Commentaires

Market Update

Tsys slight bid in wake of  NY subway explosion, TY futures making new highs ~7:45am , equities briefly fell into the red now are positive with S&P futures +1.00, 10Y tsy  2.355% (-2bps). Tsys bid in Asia & Europe led by long end, strong rally in UK gilts (10Y ~6bps) after Brexit Secretary comments that Brexit deal reached Friday regarding Irish border issue was not legally binding. Latest CFTC COT report  showed dealer Eurodollar longs at all-time highs, ~$167bln in 10Y equivalents, while specs are close to record short ten year futures. In Canada, GOCs  slightly wider vs tsys in the tsy rally, 10Y 1.84% (-1.2bps), curve 0.5bps flatter. In wake of BOC cautious statement last week, Can/US spreads 4-6bps tighter led by the 10Y. Provincials ended the week ~1.5bps tigther, yields out the curve at new lows with credit curves flatter as well . Honda Canada FInance in the mkt with $300mln  5Y fixed at ~83bps  and $300mln  3Y FRN @ ~ CDOR +30 –   15-17 over bank FRN, and cheap vs Aug 2020 FRN, which we see closer to CDOR +22 – so basically we would skip the 5Y and put in for 3Y FRN..

News headlines 

Explosion Reported Near Port Authority in New York City (NBC) Officials are responding to an explosion in Midtown Manhattan in the Port Authority area Monday morning, New York City officials confirmed to NBC News. The explosion took place near 42nd Street and 8th Avenue, according to the officials. Multiple ambulances have been requested.

U.S. Growth Pickup to Spur Earlier Fed Hike in ‘18, Survey Shows (Bloomberg) A strengthening U.S. economy may spur the Federal Reserve to raise interest rates twice in the next 3 1/2 months as a tight labor market pushes risks to the upside, a Bloomberg survey showed.

Investors Told to Brace for Steepest Rate Hikes Since 2006 (Bloomberg) Wall Street economists are telling investors to brace for the biggest tightening of monetary policy in more than a decade. With the world economy heading into its strongest period since 2011, Citigroup Inc. and JPMorgan Chase & Co. predict average interest rates across advanced economies will climb to at least 1 percent next year in what would be the largest increase since 2006.

Inside May’s Race to a Late-Night Brexit Deal (Bloomberg) It was 11 p.m. Thursday night and the staff Christmas party at 10 Downing St. was in full swing, with karaoke blasting and wine washing down the samosas and sausage rolls. Downstairs, Prime Minister Theresa May shut herself in her private office with her closest aides. It was time to talk to Arlene Foster again.

U.S. Stock Futures Erase Gain, Gold Advances: Markets Wrap (Bloomberg) U.S. stock futures erased gains on reports of an explosion in midtown Manhattan. The dollar fell and Treasuries rose. Contracts on the S&P 500 Index wiped out a small advance after the New York Police Department tweeted that it was responding to reports of an explosion at the Port Authority bus terminal on 42nd St. The dollar extended a loss and gold advanced.

U.A.E., Kuwait Target June for Talks on Phasing Out Oil Cuts (Bloomberg) OPEC and allied oil producers can draft a strategy in June to end global output cuts if the market is no longer oversupplied by then, the U.A.E.’s energy minister said. Kuwait said the cuts may end before 2019 if the market is re-balanced by June.

Canada third-quarter industrial capacity rises for fifth consecutive quarter (Reuters) Canada’s industrial capacity rose in the third quarter for a fifth straight quarter as gains in the construction sector offset lower extraction volumes in the oil and gas industry, data from Statistics Canada showed on Friday.

Futures little changed as oil prices edge lower (Reuters) Futures for Canada’s main stock index were little changed on Monday amid a fall in oil prices on signs of an increase in U.S. drilling activity.

Overnight markets

Overview: US 10yr note futures are up 0.126% at 124-14, S&P 500 futures are up 0.05% at 2655.25, Crude oil futures are up 0.26% at $57.51, Gold futures are up 0.17% at $1250.5, DXY is down -0.07% at 93.836, CAD/USD is up 0.09% at 0.7775. 

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 lower and flatter, avg volume in TY futures, 10Y 2.38%. ‘Risk on’  with equities in Europe higher, S&P futures  +5.5 before payrolls.  Economic numbers out of Japan/China much better than exp, Brexit deal supproting risk assets.  Tsys pressured in Europe with gilts, after UK and EU agreed on Brexit pact as well as UK payout, UK gilt yields 3-4bps higher out the curve in a bear steepener.  Peripherals tighter led by Greece on new Basel rules and implications for lower quality credits.  GOCs lower, underperforming tsys  by1 bp in 10s & longs, 10Y 1.87%. Provis tighter yesterday on back of strong buying post QC 10Y deal – came at 59.5, now 58.5/58 on screens. Provi  credit curves flatter, QC 48/27 0.5bps on the week (10.7/10.3) along with similar move in Ont 48/27 curve.

News headlines 

Brexit Breakthrough Struck as Path Cleared for Tough Trade Talks (Bloomberg) The U.K. and the European Union sealed a deal to unlock divorce negotiations, opening the way for talks on what businesses are keenest to nail down — the nature of the post-Brexit future.

European Stock Bulls Are Laughing All the Way to the Banks (Bloomberg) Buoyed by speculation that new capital rules will free up more cash than expected for dividends, banks on the Stoxx Europe 600 Index rose 3 percent on Friday, beating the broader gauge by the most since April and breaking through multiple technical milestones. ABN Amro Group NV soared 6 percent, while BNP Paribas SA — which has said that its payout target depended on regulation — added 4.1 percent.

