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Market Update

Quiet session overnite with tsy ten year futs trading at the low end of the range after selling since Europe on avg volume (>280k), 10Y 2.39% (+1.8bps). Gilts trading higher, led by longs on Brexit progress, weaker UK service PMI (53.8 in Nov from 55.6). GOCs lower in line with tsys, spds narrower vs tsys (~1bp) since Oct  trade deficit came in lower than exp. IGM Financial (A/AH+) in the mkt with $250mln (no grow) longs at 192, looks like a 2-3bps conc, should go quite well given exisiting longs trade closer to 185.

News headlines 

U.S. Stock Rally Fizzles as Tech Drops, Oil Slumps: Markets Wrap (Bloomberg) U.S. stocks edged lower as selling in technology shares overwhelmed an advance by companies poised to benefit from proposed cuts to corporate taxes. The dollar strengthened and oil slumped.

Trump’s Stock Forecast Fails After Senate Tax Bill’s ‘Bombshell’ (Bloomberg) President Donald Trump’s prediction of “a very big day” for the stock market didn’t exactly hold true Monday, and tax experts say it’s probably because Senate Republicans unwittingly passed a bill that would mean higher-than-intended taxes for technology firms and other corporations.

Trump Lawyers Try to Take Obstruction Charges Off the Table (Bloomberg) Just six weeks ago, Donald Trump’s lawyers insisted they hadn’t spent much time researching whether laws on obstruction of justice apply to the president.  After the guilty plea by Trump’s former national security adviser, Michael Flynn, the explanation shifted. Now, Trump’s legal team says it’s no longer a question of whether Trump’s firing of FBI director James Comey could be considered obstruction of justice. They now say it’s impossible for the president to be charged with that crime at all.

Eleventh Hour Brexit Upset Sets New Deadline for Theresa May (Bloomberg) Theresa May came closer than ever on Monday to the Brexit deal she’s been working on for months. A last-minute upset over the Irish border left all parties embarrassed and doesn’t bode well for a second run at a breakthrough.

Euro-Area Growth Heads for Strong Finale in Year of Uncertainty (Bloomberg) Euro-area economic momentum accelerated to its fastest pace in over six years in November, setting the scene for a buoyant end to a year that saw political wobbling across much of the region.

U.S. Supreme Court Lets Trump’s Travel Ban Take Full Effect for Now (Bloomberg) A divided Supreme Court let President Donald Trump’s ban on travel to the U.S. from six mostly Muslim countries take full effect while legal challenges go forward, handing him a major victory and suggesting the court ultimately will uphold the restrictions.

Toronto home prices are down 8.8% since May, but the biggest decline in 17 years lures new buyers (Financial Post) Canada’s largest housing market continues to see prices fall amid a widening pool of homes for sale, though there are signs the correction is beginning to lure in some new buyers. The Toronto Real Estate Board’s benchmark home price index fell for the sixth consecutive month, down another 0.4 per cent from October. The index has fallen 8.8 per cent since May — the largest six-month decline in the history of data back to 2000. For the first time since 2009, the average price of a home sold in Toronto — at $761,757 in November — failed to surpass levels from a year earlier.

Canadian auto sales could hit 2 million in 2017: industry group (Reuters) Canadian auto sales dipped 1.2 percent in November from last year but could hit the two million milestone for the first time, according to data released by an automotive industry research firm.

Futures little changed as oil prices slip (Reuters) Canadian stock index futures were little changed on Tuesday amid a slight fall in oil prices and ahead of Canada’s international trade report for October.

Overnight markets

Overview: US 10yr note futures are down -0.075% at 124-05, S&P 500 futures are up 0.2% at 2643.5, Crude oil futures are down -0.56% at $57.15, Gold futures are down -0.11% at $1276.3, DXY is up 0.03% at 93.218, CAD/USD is down -0.24% at 0.7909. 

