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Market Update

US tsys & GOCs higher on FTQ bid as stocks weaken globally, heavy volume in TY futures overnight (TY 535k). US 10Y 3bps lower @ 2.336% , maintaining overnite gains despite rise in y/y core Oct CPI and retail sales (0.2% vs 0.0%)with the 2s10s tsy curve @66bps the flattest in a decade (Oct07). Japan’s Topix index fell for a fifth day led by oil stocks, the DAX down 1.0% below its 50 dma, S&P futs -10.25. Crude oil down another 1.0% after yesterdays 1.9% decline – doubts emerging over OPEC’s commitment to extend production cuts, while specs net position in crude has surged to a new record as of last week to ~540k bbls .  GOCs higher, in line with tsys , longs 1bp wider, 10Y 1.91% The BOC auctions $3.0bln in 3Y bonds at noon, the second reopening of the 0.75% March 21 issue. Like last week’s 5Y (Mar 23s), the amount being sold is lower vs last auction ($3.0bln vs $3.2bln in Oct). The current 3Y Sep 20 have $26bln outstanding while the March 21s are already at $21bln at the second reopening given the issue was originally sold as a 5Y. The Mar21/Sep20 has widened ~2bps since the last auction on Oct 18th and looks cheap on a relative basis given that the Sep20/2Y (Nov19). CMB 10Y this morning – new MArch 2028  in the area of 45 bps, pricing ~9:30am – the issue is well spoken for..

News headlines 

The Treasury Market and the Fed Won’t Get Sidetracked by an Inflation Surprise (Bloomberg) The dominant dynamic in the $14.2 trillion Treasury market can withstand whatever Wednesday’s inflation numbers say and whatever Fed speakers have to say about them. Over the past year, the yield on two-year U.S. debt has marched nearly 70 basis points higher, compared to a paltry 12 basis point rise in its 10-year counterpart — an intense so-called bear flattening of the yield curve.

Senate Plan Would Repeal Mandate, Sunset Cuts: Tax Debate Update (Bloomberg) The Senate tax-writing committee hammered out the details of its tax cut proposal Tuesday, while the House may vote on its bill as soon as Thursday.

Stocks Decline Globally as Oil Slides; Euro Gains: Markets Wrap (Bloomberg) The risk-off mood gripping global markets showed little sign of easing as European stocks followed declines in Asia. Taking impetus from a selloff in energy commodities, the slide also spread to U.S. equity futures as bonds and gold advanced with the yen and euro.

For Global Economy, Slowdown in China Couldn’t Be Better Timed (Bloomberg) China’s moderation in growth last month comes at the right time for a global economy that’s benefiting from Europe’s pick up and the U.S.’s strength.  That’s especially the case if it means the world’s second-largest economy is moving toward more sustainable drivers with less reliance on cheap debt. Click here to read details of Tuesday’s data.

Airbus Seals $50 Billion Jet Deal to Outdo Boeing in Dubai (Bloomberg) Airbus SE announced the biggest commercial-plane transaction in its history, securing an order for single-aisle aircraft valued at nearly $50 billion at the Dubai Air Show, outdoing Boeing Co.’s own $20 billion mega-deal

Vancouver imposes sharp restrictions on Airbnb, homesharing sites (Reuters) The city of Vancouver passed new rules on Tuesday banning homeowners from renting out certain kinds of property on short-term rental websites like Airbnb, as part of an attempt to deal with a housing shortage that has led to soaring rents.

Loblaw is closing 22 unprofitable stores; doubles profit on sale of gas bars (Financial Post) Loblaw Companies Ltd. says it has finalized a plan that will result in the closure of 22 unprofitable stores across a range of its banners and formats. The company says it expects that the closures will be substantially complete by the end of the first quarter of next year. The move comes as Loblaw more than doubled its third-quarter profit compared with a year ago as its results were boosted by the sale of its gas bar business. The retailer says its profit attributable to common shareholders totalled $883 million or $2.24 per diluted share for the 16 week ended Oct. 7. That compared with a profit of $419 million or $1.03 per diluted share for the same period last year.

