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Market Update Tsys trades mixed on narrow range, long end outperforming, decent volume due to ongoing Sep/Dec roll action ahead Dec taking lead contract Fri, pace of roll should start tapering off today after huge jump Tuesday. Q2 GDP revised up to +4.2% SAAR vs +4.1% adv, as opposed to the downward adjustment to +4.0% expected, with the key upward revisions seen in nonresidential fixed investment, inventories, and net export gap. The prices measures were little revised. The overall GDP price index still +3.0%, while the closely watched core PCE price measure was unrev at +2.0%, keeping the y/y rate at +1.9%, still up from +1.7% in Q1. Tsy auctions today: $17B 1Y-11M FRN and $31B 7Y note. 

News headlines

Canadian Unity on Nafta Cracks in Latest Trudeau-Trump Showdown (Bloomberg) Until now, pretty much all of Canada had Justin Trudeau’s back in his Nafta fight with U.S. President Donald Trump — but cracks are emerging as some pivot to blame him if the pact falls apart. The U.S. is using a deal it announced with Mexico on Monday to pressure Canada into signing on. That’s exposing rifts within the Canadian Conservative Party, Trudeau’s main opposition, which had mostly refrained from criticizing the prime minister on this issue. Prominent former Conservative lawmakers stuck to supporting the government in talks, but Conservative Leader Andrew Scheer blamed Trudeau.

Overheating Economy Tests Poloz’s Patience With Canadian Rates (Bloomberg) The biggest threat to Canada’s economic expansion lies within its own borders, even as President Donald Trump pushes protectionism from abroad. The home-grown news is that the Canadian economy is closer to overheating than faltering on the back of the trade uncertainty, forcing the Bank of Canada to respond with higher interest rates.

Stocks Edge Higher With Treasuries; Euro Weakens: Markets Wrap (Bloomberg) European stocks edged higher and U.S. equity futures were steady on Wednesday after a lackluster Asian session, with investors largely treading water as they await the next developments on trade. The euro slipped and the pound gained. The Stoxx Europe 600 Index swung from a gain to a loss and back again, while national gauges in the U.K. and Spain stayed lower. Retailers were among the worst performers, after Morgan Stanley analysts cut their recommendation for the owner of the Zara clothes chain. S&P 500 futures gave up an earlier advance to trade little changed, though contracts for the Nasdaq stayed higher. Emerging-market assets were under pressure as the dollar gained a second day and Treasuries drifted higher.

National Bank of Canada posts 10 percent rise in quarterly earnings (Reuters) National Bank of Canada reported a ten percent rise in third-quarter earnings, beating market expectations, helped by growth in its retail and wealth management businesses. The bank said earnings per share, excluding one-off items, rose to C$1.53 in the quarter ended July 31, compared with C$1.39 the year before. Analysts had on average forecast earnings of C$1.50, according to Thomson Reuters I/B/E/S data.

Tesla wins court case against Ontario government over rebate cancellation (Reuters) A Canadian court has ruled in favor of Tesla Inc after the electric carmaker challenged the province of Ontario’s wind-down of an electric vehicle rebate. In a ruling on Monday, Judge Frederick Myers of Ontario struck down the transition program set up by the new Ontario government, which excluded Tesla customers from qualifying for rebates.

Bombardier revises deal to sell regional jets to Chinese leasing company (BNN) Bombardier says a Chinese leasing company has changed its aircraft order for 10 regional jets by swapping half of the CRJ 900s for five 90-seat Q400 turboprops. Fred Cromer, president of Bombardier’s commercial aircraft division, says the deal is part of a fleet expansion plan in Asia. The Montreal-based transportation giant entered into an agreement in June 2016 with a subsidiary of Chinese financial institution, Industrial Bank Co. Ltd.

Zara owner tumbles as ‘great’ becomes ‘good’ for Morgan Stanley (BNN) Sometimes good just isn’t good enough. Zara owner Industria de Diseno Textil SA (or Inditex SA) fell the most in six months Wednesday after Morgan Stanley analysts cut their recommendation to underweight from equalweight and reduced their price target for the stock to the lowest among analysts tracked by Bloomberg. Inditex dragged European retailers lower, making the sector the worst performer in the broader regional index. “Inditex is still a world-class retailer, but its investment proposition has been weakening for some years,” analysts Geoff Ruddell and Amy Curry wrote in a note to clients. “And we don’t think that is properly reflected [yet] either in consensus estimates or the multiple the market is applying to them.”

Overnight markets

Overview: US 10yr note futures are up 0.065% at 120-06, S&P 500 futures are up 0.05% at 2900.75, Crude oil futures are up 0.66% at $68.98, Gold futures are down -0.48% at $1208.6, DXY is up 0.19% at 94.898, CAD/USD is up 0.12% at 0.7724.