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

Risk on rally after passage of US tax bill early Saturday, tsys lower yields ~3bps higher, on heavy volume in TY futures (530k), US 10Y 2.392 (+3bps). Equities higher – S&P fut  +15, Euro stoxx +1.2%. The USD is higher vs the euro, lower vs GBP, unch vs CAD. GBP higher, gilts lower and wider vs bunds/tsys  on speculation an agreement on Brexit talks has been achieved,  EU chief negotiator Michel Barnier  saying a ‘breakthrough is likely today’. GOCs lower in line with tsys, curve maintaining flatter bias from Friday’s blowout employment figures, 20% chance of rate hike this Wed. Provis trading up to start, Ont 27s @ 61, Ont 48s @71 – expectations of supply in both provis & corps given month end cpn flows.

News headlines 

Senate Passes Major Business, Individual Cuts: Tax Debate Update (Bloomberg) Senate Republicans narrowly approved the most sweeping rewrite of the U.S. tax code in three decades, slashing the corporate tax rate and providing temporary tax-rate cuts for most Americans. The 51-49 vote — achieved only after closed-door deal-making with dissident senators — brings the GOP close to delivering a much-needed policy win for their party and President Donald Trump. Trump has promised to sign tax-cut legislation before the end of 2017.

Congress Talks Tax Deal as Trump Signals Corporate Rate Retreat (Bloomberg) House and Senate lawmakers say they’ll begin working Monday on compromise tax-overhaul legislation — just a couple days after President Donald Trump introduced uncertainty over a provision that could mean a difference of about $200 billion over 10 years.

U.K. Fears Brexit Breakdown as May Takes Best Offer to Lunch (Bloomberg) Brexit talks risk being torpedoed by the taboo issue of the European Court of Justice, a senior British official said, as the U.K. downplayed expectations of a breakthrough when Prime Minister Theresa May meets European officials in Brussels on Monday.

CVS to Buy Aetna for $67.5 Billion, Remaking Health Care Sector (Bloomberg) CVS will pay $207 a share for Aetna, with $145 a share in cash and the rest in stock, the companies said in a statement Sunday. That’s a 29 percent premium to Aetna’s share price on Oct. 25, the day before the companies were reported to be in talks.

Dollar Rises With Yields on Tax Plan; Stocks Jump: Markets Wrap (Bloomberg) The dollar made a strong start to the week, rising with Treasury yields and U.S. stock futures on the back of progress for the Republican tax-overhaul plan. European equities rebounded after Friday’s slump, though it was a mixed picture across Asian gauges.

Citi’s Bullish on Commodities While Warning of Risk in China (Bloomberg) Demand gains will be sustained through next year and in 2019, lifted by emerging markets as well as advanced economies, the bank said in a report. While there may be a slowdown in China, the top consumer of metals and energy and grains, stricter environmental standards and pressure to support bank balance sheets by eliminating overcapacity and curbing a glut could lead to tightness in some commodities, according to Citigroup.

Free trade talks with China will not yet begin (CBC) Canada will not begin formal free trade talks with China, at least not yet.  Prime Minister Trudeau met Monday with Chinese Premier Li Keqiang at the Great Hall of the People in Beijing. A joint statement indicating talks would begin had been widely expected.

BlackBerry loses payment dispute with Nokia, to pay $137 million (Reuters) An arbitration court ordered smartphone pioneer BlackBerry Ltd to pay $137 million to Nokia to settle a payment dispute and the Canadian company said it would pursue a separate patent infringement case against the Finnish firm.

Flynn pleads guilty, is cooperating in Trump-Russia probe (Associated Press)  Michael Flynn, the retired general who vigorously campaigned at Donald Trump’s side and then served as his first national security adviser, pleaded guilty Friday to lying to the FBI about reaching out to the Russians on Trump’s behalf and said members of the president’s inner circle were intimately involved with — and at times directing — his contacts.

