Commentaires

Market Update Tsys weaker yet off the lows despite weak stocks/emer mkts, strong USD, 10Y 2.87(+0.5bps), heavy volume in Ty futures (508k). Emerging mkt stocks lower for a 4th day, MSCI index -0.84%, with the DXY +0.44% @ 95.53. Turkish lira 0.3% lower on doubts the central bank will hike rates to stem inflation. Core EGBs hanging on to slight gains, gilts rising after weak Aug Construction PMI, bund curve flattening 2s10s to 92.9 close to lows of last week. 10Y bund future reversing lower as Italy BTPs rallied on comments from Deputy PM saying 2% deficit rule will be respected. In Canada, GOCs mixed, short end higher before BOC, notable steepening in 10s30s 3bps over the past week as corp calendar builds for Sept. Expectations have the BOC holding rates steady tomorrow with a 25bp hike priced in for October 24th. Provis opening steady after spds widened 2bps last week. 

News headlines

Trump’s Fight With Canada Over Nafta Faces New Hurdles (Bloomberg) President Donald Trump’s effort to force Canada into signing on to a new Nafta on his terms is facing new hurdles thanks to growing opposition at home to his threat to proceed without the U.S.’s northern neighbor. Trump’s frustration spilled into the open over the holiday weekend as he railed against Canada on Twitter — as well as its many supporters in both political parties. The president has threatened to leave Canada out of a new trade deal already negotiated with Mexico, but without congressional support he lacks leverage to force Ottawa to make concessions in talks that are due to resume Wednesday.

U.K. Construction Growth Slows to Weakest in Three Months (Bloomberg) U.K. construction growth slowed more than forecast in August, providing further evidence that the nation’s economy is losing momentum. IHS Markit’s Purchasing Managers’ Index for the industry fell to 52.9 last month from a 14-month high of 55.8 in July, the firm said Tuesday. The reading was the lowest since May and below the 54.9 forecast by economists in a Bloomberg survey. A reading above 50 indicates expansion. Markit’s survey showed a “sharp slowdown” in house building in August, while work on civil engineering projects decreased for the first time in five months. New business growth also ebbed, with some respondents noting Brexit-related uncertainty was holding back investment.

ECB Endgame Has Governments Thinking About Rate-Hike Damage (Bloomberg) European finance ministers and central bankers will gather in Vienna this week to discuss a key test for the euro zone’s expanding economy — whether it can cope with interest-rate hikes. The debate reflects the currency bloc’s relatively solid economic health after a decade of crises and recessions, but also marks a new challenge. The European Central Bank’s plan to gradually unwind years of extraordinary monetary stimulus comes with the risk of destabilizing asset markets such as stocks and real estate if they’re bloated by cheap money.

Dollar Advances as Stocks Fall With EM Currencies: Markets Wrap (Bloomberg) The dollar advanced and stocks fell as trade tensions persisted and emerging markets came under pressure, with turmoil in currencies spreading from Turkey and Argentina to South Africa. Declines in the yen and gold left investors with few havens. Miners and chemical companies led declines on the Stoxx Europe 600 Index, and contracts on the Dow, S&P 500 and Nasdaq pointed to a lower open before U.S. trading resumes after Labor Day. Nike fell in the pre-market on a politically controversial advertising campaign. Stocks in Japan slipped with the yen. Italian 10-year notes jumped, extending Monday’s advance on the government’s more conciliatory stance toward European Union spending limits.

Pipeline politics leave Canada’s prime minister in peril (Reuters) With one surprise court ruling, Canadian Prime Minister Justin Trudeau faces the risk of contesting next year’s election with key pieces of his economic and environmental plans in ruins. The Federal Court of Appeal overturned on Thursday the Liberal government’s 2016 approval to expand Trans Mountain, a critical pipeline to link Canadian crude with foreign markets, followed hours later by Alberta’s tit-for-tat withdrawal from Trudeau’s climate plan.

