Commentaires

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

News headlines

Nafta Deal Unlikely This Week, Talks to Resume Friday (Bloomberg) A Nafta deal doesn’t look likely this week. Talks between the U.S. and Canada have seemed upbeat, but are not expected to lead to a deal this week, a Canadian government official said, speaking on condition of anonymity. The pace of meetings between U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland has slowed since last week, as both countries look to be squaring off. The Trump administration gave notice Aug. 31 of intent to sign a deal that could include Canada. Freeland has said there’s progress, but that no deal is done until it’s done. The officials will not be able to work through the weekend into the new week because Lighthizer is scheduled to meet his European counterpart in Brussels Monday.

Trump’s Loyalty Demands Met by ‘Treason’ Within His Inner Circle (Bloomberg) President Donald Trump is facing another set of revelations that call into question the loyalty of his inner circle, this time within the White House. Last month, two longtime business confidants struck cooperation deals with federal prosecutors, potentially trading information on Trump’s dealings for better treatment. Now, Watergate investigative reporter Bob Woodward’s book detailing a chaotic West Wing and former staffers actively deceiving and undermining Trump, coupled with an anonymous op-ed in the New York Times describing senior administration officials’ attempts to thwart the president, has further undermined his trust in his staff.

Bank of Canada Debated Whether to Accelerate Rate Hikes (Bloomberg) The Bank of Canada’s top officials debated whether to accelerate the pace of potential interest rate hikes, before finally choosing to stick to their current “gradual” path. In a speech Thursday outlining some of the deliberations from yesterday’s rate decision, Senior Deputy Governor Carolyn Wilkins said the issue came up in the governing council’s discussions because Canada’s economy is running near capacity and is at the stage of the business cycle where the focus turns to combating price increases.

Stocks Decline on Tariff Suspense; Dollar Steady: Markets Wrap (Bloomberg) S&P 500 Index futures fell along with European shares as investors awaited the latest move in the U.S.-China trade war, as well as key payroll data from the world’s biggest economy later Friday. Emerging-market equities snapped seven days of declines while a gauge of currencies also rose. U.S. equity futures pointed to a softer open as the Stoxx Europe 600 Index slipped, heading for its worst week since March, following a mostly negative session in Asia. Equities fell in Japan, South Korea and Australia, while those in China posted gains. Technology shares lagged behind, following their U.S. counterparts lower amid concern about the durability of chip demand.

China to increase export tax rebates on 397 products (Reuters) China said on Friday it will increase export tax rebates for 397 items ranging from some steel products to electronic ones, in a bid to boost prospects for shipments amid its trade war with the United States. The move comes as word is widely awaited on whether U.S. President Donald Trump will impose tariffs on another $200 billion of imports from China. A public consultation period in Washington on the proposal has just ended.

Short seller Andrew Left suing Musk, Tesla for inflating stock price (BNN) Citron Research founder Andrew Left, an activist short-seller known among other things for calling beleaguered drug company Valeant a “pharmaceutical Enron,” is suing Tesla Inc. () and Chairman Elon Musk for inflating the company’s stock price. In his lawsuit, Left seeks to represent a class of investors who traded Tesla shares from Aug. 7 to Aug. 17. The suit cites Musk’s “long-standing public feud with short-sellers,” claiming he manipulated the price of Tesla securities to hurt such investors — and in so doing damaged all buyers of the company’s shares by issuing false and misleading information.

Delta jet-engine failure at 18,000 feet draws U.S. safety probe (BNN) U.S. safety regulators are investigating an engine failure on a Delta Air Lines Inc. () jet that forced pilots to shut down the turbine and return to Atlanta shortly after takeoff. The accident occurred Wednesday on a Boeing Co. () 757-200 bound for Orlando, Florida, the National Transportation Safety Board said Thursday on Twitter. Delta Flight 1418, which had 121 passengers and six crew members, landed safely and there were no injuries. The engine failure occurred at about 18,000 feet, according to the Federal Aviation Administration. 

Overnight markets

Overview: US 10yr note futures are down -0.065% at 120-03, S&P 500 futures are down -0.17% at 2874, Crude oil futures are up 0.06% at $67.81, Gold futures are up 0.2% at $1206.7, DXY is down -0.04% at 94.987, CAD/USD is down -0.2% at 0.7624.

US Economic Data

Canadian Economic Data