Overnight markets

Overview: US 10yr note futures are down -0.201% at 124-06, S&P 500 futures are up 0.52% at 2657.75, Crude oil futures are down -0.93% at $57.82, Gold futures are down -0.4% at $1277.2, DXY is up 0.23% at 93.101, CAD/USD is down -0.15% at 0.7895.

 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

US Treasuries opened NY higher, flatter after US Senate Thursday night postponed GOP tax bill vote to 11am ET Fri, amid need for compromise as various GOP sides want different bill contents.Bloomberg reports various GOP factions appeared to have made “a lot of progress” overnight in addressing “deficit concerns,” but more work to be done, citing a Senate aide. Canada November Employment +79.5k, above +10k expected and largest gain since Apr’12. Unemployment rate 5.9%, lowest since Feb’08 vs 6.2% expected. Full-time +29.6k. Part-time +49.9k. Particiption rate unch at 65.7%. Hourly wages of permanent workers +2.7% y/y,largest gain since Apr’16. 3Q real GDP +1.7% ann., as expected. 2Q rev to +4.3% from +4.5%. 3Q slowdown mainly on weak exports and residential investment (weaker housing resale mkt). Largst positive contribution was household consumption while exports trimmed GDP by 3.4pts. invent build up added 1.1 pt.

News headlines 

Senate Suspends Bill Votes to Friday Morning: Tax Debate Update (Bloomberg) The Senate tax bill is headed for a marathon debate this week after Republican leaders brought the measure to the floor Wednesday with the goal of holding a final vote by the end of the week. Here are the latest developments, updated throughout the day

May’s Brexit Breakthrough at Risk as Irish Parties Dig In (Bloomberg) The breakthrough in Brexit talks that Theresa May has been working to clinch next week was at risk Friday as the Northern Irish party that props up her government threatened to bring her down if she makes anything like the concessions that Europe is demanding.

Booming Euro-Area Factories Expand at Fastest Pace Since 2000 (Bloomberg) Euro-area factories haven’t done this well since the height of the dot-com boom 17 years ago. A Purchasing Managers’ Index for manufacturing rose to 60.1 in November from 58.5 the previous month, IHS Markit said on Friday. That beats a preliminary reading of 60 and is the second-highest reading since the survey began in June 1997.

Stocks Drop as Tech Selloff Resumes; Dollar Steady: Markets Wrap (Bloomberg) European stocks dropped at the start of the last month of 2017 as a selloff in technology shares resumed. The dollar edged lower and Treasuries gained after tax reform efforts in the U.S. stumbled.

Tillerson Faces ‘Death Blow’ After Repeated Clashes With Trump (Bloomberg) Time is quickly running out for U.S. Secretary of State Rex Tillerson. America’s top diplomat heads to Europe next week hobbled by reports that the White House is preparing to oust him. On stops in Brussels, Vienna and Paris, he’ll face foreign leaders who will do their best to express comity but also wonder how much longer he’ll remain in the job.

National Bank boosts dividend as quarterly profit jumps (Globe and Mail) National Bank of Canada raised its dividend as it reported stronger fourth-quarter profit driven by gains in personal and commercial banking as well as wealth management.

Canada stock futures little changed ahead of economic data (Reuters) The gross domestic product report, due at 8:30 a.m. ET, is expected to show growth of 1.6 percent on an annualized basis for the third quarter. The employment change data, also due at 8:30 a.m. ET, is likely to show an addition of 10,000 jobs in November, bringing the unemployment rate down to 6.2 percent.

Global manufacturing buoyed as focus shifts to rate hikes (Reuters) Global manufacturing expanded at the fastest pace in years last month and the second-best in two decades in the euro zone, driven by robust demand and bolstering the case for central banks to shift to tighter monetary policy.

Overnight markets

Overview: US 10yr note futures are up 0.239% at 124-11, S&P 500 futures are down -0.12% at 2644.75, Crude oil futures are up 0.82% at $57.87, Gold futures are up 0.07% at $1277.6, DXY is up 0.06% at 93.101, CAD/USD is down -0.12% at 0.7763. 

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