Laurentian Bank buys back $103 million of mortgages after review (Reuters) Laurentian Bank of Canada (LB.TO) said on Tuesday it had repurchased mortgages worth C$135 million ($103 million) after a review found they had been incorrectly sold to Canada’s federal housing agency. The bank said in February that it was reviewing mortgages sold to the Canada Mortgage and Housing Corporation’s (CMHC) securitization programs after an audit found “documentation issues and client misrepresentations.”

Canadian Natural acquires Joslyn oil sands project for $225M (BNN) Canadian Natural Resources Ltd. has signed a deal to buy the Joslyn oil sands project for $225 million from Total SA and its partners. Paris-based Total, which is Joslyn’s operator, currently owns 38.25 per cent of the project, which is directly south of Canadian Natural’s Horizon oil sands operation. A further 36.75 per cent of Joslyn is owned by Calgary-based Suncor Energy, while the Joslyn Partnership holds 15 per cent and Inpex Canada Ltd. owns 10 per cent.

Alberta projects deficit drop of $1B in first-quarter update (BNN) Alberta’s finance minister says the court decision putting the Trans Mountain pipeline expansion in legal limbo won’t affect the long-term plan to rid the province of red ink by 2024. Joe Ceci says the province is relying on revenues not just from the Trans Mountain expansion but other pipeline projects as well, such as the Line 3 expansion from Alberta to Wisconsin and the Keystone XL line to the U.S. Gulf Coast. 

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-06, S&P 500 futures are down -0.17% at 2897, Crude oil futures are up 1.83% at $71.08, Gold futures are down -0.62% at $1199.2, DXY is up 0.42% at 95.543, CAD/USD is up 0.59% at 0.7591.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

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 Tsys higher on risk off, yields 2-3bps lower across the curve with mkt focus on trade with reports Nafta talks between the US/Cda have stalled, meanwhile European stocks lower (Stoxx -1.0%) after Trump’s decision to follow through on $200bln in tariffs on China and his rejection of a proposal to eliminate tariffs on EU autos. GOCs higher, 1.5-2bps narrower on strong Cda outperformance after nafta news, CAD lower (1.3040 +56pps), GOC curve 1bp flatter, 10Y 2.235(-3.6bps). Provis starting 1.5-2bps wider,Ont 10s30s box 0.5bps wider @ 14.5. Ford 15-20bps wider after Moody’s downgrade, JPM negative view on free cash flow F 2.766/22 165/155 from 145/135. 

News headlines

Trudeau’s Pipeline Gamble Stalls After Court Overturns Approval (Bloomberg) Prime Minister Justin Trudeau’s bid to press ahead with construction of the Trans Mountain pipeline suffered a major setback after a Canadian court nullified approval of the project. The Federal Court of Appeal ruled Thursday that the regulatory review of the pipeline expansion was “impermissibly flawed” because it excluded project-related tanker traffic. In addition, the court found the government failed to fulfill its legal duty to consult indigenous people.

Coke Makes $5.1 Billion Bet on Coffee Market With Costa Purchase (Bloomberg) Coca-Cola Co. is making an audacious move into coffee and retail outlets with the 3.9 billion-pound ($5.1 billion) purchase of U.K. coffee chain Costa, its biggest acquisition in eight years that pushes the soda pioneer into a fiercely competitive java market. The soft-drinks company swooped in after Whitbread Plc announced a plan in April to spin off the business. The transaction gives Coca-Cola instant heft in a business from which it was all but absent, with 3,800 stores in 32 countries and a foothold in China. Highlighting Coke’s desire to close the deal, Whitbread CEO Alison Brittain said the two sides signed just minutes before the announcement, after Coke first approached the other party in June.

Trump Makes Clear EU Won’t Escape His Ire Over Trade for Long (Bloomberg) The EU’s Jean-Claude Juncker left Washington in late July with a Rose Garden truce — a handshake trade agreement he had good reason to believe would spare the continent from President Donald Trump’s wrath. It didn’t last.

