Comments

Market Update

Tsys weaker, yields 1.2-2bps higher with the 10Y 2.373% (+2bps), avg volume in TY futures (205k). Equities stronger with S&P futures +10, crude higher for third day , +0.46% 57.55.  Optimism on passage of US tax cut with Senate to vote as early as tomorrow. Tsys weaker into European trading, lagging the rally in EGBs with bund/gilt yields 1-2 lower. GOCs lower, in line with tsys, curve slightly flatter – Friday’s late day rally in longs left the GOC 5s30s the flattest in ten years. A large 0.08yr extension in the FTSE TMX index supporting the long end, yet over the past month there has also been a significant increase in the correlation between movement in the  GOC curve and the tsy curve. Provi spreads starting firm, Ont 27s trading down at 58bps , a new low , 2bps tighter since last Monday. 

News headlines 

Everything You Need to Know About the GOP Tax Bill (Bloomberg)  Here are key changes to U.S. tax law for individuals and businesses that have emerged from the final Republican bill that’s headed for votes in the House and Senate next week.

May Risks Brexit Row Over Migration and Trade During Transition (Bloomberg) U.K. Prime Minister Theresa May will set out her plan for how a proposed Brexit transition period will work, stoking a potential new row with the European Union as she tries to keep different factions inside the Conservative Party on her side.

Stocks Hit Records With GOP Set to Unveil Tax Bill: Markets Wrap (Bloomberg) U.S. stocks rallied to new highs and the dollar strengthened as investors grew increasingly optimistic that Congress would reach a deal to cut corporate taxes.

Modi Set to Retain Grip on Home State After Bellwether Vote (Bloomberg) Indian Prime Minister Narendra Modi’s party is set to return to power in his home state, an election that’s considered a bellwether before the national vote in early 2019.

Bombardier’s Chinese Joint Venture Wins its First Monorail Contract in China (MarketWired) Rail technology leader Bombardier Transportation announced today that the CRRC Puzhen Bombardier Transportation Systems Limited (PBTS), a joint venture (JV) between Bombardier Transportation and the Chinese CRRC Corporation Limited (CRRC), has been awarded its first monorail contract in China. The order is to provide the BOMBARDIER INNOVIA Monorail 300 platform, along with a total of 240 cars to Wuhu City in Anhui Province. The total contract is valued at approximately 1.785 billion CNY (229 million euro, $270 million US). Bombardier owns 50% of the shares in PBTS, which is consolidated by Bombardier Transportation’s partner CRRC Nanjing Puzhen Limited.

Duelling bitcoin futures go head-to-head as CME launches contract (Financial Times) The bitcoin futures race began in earnest on Sunday as exchange operator CME Group challenged another Chicago exchange that had launched the first digital currency futures a week before.

Campbell Soup to buy snacks maker Snyder’s-Lance for $4.87 billion (Reuters) Campbell Soup Co CPB.N will buy Pretzels and Cape Cod chips maker Snyder‘s-Lance Inc LNCE.O for $4.87 billion as it looks to expand its snack business amid sagging soup sales.

Overnight markets

Overview: US 10yr note futures are down -0.126% at 124-09, S&P 500 futures are up 0.37% at 2692, Crude oil futures are up 0.56% at $57.62, Gold futures are up 0.37% at $1262.2, DXY is down -0.29% at 93.662, CAD/USD is up 0.05% at 0.7768. 

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

Market Update

Tsys slightly lower on very light flows o/n (211k TY), 10Y 2.355%. Tsys lagging the rally in EGBs, led again by UK gilts with the gilt curve another 2bps flatter, UK 5/30 near the lows since Aug 2016, 10Y @ 1.15 the lowest since Sep 13th. Progress on Brexit negotiations. In Canada, GOCs  0.5bps wider vs tsys, curve another 1bp flatter on top of the 3bps in the wake of Poloz somewhat hawkish comments yest afternoon, specifically that ‘caution isn’t code for being on hold’, thou the curve did resteepen late in the day after Poloz added that he would allow the economy to ‘run hotter’ for a bit. In credit, Smart Reit (BBB) priced a two tranche deal yest to finance its $1.1bln acquisition of OneReit – $250mln 3Y FRN @ CDOR + 66, $250mln 10Y @ 197, both tranches broke tighter. 

News headlines 

Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) Congressional Republicans are scheduled to reveal final details of their agreed-upon tax-overhaul legislation Friday. It’s the culmination of a six-week legislative sprint designed to deliver a major policy victory for their party and President Donald Trump before year’s end.

The Biggest Voices in Oil Disagree About 2018 (Bloomberg) The two most critical forecasts of global oil markets offer contrasting visions for 2018: one in which OPEC finally succeeds in clearing a supply glut, and another where that goal remains elusive.

Brexit Bulletin: Divide But Not Conquer (Bloomberg) The European Union’s united front on Brexit is set to splinter as negotiations move on to trade. That’s not necessarily a good thing for Britain. The EU’s 27 remaining countries surprised themselves by defying years of talking at cross purposes to hold a common line on the U.K.’s withdrawal. But with leaders in Brussels set to formally agree on Friday that May has offered enough on the divorce settlement for talks to move on, there are already signs the unity has hit its high-water mark. Diplomats, and leaders, have warned the next stage could be messier.