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 US tsys moving lower, 10Y 2.86 (+1.5bps), curve steepening, heavy volume in TY futures on roll (960k), weaker after stronger Wholesale inventories/Trade Balance data. ‘Risk on’ as the Turkish Lira pares losses, USD weakening, US equity futures higher, gold higher, crude continuing its run close to a seven-week high. The US auctions $37bln in 5Y notes this aft. GOCs lower, 1bp wider vs tsys – Nafta on the line with pressure on Trudeau to make a separate bilateral deal with the US. 

News headlines

Markets Bet Canada Will Stay in Nafta as Trump Raises Pressure (Bloomberg) Investors are betting President Donald Trump’s trade threats against Canada will fizzle out. There are a few reasons why they might. Canadian stocks and the dollar, known as the loonie, extended gains Monday on news of the U.S.-Mexican agreement, shrugging off Trump’s threats that Canada might be frozen out and instead face auto tariffs. Shares of Canadian auto parts makers like Magna International Inc. and Linamar Corp. were among those to surge.

Trump Accuses Google of Rigging Search Results Against Him (Bloomberg) U.S. President Donald Trump accused Alphabet Inc.’s Google of rigging its search results to display only negative stories about him, calling it “a very serious situation” that “will be addressed.” “Google search results for ‘Trump News’ shows only the viewing/reporting of Fake New Media. In other words, they have it RIGGED, for me & others, so that almost all stories & news is BAD, Fake CNN is prominent. Republican/Conservative & Fair Media is shut out. Illegal,” Trump tweeted early Tuesday, in his latest claim of bias on the part of a news or social media company.

Trump Dents Hopes for a China Deal After Agreement With Mexico (Bloomberg) President Donald Trump said it’s not the right time for trade negotiations with China, denting expectations for a near term deal after a breakthrough agreement between the U.S. and Mexico. Speaking to reporters during his announcement Monday of the new Mexico accord, Trump said he is rejecting overtures from China to negotiate as he tries to achieve a less “one-sided” trade policy. “They want to talk,” Trump said. But “it’s just not the right time to talk right now, to be honest.”

Stocks Edge Higher After Mexico Deal; Dollar Slips: Markets Wrap (Bloomberg) U.S. futures and European stocks drifted higher as Asian shares advanced as investors digested conflicting developments on global trade. S&P 500 looked set to hover near its record high, while carmakers and miners were the biggest winners in the Stoxx Europe 600 Index, after the U.S. and Mexico moved closer to a deal on trade. Stocks in Japan extended a recent increase while those in China underperformed. The yuan climbed after the Chinese central bank strengthened the daily fixing against the greenback by the most in more than 14 months, even as President Donald Trump said it’s not the right time for trade negotiations with China.

Canada’s Scotiabank, BMO post higher quarterly profits (Reuters) Canadian lenders Bank of Nova Scotia and Bank of Montreal on Tuesday reported increased earnings in the third quarter, helped by strong growth in their domestic and international businesses. Bank of Nova Scotia, Canada’s third-biggest lender, reported a 5 percent increase in third-quarter earnings on Tuesday, helped by growth in its domestic and international businesses.

U.K. asks Carney to stay at Bank of England until 2020, Standard says (BNN) The U.K. Treasury asked Bank of England Governor Mark Carney to stay in his role for another year, according to a report in the Evening Standard newspaper published Tuesday. Carney has already extended his tenure at the central bank to the end of June 2019 to provide continuity through the Brexit negotiations. When he started at the BOE in 2013, he planned to stay for only five years. The newspaper didn’t say where it got the information.

Best Buy slumps after quarterly sales forecast disappoints investors (BNN) Best Buy Co.’s quarterly outlook fell short, a rare disappointment amid a solid summer for large U.S. retailers. Earnings will be 79 cents to 84 cents the third quarter, excluding some items, the electronics retailer said Tuesday, trailing the 91-cent average of analysts’ estimates. The shares dropped 5.1 per cent in early U.S. trading. The forecast overshadowed a solid second quarter at Best Buy, which beat projections on a key sales measure and also raised its forecast for the full year. Walmart Inc. and Target Corp. both posted their best quarterly sales increases in more than a decade, fueled by robust in-store traffic and web sales. During the summer, big-box retailers have benefited from a strong consumer environment, tax cuts and easing gas prices.