Stocks Drop on Trump Trade Talk; Dollar Advances: Markets Wrap (Bloomberg) U.S. stock index futures pointed to a drop at the open and European equities fell following a downbeat session in Asia on Friday after President Donald Trump stepped up his tough talk on trade. Emerging-market shares took another hit, while the dollar climbed with Treasuries. Contracts on the S&P, Dow and Nasdaq all pointed to weak start, while carmakers were the biggest losers in the Stoxx Europe 600 Index after Trump cast doubt on the scope of a trade deal between the U.S. and Europe. Emerging-market equities fell a second day, and the Indian rupee dropped to a record as contagion spread from Argentina and Turkey. The yen climbed and European sovereign bonds edged higher while the euro fell as the region’s inflation unexpectedly slowed.

U.S., Canada slug it out as deadline looms to clinch NAFTA (Reuters) Canada and the United States will make a final push to iron out differences on a pact to modernize the North American Free Trade Agreement (NAFTA) on Friday, with Mexico on standby to return to talks aimed at ending a year of hard-fought negotiations. U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland were unable to clinch a deal despite meeting late into the evening on Thursday. They will reconvene on Friday morning.

Futures dip on renewed worries over trade dispute (Reuters) Futures for Canada’s main stock index fell on Friday, ahead of a deadline for the NAFTA trade deal, as fresh threats from U.S. President Donald Trump on a trade war with Beijing dulled investor sentiment. Trump is prepared to quickly ramp up a trade war with China and has told aides he is ready to impose tariffs on $200 billion worth of Chinese imports as soon as a public comment period on the plan ends next week, Bloomberg News reported on Thursday.

Morneau vows Trans Mountain ‘will be built’ despite court ruling (BNN) Finance Minister Bill Morneau said that the Canadian government is committed to ensuring the Trans Mountain pipeline project is completed despite Thursday’s ruling by the  Federal Court of Appeal that nullified the project. “We want to make sure this project gets done,” Morneau said in an interview with BNN Bloomberg Thursday. “We want to make sure it happens and as a government, we’re well placed to assure that that happens. We’ll be moving forward with resolve.

TD beats third-quarter expectations as profit in U.S. surges 31% (BNN) Toronto-Dominion Bank has closed out Big Six earnings season with a profit beat amid double-digit growth in the lender’s stateside division. TD’s total fiscal third-quarter net income rose 12 per cent year-over-year to $3.1 billion. On an adjusted basis, the company earned $1.66 per share; analysts, on average, were expecting $1.63 in earnings per share. 

Overnight markets

Overview: US 10yr note futures are up 0.117% at 120-10, S&P 500 futures are down -0.16% at 2897.25, Crude oil futures are down -0.07% at $70.2, Gold futures are up 0.41% at $1210, DXY is up 0.08% at 94.8, CAD/USD is up 0.44% at 0.7669.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

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 Tsys paring earlier losses, now slightly higher before PCE data, 10Y 2.877 (-0.7bps), lagging the move higher in core EGBs.  Bunds rallied on regional inflation data, Turkish Lira fell to two week low, EU peripheral spds wider. US equity futures lower, China CSI 300 fell 1.0%, European stocks lower even as European autos rallied on news EU would include cars among US goods which can imported duty free. In Canada, GOCs lower in line with tsys before Q2 GDP – likely to figure in next week’s BOC rate decision thou expectations for a hike are still hovering around 20% 

News headlines

Nafta Talks to Continue as Trump Says They’re on Track for Deal (Bloomberg) Talks to update Nafta are edging toward their next deadline with signs of optimism from President Donald Trump and other key figures, as the U.S. and Canada push to resolve enough differences to trigger a countdown to sign a new deal. Key U.S. and Canadian government figures met again Wednesday, book-ended by meetings of lower-level trade officials set to work through the night. Trump and Canadian Prime Minister Justin Trudeau signaled Wednesday an accord could be reached.