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 led by the long end, curve 2bps flatter 2s30s, 10Y 2.388 (-1.8bps), above avg volume in TY futures (350k), short end weighed by firmer Oct PPI (0.4% vs 0.1%, overall 2.8%  highest since Feb 2012). Fed Bullard  sounding dovish saying fed funds rate appropriate for near term, need higher productivity to lift wages. Tsys declined in Asia session and then rallied in Europe led by longs. Tsy curve resuming flattening trend from last week, 5s30s at new lows 77.7, 4 bps narrower since Friday. So far not much news from ECB central bank panel in term s of monetary policy. GOCs better offered curve 2bps flatter, spds ~1bp wider vs tsys in the short end. The BOC auctions $3bln in 3Y bonds tomorrow and a $500mln in ultra longs Thursday

News headlines 

Trump Declares Trade ‘Rules Have Changed’ as Asia Trip Concludes (Bloomberg) President Donald Trump ended his swing through Asia, hailing progress toward his goal of reducing the U.S. trade deficit. Trump took off from Manila aboard Air Force One on Tuesday, skipping the final session of meetings hosted by the Association of Southeast Asian Nations. The trip, which included stops in Japan, South Korea, China and Vietnam, brought Trump in contact with dozens of leaders, including the heads of Asia’s five biggest economies and a brief encounter with Russian President Vladimir Putin.

Here’s Where the GOP Tax Plan Stands Right Now (Bloomberg) The Senate tax-writing committee continues hammering out the details of its tax cut proposal on Tuesday, while the House may vote on its bill as soon as Thursday

Powell Wants to Change How the Fed Communicates (Bloomberg) Federal Reserve Chair nominee Jerome Powell has likened central bank communication to a popular Far Side cartoon: A man chides his dog Ginger about rooting through the trash, but all the dog hears is “Blah, blah, Ginger, blah, blah blah.”

German Economy Beats Forecasts, Heads for Best Year Since 2011 (Bloomberg) German growth steamed ahead in the third quarter, keeping Europe’s largest economy on track for its best year since 2011. The 0.8 percent jump in gross domestic product was an acceleration from the previous three months and topped the 0.6 percent median forecast in a Bloomberg survey. The expansion was driven by exports and capital investment, and net trade made a positive contribution.

Stock Selloff Heads Toward U.S. as Euro Advances: Markets Wrap (Bloomberg) The equity selloff that moved from Asia to Europe looks to continue, with U.S. stock futures joining the retreat. Treasuries and bonds turned positive as the world’s most powerful central bankers spoke in Frankfurt, while the dollar weakened and the euro appreciated on German growth data.

Venezuela Creditor Meeting Is a Bust as S&P Declares Default (Bloomberg) Venezuela’s grand gathering with creditors Monday lasted all of 30 minutes and didn’t produce anything of substance. To make matters worse, S&P Global Ratings declared the country in default while Fitch Ratings cited missed payments by the state oil company.

EgyptAir signs letter of intent for up to 24 Bombardier CS300s (CBC) Montreal-based Bombardier Inc. has signed a letter of intent to sell up to 24 CS300 aircraft to EgyptAir Holding Co. The CS300 is the larger version of Bombardier’s C Series aircraft. The agreement announced at the Dubai Airshow includes 12 CS300 aircraft with purchase rights for an additional 12 aircraft.

Fifth NAFTA round reaches Mexico under shadow of U.S. tax reform (Reuters) U.S., Canadian and Mexican negotiators hope to make modest progress in the next round of NAFTA trade talks as the White House focuses on pushing tax cuts through Congress, with little sign of compromise in sight on key sticking points.

