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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

Market Update

Tsys trading higher close to session highs after ADP +190k as expected. Heavy volume in TY futures overnite (>480k) tsy curve steeper, 10Y 2.33(-2bps). FTQ bid on news Trump admin to recognize Jerusalem as capital of Israel. Equities weaker –  S&P futures -2.5, Europe -0.70%, crude at two week low 56.90 on API data showing build in gasoline inventories. Core EGBs higher led by 10Y gilts, curve 2bps flatter (narrowest in 14 months), 10Y gilt yield one month low 1.226%. Bunds lagging following uncovered 10Y reopening, stronger Oct factory orders. In Canada, focus on BOC decision at 10:00, GOCs unch, 10Y 1.89%. BOC expected to hold rates unch at 1.0% at this morning’s meeting – market pricing based on BA futures 16% hasn’t changed much since last Friday’s blowout jobs report. No MPR/press conference, statement expected to be slightly more hawkish than  in Oct, reflecting a tighter labor market in terms of both employment levels and wages which have surged from a low of 0.66% in April to a nineteen-month high of 2.80%.

News headlines 

Debt-Limit Tracker: What to Watch in Markets as Suspension Ends (Bloomberg) The three-month U.S. debt-ceiling reprieve is about to end, putting investors in Treasury bills and other short-term debt on notice. The September legislation that suspended the limit and funded the government is set to expire Dec. 8. House Republicans have a plan to pass a two-week extension to keep the government open. But lawmakers have yet to take it up as they focus on concluding an agreement to overhaul the tax system.

Theresa May Faces New Brexit Revolt From Boris Johnson (Bloomberg) Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her chances of breaking the deadlock in negotiations.

Stocks Drop as Risk-Off Takes Hold; Bonds Advance: Markets Wrap (Bloomberg) European shares followed their Asian counterparts lower as investors continued to lock in gains in the year’s better performing assets amid a broad risk-off mood. The dollar inched higher and Treasuries climbed as focus turns to efforts to avert a U.S. government shutdown on Saturday.

Oil Drops as Industry Data Show U.S. Gasoline Stockpiles Grew (Bloomberg) Oil declined after industry data showed U.S. gasoline stockpiles expanded for the first time in four weeks. Futures dropped 1.3 percent in New York after rising 0.3 percent on Tuesday. Motor-fuel inventories climbed by 9.2 million barrels last week, the American Petroleum Institute was said to report. That would be the biggest gain since January 2016 if replicated in government data due later on Wednesday. Nationwide crude stockpiles declined, according to the API data.

As Selloff Hits Stocks, Some Investors Point to Jerusalem (Bloomberg) Investors watching the selloff that enveloped Asian markets Wednesday saw a host of reasons, ranging from profit-taking to the continued drop in technology stocks. But one matter was prominent for some commentators: U.S. President Donald Trump’s plan to formally declare Jerusalem as Israel’s capital.

Condos a bright spot in recovering Toronto, Vancouver markets (Reuters) he market for condos and attached properties surged in Canada’s main real estate markets, Toronto and Vancouver, as buyer interest in expensive detached homes has withered, data showed on Tuesday.

Rogers considering sale of Blue Jays, Cogeco stake (Reuters) Canadian telecom company Rogers Communications Inc is looking to sell assets such as the baseball team Toronto Blue Jays and a stake in media company Cogeco Inc, Bloomberg reported on Wednesday, citing Chief Financial Officer Tony Staffieri.

Hudson’s Bay reports worse-than-expected loss on lower retail sales (Reuters) Canadian department store Hudson’s Bay Co (HBC.TO) on Wednesday reported a wider-than expected quarterly loss as retail sales fell.

Retailer Dollarama reports third-quarter profit and sales up from year ago (CTV News) Dollarama Inc. says it earned $130.1 million in its third quarter, up from $110.1 million in the same quarter last year, boosted by higher sales. The company (TSX:DOL) says the profit amounted to $1.15 per diluted share, up from 92 cents per diluted share a year ago when the company had more shares outstanding.

Overnight markets

Overview: US 10yr note futures are up 0.176% at 124-18, S&P 500 futures are down -0.1% at 2625.75, Crude oil futures are down -1.28% at $56.88, Gold futures are up 0.38% at $1269.7, DXY is down -0.04% at 93.342, CAD/USD is down -0.22% at 0.7899. 

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