Turkish Lira Extends Slumps as Investors Wait for Policy Action (Bloomberg) The lira headed for a fourth day of declines as the latest measures by the central bank failed to stop selling pressure. The dollar gained as much as 3.7 percent to 6.7107 against the lira, which was the worst performer among emerging markets. Trade was thin during a public holiday in Turkey.

U.S. Farm Trade Surplus to Shrink as Chinese Tariffs Bite (Bloomberg) Agriculture, one of the few areas of the U.S. economy that sells more abroad than it buys, will see its trade surplus shrink next year as shipments to China collapse amid a trade war between the two nations, according to a government forecast. The world’s biggest agricultural exporter will see a surplus of $18 billion in the fiscal year beginning Oct. 1, down 7.7 percent from the current year, the U.S. Department of Agriculture said Wednesday in a quarterly forecast.

Stocks Drop as Trade Worries Linger; Dollar Rises: Markets Wrap (Bloomberg) U.S. equity futures and European stocks followed Asian shares lower on Thursday, as simmering trade and geopolitical issues weighed on sentiment. The dollar edged higher and gold fell. Contracts for the S&P 500, Dow and Nasdaq all pointed to a drop at the open, after America’s benchmark gauge on Wednesday closed above 2,900 for the first time. Telecom companies led the retreat as almost every sector fell on the Stoxx Europe 600 Index. Treasuries and most European bonds drifted. Sterling and the euro slipped after the European Union’s chief negotiator warned the bloc must be prepared for a disorderly Brexit.

On Canadian dairy farms, fear and frustration as U.S. demands trade concessions (Reuters) Marie-Pier Vincent, a fourth-generation Quebec dairy farmer, worries it will be even harder to make ends meet if Canada allows more tariff-free imports of milk products from the United States under a reworked North American Free Trade Agreement.

Futures fall on China trade worries (Reuters) Stock futures pointed to a lower opening for Canada’s main equity index on Thursday, as concerns about uncertainty over an escalating trade war between China and the United States eclipsed optimism around the U.S.-Mexico trade deal. Talks between Canada and the United States are intensifying as the two countries push to hammer out a deal on a revamped North American Free Trade Agreement by a Friday deadline, with both sides upbeat about progress made so far.

Air Canada warns 20,000 app accounts may have been breached (BNN) Air Canada said it has locked all of its 1.7 million user accounts on its mobile app after the airline discovered that about 20,000 customers’ personal information may have been “improperly accessed.” In a notice on Air Canada’s website, the country’s largest air carrier said it detected unusual login behaviour on its app between Aug. 22 to 24. The company said it is contacting potentially affected customers directly. “We immediately took action to block these attempts and implemented additional protocols to block further repeated unauthorized attempts,” Air Canada said on its website. “As an additional security precaution, we have locked all Air Canada mobile app accounts to protect our customers’ data.”

U.S. trade commission says Canadian newsprint doesn’t harm U.S. industry (BNN) An independent U.S. federal agency ruled that Canadian paper imports don’t hurt American producers, delivering a surprise decision that eliminates tariffs that had raised prices and squeezed margins at struggling newspapers. The U.S. International Trade Commission said in a statement Wednesday that its decision ends the yearlong government investigation into allegations that Canada was dumping uncoated groundwood paper into the U.S. and offering its producers unfair subsidies. The paper is commonly used to print newspapers. “No antidumping or countervailing duty orders will be issued on imports of this product from Canada,” the commission said in the statement.

Overnight markets

Overview: US 10yr note futures are up 0.052% at 120-05, S&P 500 futures are down -0.15% at 2910.5, Crude oil futures are up 0.7% at $70, Gold futures are down -0.06% at $1210.8, DXY is up 0.02% at 94.621, CAD/USD is up 0.13% at 0.7736.

US Economic Data

Canadian Economic Data

Disclosure and Disclaimer

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