Japan’s Economy Expands More Than Expected on Strong Investment (Bloomberg) Japan’s economy expanded a faster-than-expected 2.5 percent in the third quarter, as a nearly year-long recovery in exports helped fuel business investment.

Dollar Gains Again as Stocks Rebound; Pound Falls: Markets Wrap (Bloomberg) The dollar’s solid week continued on Friday, with the greenback gaining as the U.S. government averted a shutdown and tax reform negotiations made progress before what’s expected to be a healthy jobs report. The upbeat mood also helped stocks after Asian data bolstered the global growth story, while the pound dropped even after a Brexit breakthrough.

Spending Talks Continue After Congress Sends Trump Short-Term Bill (Bloomberg) The U.S. Congress sent President Donald Trump a two-week extension of federal funding that averts a government shutdown this week but defers contentious decisions on spending on defense and domestic programs.

TSX set for higher open as oil prices rise (Reuters) Futures pointed to a higher opening for Canada’s main stock index on Friday ahead of Canadian housing data and as oil prices edged up on rising Chinese demand.

Overnight markets

Overview: US 10yr note futures are down -0.038% at 124-08, S&P 500 futures are up 0.23% at 2648.25, Crude oil futures are up 1.75% at $57.68, Gold futures are down -0.33% at $1249, DXY is up 0.23% at 94.01, CAD/USD is down -0.13% at 0.7789. 

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 weaker on moderate volume (293k TY futs), 10Y 2.342% (+0.5bps).  Mkt focus turns to payrolls tomorrow with only initial claims on the calendar today.  Tsys lagging the declines in EGBs – gilt/oat yields 2-3bps higher, bunds ~1bp.  Gilts weaker on lack of progress in Brexit talks, weak 30Y gilt reopening with a huge rise in tail to 1bp from 0.4 in Sep.  Large gilt future block 5,539 GH8 at 6:12am. France sold three off the run long bonds which put additional pressure on yields as results were mixed. GOCs unch after Oct Building Permits rose 3.5% in Oct vs 1.0% exp. Curve slightly flatter overnite, yet 1.5bps steeper after cautious BOC yest.  CAD weaker for second day, 0.4% this morning on top of 0.77% decline yest. Provis/CMBs unch yest,  5Y CMB reopening coming up with Ont/CMB spd at the tighter end of the range over th elast six months @ 13.5bps (12-19bps).  BAC maples better bid after Moodys upgrade to A3 from Baa1, BAC  2022 FRNS still look like great value at CDOR+22.

News headlines 

Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) House and Senate Republicans are working this week on compromise tax-overhaul legislation in an effort to send it to President Donald Trump by the end of the year. Here are the latest developments.

Trump to Meet Democrats With Congress on Track to Avoid Shutdown (Bloomberg) President Donald Trump will meet with congressional leaders from both parties Thursday to negotiate on a long-term budget deal as Congress prepares to pass a stopgap spending measure to avoid a U.S. government shutdown Saturday.

May Is Preparing Another Brexit Proposal for Ireland (Bloomberg) Prime Minister Theresa May is not giving up. In the latest twist to the Brexit saga, she is preparing another proposal to submit to Ireland within 24 hours in a dash to meet the European Union’s cutoff.

World Leaders Condemn Trump Jerusalem Move, Warn of Violence (Bloomberg) World leaders reacted with dismay after President Donald Trump decided to recognize Jerusalem as Israel’s capital and relocate the U.S. embassy there, amid concern the moves could ignite new violence and bury any hope for resolving the Israeli-Palestinian conflict.

Dollar Rises to Two-Week High; Stocks Pare Gains: Markets Wrap (Bloomberg) The dollar advanced a fourth day and Treasuries ticked lower as progress continued toward a final U.S. tax bill. European stocks pared earlier gains to trade little changed after two days of declines, and the British pound extended a retreat.

Consumption and Investment Propel Euro-Area Economic Growth (Bloomberg) Private consumption and investment drove euro-area economic growth in the third quarter, underpinning a recovery that has spread across the 19-nation bloc. Consumer spending contributed 0.2 percentage point to gross domestic product, with gross fixed capital formation adding another 0.2 point, the European Union’s statistics office said on Thursday. The economy expanded 0.6 percent from the second quarter, unrevised from an earlier estimate.

Bank of Canada holds interest rate at 1%, and signals more caution to come (Financial Post) The Bank of Canada on Wednesday maintained its key interest rate at one per cent, confirming expectations that the bank would hold off on further rate hikes amid slackening economic data.

Canada’s Desjardins lifts temporary halt on pipeline lending (Reuters)  Canadian lender Desjardins Group has lifted a moratorium on loans for energy pipeline projects, CBC News reported on Wednesday, citing Canadian Press.

General Electric to cut 12,000 jobs in power business revamp (Reuters) General Electric Co (GE.N) announced on Thursday it was axing 12,000 jobs at its global power business as the struggling industrial conglomerate responds to dwindling demand for fossil fuel power plants.

Overnight markets

Overview: US 10yr note futures are down -0.063% at 124-17, S&P 500 futures are down -0.03% at 2628.5, Crude oil futures are up 0.34% at $56.15, Gold futures are down -0.64% at $1258, DXY is up 0.12% at 93.72, CAD/USD is up 0.39% at 0.7791. 

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