Overnight markets

Overview: US 10yr note futures are down 0% at 120-11, S&P 500 futures are up 0.16% at 2903, Crude oil futures are up 0.07% at $68.92, Gold futures are up 0.3% at $1219.6, DXY is down -0.25% at 94.542, CAD/USD is down -0.35% at 0.774.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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 trading close to unch, in narrow overnite range, 10Y 2.83%, on above avg volume (~390k TY futures), thou the Sep/Dec roll accounting for much of the vol.  Core EGBs weaker, with Italian BTPs weaker despite news Trump offered to buy Italian bonds next year in his meeting with Italian PM Conte three weeks ago. GOCs unch as well, the 5s30s curve flattened 3bps over the last week to new lows @ 5bps , 10s30s close to inversion (0.2bps). Quebec returned to the mkt yest issuing $500mln 30Y bonds @79,which was well received closing 79/78. 

News headlines

Trudeau Says He Won’t Settle for Bad Nafta as Talks Continue (Bloomberg) Canadian Prime Minister Justin Trudeau is preaching some caution on expectations for Nafta talks, saying he’s encouraged by the latest optimism but won’t sign just any deal. Trudeau spoke Thursday in British Columbia at the conclusion of a cabinet meeting, amid U.S.-Mexico talks that are said to be nearing a deal on autos, a key Nafta subject. Trudeau said the latest news has been encouraging while also saying there’d been progress in previous months, too. He said Canada was looking forward to rejoining talks but gave no indication of when that would be.

How Trump Story on Cohen’s Hush-Money Payments Shifted Over Time (Bloomberg) President Donald Trump and his aides and lawyers have made vague and shifting statements about his alleged affairs with two women and arrangements to buy their silence before the 2016 election. Trump, the White House and his lawyers have had at least 25 opportunities since January to describe the president’s role in the hush-money payments and explain when he first learned of them. Their answers have been imprecise and inconsistent, and at no time have they provided a full explanation of Trump’s involvement.

Stocks Advance as Trade Talks End; Dollar Slips: Markets Wrap (Bloomberg) U.S. equity-index futures rose alongside stocks in Europe following a mixed session in Asia after trade negotiations with China drew a blank. Oil and most commodities rallied as the dollar slipped with Treasuries before an address from Federal Reserve Chairman Jerome Powell. Energy majors led the advance in the Stoxx Europe 600 Index as crude gained along with industrial metals. Futures on the Dow, S&P 500 and Nasdaq indexes climbed while China and Hong Kong equities underperformed as trade talks wound up with no major progress. Shares in Japan and South Korea rose. Treasuries edged lower with the greenback as investors awaited Powell’s scheduled comments at the Jackson Hole retreat later Friday.

Canada PM says in diplomatic talks with Saudi Arabia (Reuters) Canada’s Prime Minister Justin Trudeau said on Thursday that his government is engaging diplomatically with Saudi Arabia, but did not back down on his concerns about human rights, two weeks into a spat over Ottawa’s calls for the release of Saudi activists from detention. “We continue to engage diplomatically with Saudi Arabia, I think it’s important to have positive relationships with countries around the world,” Trudeau told reporters after Cabinet meetings in British Columbia. Trudeau was responding to a question on reports that Saudi Arabia’s prosecutor is seeking the death penalty against rights activists.

Enbridge to buy Spectra Energy Partners for $3.3 billion (Reuters) Enbridge Inc (ENB.TO), Canada’s largest pipeline operator, said on Friday it would buy its U.S. master limited partnership Spectra Energy Partners (SEP.N) for a sweetened $3.3 billion deal. The company said the deal represents a exchange ratio of 1.111 common shares for each unit of Spectra, representing an increase of 9.8 percent from its initial offer.

Top court paves way for Toronto realtors to unlock key sales data (BNN)  The Supreme Court of Canada has refused to hear an appeal from the country’s largest real estate board that would have prevented its members from posting home sales data on their websites, ending a years-long battle in a case that could have sweeping implications for consumer access across the country. Canada’s top court announced Thursday it has dismissed the application from the Toronto Real Estate Board, which represents more than 50,000 Ontario agents. “I’m glad we’re one step closer to giving people more access to information,” said John Pasalis, president, Realosophy Realty, in an interview with BNN Bloomberg Thursday.  “The more information people have, the better decisions that they can make – and that’s the core of what’s going on here.”

U.S. sanctions showing cracks in Putin’s armour (BNN) The upheaval set off by the threat of American sanctions is roiling the Kremlin’s economic plans even before the U.S. announces a new round of penalties. The speculation alone was enough to put Russian assets under such pressure that the authorities had to look for policy compromises. With the turmoil gripping other emerging nations, President Vladimir Putin’s government is already adjusting down its outlook for the economy, bracing for growing outflows of capital and a weaker currency.

Overnight markets

Overview: US 10yr note futures are down -0.091% at 120-16, S&P 500 futures are up 0.2% at 2863.75, Crude oil futures are up 1.14% at $68.6, Gold futures are up 0.39% at $1198.7, DXY is down -0.36% at 95.318, CAD/USD is down -0.12% at 0.7654.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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