Overnight markets

Overview: US 10yr note futures are up 0.025% at 124-21, S&P 500 futures are down -0.19% at 2577, Crude oil futures are down -0.55% at $56.45, Gold futures are down -0.32% at $1274.8, DXY is down -0.4% at 94.112, CAD/USD is down -0.18% at 0.7868.

 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 trading sharply lower, yields 2-3bps higher on heavy volume in TY futures (515k vs 300k avg). Euro stocks lower, S&P futures -8, gold higher, crude unch 57.17. Tax reform cited as contributing to the selloff in both stocks & bonds the last couple of days, more specifically that the US Senate tax plan would delay corp tax cuts to 2019, even as the tax rate would decline to 20% from 35%. Core EGB yields higher for a second day led by  UK gilts, 10Y bund 0.39%  a two-week high, profit taking after 10Y bund yields had fallen rapidly(~ 18bps) just since ECB ‘dovish taper’ meeting Oct 26th.  Next week also sees a substantial uptick in European bond supply (~E31bln from E7.2bln this week according to MNI) from from France, Spain , Germany, Italy and the Netherlands. Provis wider for a second day led by longs, Ont 10Y 64bps – 3bps wider on the week with the Ont 48/27 curve 0.5bps steeper.

News headlines 

Trump Offers Trade to Asian Nations But Only If They Play Fair (Bloomberg) President Donald Trump told Asian nations eager for the U.S. to stay committed to the region that he would no longer join multilateral deals like the Trans-Pacific Partnership but would seek bilateral pacts — and only with countries that played by the rules and didn’t try to exploit the United States.

China Moves to Open Market for Financial Firms in Historic Step (Bloomberg) China took a major step toward the long-awaited opening of its financial system, saying it will remove foreign ownership limits on banks while allowing overseas firms to take majority stakes in local securities ventures, fund managers and insurers.

GOP’s Dueling Tax Overhauls Struggle to Pass a Key Red-Ink Test (Bloomberg) Republican tax writers in the House and Senate scoured the U.S. tax code Thursday and shook the couch cushions for loose change, as one member put it, in an all-day struggle to find ways to pay for the deep tax cuts their leaders and President Donald Trump have promised.

Get Ready for a Washington Train Wreck in December (Bloomberg) Republicans in Congress are so focused on passing a massive tax overhaul this year that they’re saying little publicly about another December deadline — the day the government would shut down if the GOP can’t reach a deal with Democrats on spending and other hot-button issues.

Stocks, Dollar Fall on Senate Tax Plan Concerns: Markets Wrap (Bloomberg) U.S. stocks stumbled Thursday, with losses widening after the Senate revealed that its tax plan would delay cuts to the corporate rate until 2019. Treasuries turned higher and the dollar extended losses.

Irish Border Throws Unexpected Hurdle Into Brexit Talks (Bloomberg) The future of the Irish border erupted unexpectedly into Brexit talks this week, as the European Union made new demands on Britain that risk distracting from efforts to reach a breakthrough by year-end.

Big Tobacco urges Canada to ensure legal nicotine competitive with black market (CTV) If the price of legal marijuana must be competitive with the black market in order to discourage underground sales, then the same logic should apply to nicotine, the head of Imperial Tobacco Canada said Thursday.

Justin Trudeau says Canada won’t be pressured into premature TPP deal, denies report ‘principle’ agreement reached  (Global News) Canada won’t be pressured into prematurely signing a deal on the Trans-Pacific Partnership, Prime Minister Justin Trudeau said Thursday as his Liberal government flatly denied media reports of a “deal in principle” on the Pacific Rim trade pact.

Overnight markets

Overview: US 10yr note futures are down -0.187% at 124-31, S&P 500 futures are down -0.29% at 2576.5, Crude oil futures are up 0.02% at $57.18, Gold futures are down -0.16% at $1285.5, DXY is down -0.02% at 94.421, CAD/USD is down -0.09% at 0.7892

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