Commentaires

Market Update

Tsys trading weaker, unwinding brief FTQ bid following N. Korea missile launch, trading lower since Europe with core EGBs, US 10Y 2.37% (+4.3bps), little reaction to upwardly revised Q3 GDP (3.3% vs 3.0% prev). Gilts yields 10bps higher, bunds weaker on stronger Grman CPI.  GOCs lower, continuing outpeformance vs tsys, another 1.5bps tighter in the 10Y at -52bps. At noon the BOC auctions $700mln in 2050 RRBs. Real yields at 0.60% are ~18bps lower since  the last auction on Sept 13th, while breakevens have been trading in a narrow 5bp range since July. The 2050/47 real yield spd has narrowed to 0.8bps, the low end of the range since the 2050 RRB was first auction in May. Provis a touch softer yest in wake of new Ont 49 issue @ 70.5, now 71/70.

News headlines 

Revenue Trigger Looms as Source of Friction: Tax Debate Update (Bloomberg) The Senate tax bill is headed for a marathon debate this week as Republican leaders plan to hold a floor vote as early as Thursday — but first, the measure had to go through the Budget Committee, where key GOP lawmakers were raising objections.

Trump’s Clash With Democrats Raises Risk of Government Shutdown (Bloomberg) Republicans in the U.S. Congress were cheered on Tuesday after President Donald Trump helped them get a bit closer to passing a tax overhaul in the Senate. But Trump also may have ensnarled negotiations to keep the federal government funded after money runs out on Dec. 8 by stiff-arming Democratic leaders before a scheduled White House meeting on spending.

U.K. and EU Agree on Outline Brexit Bill as Irish Block Remains (Bloomberg) U.K. and the European Union negotiators reached an outline deal on the Brexit divorce bill, clearing a hurdle in negotiations and ramping up pressure to find a compromise on the thorny issue of the Irish border. The pound surged.

Why Investors Are Unfazed by North Korea’s Missile Launch (Bloomberg) North Korea launched an intercontinental ballistic missile near Japan, but investors and analysts were unfazed by the latest provocation.

Stocks Gain With Tax, Data in Focus; Pound Rises: Markets Wrap (Bloomberg) Stocks in Europe gained, following equities from the U.S. to Asia higher as optimism over U.S. tax reform and euro-area economic growth overshadowed concerns about North Korea’s latest missile launch. The British pound strengthened after the U.K. cleared a major Brexit hurdle.

RBC quarterly profit jumps 12 per cent, beats expectations (Globe and Mail) Royal Bank of Canada saw a 12 per cent jump in its fourth-quarter net income to $2.84-billion, which pushed its net income for the full 2017 year to a record $11.47-billion.

Canada’s British Columbia lowers budget surplus forecast (Reuters) The Canadian province of British Columbia cut its 2017-18 budget surplus forecast to C$190 million ($148 million), due to tax adjustments and as the cost of fighting its worst-ever wildfire season bites, the provincial Finance Minister said on Tuesday.

Overnight markets

Overview: US 10yr note futures are down -0.175% at 124-24, S&P 500 futures are up 0.06% at 2627.5, Crude oil futures are down -0.43% at $57.74, Gold futures are down -0.58% at $1291.6, DXY is up 0.12% at 93.384, CAD/USD is up 0.21% at 0.7787.

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

Market Update

Tsys trade slightly weaker, US 10Y 2.33%, heavy volume in TY futures 9>535k) mostly due to Dec/Mar roll ahead of Thursday’s first notice. Equities firmer in Europe led by energy, after Royal Dutch Shell (+3.25%) boosted guidance and restored its dividend.  Crude down another 0.60% 57.75 even as OPEC is set to announce extension of production cuts on Thursday. Core EGBs mixed, bund curve flatter, 10Y bund 0.4bps lower @ 0.338% a two-week low. GOCs well bid, outperforming tsys ~1bp in 10s after yesterday’s 1.5bp narrowing after a large block trade in CGBs yest morning. Provis trading down 0.5bps to start ahead of supply – new long Ont 2049 exp, Ont 48/46 roll -1.7bps so ~-1bp thru Ont 48s  makes sense.

News headlines 

GOP Panel Members Threaten to Bottle Bill Up: Tax Debate Update (Bloomberg) The Senate tax bill is headed for a marathon debate this week with the aim to hold a floor vote as early as Thursday. Should it pass, Republican leaders will have to hammer out a compromise between different provisions in the House and Senate bills.

Jerome Powell Sees Rates Rising Somewhat Further (Bloomberg) President Donald Trump’s nominee to head the Federal Reserve is making one thing clear as he prepares to testify before lawmakers: He’s not here to shake things up at the U.S. central bank.

Fox Says U.K. Has Done Enough for Brexit Talks to Move Forward (Bloomberg) U.K. Trade Secretary Liam Fox called on the European Union to allow Brexit negotiations to move on to future trade links, saying his government has done enough to satisfy the bloc’s demands for money.

Oil Extends Declines Before OPEC Meeting on Output-Cut Extension (Bloomberg) Brent crude slipped toward $63 a barrel before OPEC and its allies meet this week to discuss prolonging their output cuts beyond March. Futures dropped as much as 1.2 percent in London, extending Monday’s decline. Uncertainty over the outcome of Thursday’s meeting is creating the risk of a slide in prices, which have gained on assumptions that the curbs will be prolonged for nine months, according to Goldman Sachs Group Inc. OPEC backs such an extension but is still waiting for commitments from Russia, according to people familiar with the matter.