European Stocks Drop as Bonds Gain; Dollar Steady: Markets Wrap (Bloomberg) Stocks in Europe dropped and bonds gained as investors assessed messages from the Federal Reserve and European Central Bank meetings this week, while concerns about the U.S. tax overhaul lingered.

Russia Surprises With Bigger Rate Cut on Oil Deal, Inflation (Bloomberg) Russia’s central bank unexpectedly accelerated its pace of monetary easing after price growth fell to a record and a deal between OPEC and its allies to maintain oil production cuts until the end of 2018.

Some Canada firms could move to U.S. amid NAFTA worries: survey (Reuters) More a quarter of Canadian firms could move part of their operations to the United States amid uncertainty over the future of the NAFTA trade pact, the nation’s export credit agency said on Friday.

TSX futures point to flat opening (Reuters) December futures on the S&P TSX index SXFc1 were down 0.04 percent at 7:15 a.m. ET. Manufacturing sales data is due at 8:30 a.m. ET ECONCA.

Overnight markets

Overview: US 10yr note futures are down -0.1% at 124-14, S&P 500 futures are up 0.35% at 2665.25, Crude oil futures are up 0.23% at $57.17, Gold futures are up 0.43% at $1262.5, DXY is up 0.07% at 93.551, CAD/USD is down -0.28% at 0.7836. 

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

Market Update

Tsys weaker, yields 2-3bps higher, 10Y 2.37% (+2.8bps) –  , yield curve slightly flatter, little reaction to stronger Nov retail sales (0.8% vs 0.3%). In Europe UK gilts outperforming, gilt/bund spread at a three-month low 87 bps – the March gilt future spiked to intra day high 125.18 well after BOE decision to leave rates unch despite a very strong read on Nov UK retail sales 1.1% vs 0.4%. Bunds under pressure as flash PMI data from France and Germany came in better than exp.  GOCs better offered after 8:30 US data, Can/US 1bp tighter after yesterday’s 4bp post FOMC widening. 

News headlines 

Fed Raises Rates, Eyes Three 2018 Hikes as Yellen Era Nears End (Bloomberg) Federal Reserve officials followed through on an expected interest-rate increase and raised their forecast for economic growth in 2018, even as they stuck with a projection for three hikes in the coming year.

Carney in Holding Pattern on Interest Rates After November Hike (Bloomberg) The Bank of England will fall into a central banking holding pattern on Thursday after November saw the first interest-rate hike in a decade.

Two GOP Senators Slam Tax Cuts for Rich, But How Will They Vote? (Bloomberg) President Donald Trump insisted Wednesday that his tax cut is all about helping the middle class even as Republican leaders formed a last-minute plan to cut the top rate paid by million-dollar earners.

Euro-Area Activity Surges as Manufacturing Posts Record Growth (Bloomberg) Economic momentum in the euro area unexpectedly accelerated to the fastest pace in almost seven years as manufacturing posted record growth at the end of 2017.  A composite Purchasing Managers’ Index rose to 58 in December from 57.5 in November, IHS Markit said. Economists surveyed by Bloomberg predicted a decline to 57.2. An index for Germany, the region’s biggest economy, jumped to the highest since 2011.

European Stocks Down, Euro Steady After ECB Holds: Markets Wrap (Bloomberg) Stocks stayed lower, while the euro and core European bonds held steady after the European Central Bank left its key rate unchanged and maintained its pledge to move slowly in winding down euro-area stimulus.

U.K. Retailers Get Black Friday Boost as Sales Jump 1.1% (Bloomberg)  Black Friday gave U.K. retailers a stronger-than-expected boost last month as discounts spurred Britons to snap up electrical appliances and other household products.

Walt Disney buys Murdoch’s Fox for $52.4bn (BBC) Walt Disney says it is to buy 21st Century Fox’s entertainment assets for a total $52.4bn (£39bn). The deal includes Fox’s 39% stake in satellite broadcaster Sky, and the 20th Century Fox film studio, Disney announced. Fox’s remaining assets, including Fox News and Sports, will form a new company.

Canadian home prices fall again in November: Teranet (Reuters) Canadian home prices fell again in November, the third straight monthly decline and the largest November drop outside of a recession, as Toronto prices fell for the fourth month and Vancouver prices were flat, data showed on Wednesday

Bombardier forecasts 2018 revenue below analysts’ estimates (Reuters) Canadian plane and train maker Bombardier Inc, in the middle of a five-year plan to turn around its ailing business, on Thursday forecast 2018 revenue that came in well short of analysts’ estimates.

Overnight markets

Overview: US 10yr note futures are down -0.113% at 124-15, S&P 500 futures are up 0.07% at 2671, Crude oil futures are down -0.44% at $56.35, Gold futures are up 0.89% at $1259.7, DXY is down -0.08% at 93.355, CAD/USD is up 0.1% at 0.7795. 

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