight with Euro equities higher led by energy and info tech, crude higher rising above $82. US eco data Case-Shiller home prices, Consumer Confidence. Second leg of US tsy supply with $38bln 5Y auction at noon, FOMC tomorrow.  GOCs lower, underperforming tsys out the curve, 10Y 2.46% closing in on May’s 2.52% high. Provis trading tighter to start in 10s & longs –  Onts 28s @ 67.5, Ont 49s @ 81, this despite Ontario expected to be back in the mkt this morn (10Y or 30Y?). In corps, yest RBC issued the first ‘bail-in’ bond 5Y  @ 95 OTC – the tighter side of guidance (15 over RY 2.33 12/23, vs 15-20 guid).

News headlines

Fed to Spurn Rate Pause and Stick With Quarterly Hikes: Survey (Bloomberg) The Federal Reserve will raise interest rates this week and continue its quarterly drumbeat of 25-basis-point increases straight through to June 2019, according to economists surveyed by Bloomberg. That’s a steadier pace for hikes over the coming months than Fed watchers anticipated in June, when they predicted the Federal Open Market Committee would skip a move at its December meeting. Such a pause won’t come until next September, economists now say.

Barrick’s Randgold Acquisition May Spur More Gold Mining Deals (Bloomberg) Gold miners earned the ire of investors including billionaire hedge-fund manager John Paulson for entering into bad deals that destroyed shareholder value in the past. Shareholders of the two companies announcing a merger Monday signaled they think this time may be different. Barrick Gold Corp. Executive Chairman John Thornton said his company isn’t paying a premium under its agreement to buy Randgold Resources Ltd. The decision came after the company has been criticized for its “undisciplined growth and poor returns” in the past.

Trump Says He’ll Discuss ‘What’s Going On’ With Rosenstein (Bloomberg) President Donald Trump said he’s looking forward to meeting with Deputy Attorney General Rod Rosenstein on Thursday to discuss his future, after a person familiar with the matter said Rosenstein told Chief of Staff John Kelly that he was resigning. “We’ll be determining what’s going on,” Trump told reporters at the United Nations on Monday. “We want to have transparency, we want to have openness and I’m looking forward to meeting with Rod at that time.”

Stocks Climb, Bonds Fall as Risk Appetite Rebounds: Markets Wrap (Bloomberg) Stocks across Europe resumed their upward march and U.S. equity futures pointed to a gain at the open as investors shrugged off worries over trade and politics to rediscover their appetite for risk. Benchmark Treasury yields climbed past 3.1 percent, and oil traded at a four-year high. Energy shares powered the Stoxx Europe 600 Index higher after a sluggish start. Contracts for the S&P 500, Dow Jones and Nasdaq all climbed, though the tech index lagged after Instagram’s founders said they were leaving Facebook Inc. Japanese equities rose to the highest since February as traders returned from a holiday, although Chinese shares headed in the opposite direction after a long weekend. Hong Kong and South Korea were shut. The dollar drifted and the euro rose. Core European bonds slipped but Italian debt rallied as the country crept closer to a budget.

Corporate Canada takes side bet with FX hedges as NAFTA risk intensifies (Reuters) As the month-end deadline for North American trade talks nears, Canadian executives who hedge foreign exchange risk have been changing their strategies so their companies can profit from any possible swings in the Canadian dollar. Companies ranging from manufacturing, agriculture to retail are choosing to hedge their foreign exchange risk with options, which have become cheaper than normal to buy, rather than enter into contracts that lock in a future currency rate, currency dealers said.

Canada unveils plan to bolster WTO in face of U.S. protectionism (BNN) The Canadian government released a new blueprint Tuesday to reinforce the World Trade Organization and buffer it from President Donald Trump’s ‘America First’ attacks on the Geneva-based trade body. The proposal, called “Strengthening and Modernizing the WTO,” seeks to forge an alliance of like-minded countries to “restore confidence in the multilateral trading system and discourage protectionist measures and countermeasures,” according to a copy of the eight-page document obtained by Bloomberg. The effort is one of several initiatives aimed at shoring up the WTO as it confronts an array of crises that could ultimately sideline the organization’s role as the arbiter of global trade. Trump has threatened to withdraw from the WTO, repeatedly attacked the organization as being biased against U.S. interests and is slowly strangling the dispute settlement system, which mediates trade disputes that affect some of the world’s largest companies.

TransCanada plans to start Keystone XL construction in 2019 (BNN) The developer of the Keystone XL oil pipeline plans to start construction next year, after a U.S. State Department review ordered by a federal judge concluded that major environmental damage from a leak is unlikely and could quickly be mitigated, a company spokesman said Monday. TransCanada spokesman Matthew John said the company remains committed to moving ahead with the project following years of reviews from federal and state regulators. The company has already started preparing pipe yards, transporting pipe and mowing parts of the project’s right-of-way in Montana and South Dakota, but TransCanada said in court documents it doesn’t plan start construction in Nebraska in the first half of 2019.

Overnight markets

Overview: US 10yr note futures are down -0.132% at 118-15, S&P 500 futures are up 0.21% at 2931.5, Crude oil futures are up 0.39% at $72.36, Gold futures are up 0.13% at $1206, DXY is down -0.11% at 94.084, CAD/USD is up 0.05% at 0.7715.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today