Asian Stocks Fall for a Second Day Amid North Korea Missile Risk (Bloomberg) Asian stocks declined for a second day as investors turned cautious after reports that North Korea may be preparing a missile launch. The MSCI Asia Pacific Index lost 0.1 percent to 172.13 as of 4:45 p.m. in Hong Kong, led by material stocks such as BHP Billiton Ltd. Japanese stocks dropped as the yen unwound gains spurred by North Korea reports. Stocks in South Korea gained.

Stocks Rise as Energy Shares Jump; Dollar Steady: Markets Wrap (Bloomberg) Stocks in Europe advanced as energy companies gained after a bullish outlook from one of the sector’s bellwethers. The dollar and Treasury yields edged higher ahead of a Federal Reserve confirmation hearing and debate on U.S. tax reform.

Scotiabank bids $2.9 billion to buy majority stake in BBVA Chile (Financial Post) Scotiabank says it has submitted an offer to buy a majority stake in a Chilean bank for $2.9 billion. Scotiabank (TSX:BNS) seeks to acquire Banco Bilbao Vizcaya Argentaria, S.A.’s (BBVA) shares in its Chilean banking operation, BBVA Chile. The Canadian bank, which releases its quarterly results early Tuesday, says BBVA is willing to accept the deal if its minority partner, the Said family, does not exercise its right of first refusal under a shareholders agreement. BBVA currently owns 68.19 per cent of BBVA Chile and the Said family owns 31.62 per cent. he transaction would double Scotiabank’s market share in Chile to approximately 14 per cent and would be in line with Scotiabank’s strategy to increase scale within Chile and the Pacific Alliance countries.

Crunch looms as house correction puts some Canadians under water (Reuters) A drop in Canadian home prices has put some recent buyers under water, particularly in Toronto, the nation’s largest market, just as rising interest rates and record levels of household debt have put the squeeze on borrowers.

Overnight markets

Overview: US 10yr note futures are down -0.025% at 125-03, S&P 500 futures are up 0.11% at 2604.5, Crude oil futures are down -0.72% at $57.69, Gold futures are up 0.02% at $1299.2, DXY is up 0.17% at 93.059, CAD/USD is up 0.19% at 0.7816. 

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 mixed, curve flatter, US 10Y 2.33% (-1bp), heavy volume in TY futures (>600k) mostly due to roll, equities steady (Euro equities -0.2%, S&P futures -1) Tsy 2s10s curve reaching new lows in front of supply, bear flatteners put on in Europe, long tsys bid along with bunds. Flattening trend in tsy curve is poised to continue this week – double auction today with $26bln 2Y at 11:30 and $34bln 5Y at 1:00pm, while the Bloomberg Nov index extension for USTs is 0.11yrs longer than the avg (0.09) yrs due to Nov being a refunding month.  Coe EGBs higher led by long bunds, paying flows in 2 & 5Y EUR swaps, firmer EU peripheral spds. In Canada, GOCs unch, lagging the rally in tsys by ~1bp in longs. Provis opening unch, spds 2-2.5bps tighter on the week. Relatively busy week in terms of data – Tuesday BOC FSR  and Q3 GDP & employment on Friday.

News headlines 

The GOP Tax Plan Is Entering Its Make-or-Break Week (Bloomberg) The $1.4 trillion item on President Donald Trump’s wish list — a package of tax cuts for businesses and individuals that he has said he wants to sign before year’s end — is headed into the legislative equivalent of a Black Friday scrum next week.

Germany’s Standoff Eases as Wrangling Shifts to Coalition Terms (Bloomberg) Germany’s political stalemate showed signs of easing as the Social Democrats started haggling over terms of a renewed coalition with Chancellor Angela Merkel’s conservative bloc rather than outright blocking an alliance between Germany’s two biggest parties.

U.K. Faces Brexit Deadline on Ireland as Varadkar Clings On (Bloomberg) Prime Minister Theresa May has a week to find a compromise on the conflicting Brexit demands from the north and south of Ireland, just as a political scandal threatening the Irish government could further undermine her chances of success.

Technology Stocks Drag Asia Lower as Morgan Stanley Downgrades (Bloomberg) Asian stocks retreated from Friday’s record after Morgan Stanley downgraded Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., saying their shares had risen too much.

Stocks Decline as Metal Prices Drop; Dollar Slips: Markets Wrap (Bloomberg) European equities retreated as a slump in industrial metals weighed on mining stocks. The dollar extended a decline and Treasuries edged higher as investor focus returned to the U.S. economy and tax reform at the start of a week packed with potential market catalysts.

Canada posts larger September budget deficit as expenditures increase (Reuters) Canada’s budget deficit increased in September compared with the previous year as government spending on programs increased at a faster rate than revenues, the finance department said on Friday.

OSC adjourns hearing on Rhone investment in Hudson’s Bay (Reuters) The Ontario Securities Commission (OSC) adjourned a hearing on Friday of activist fund Land and Buildings’ appeal against a conditional approval for a $500 million investment in luxury retailer Hudson’s Bay Co from Rhone Capital.

TSX futures lower as oil prices slip (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Monday, as oil prices slipped with U.S. crude easing from two-year highs on prospects of higher output.

Overnight markets

Overview: US 10yr note futures are up 0.025% at 125-00, S&P 500 futures are down 0% at 2601, Crude oil futures are down -1.14% at $58.28, Gold futures are up 0.54% at $1298.8, DXY is down -0.18% at 92.614, CAD/USD is down -0.22% at 0.7883. 

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