Commentaires

Market Update

Tsys mixed, long end outperforming, new lows for 2s10s new low 58.73 overnite, 10Y 2.36%. Equities firmer (S&P fut +7.5), gold recovering somewhat after yesterday’s $15 decline, the largest since Sep. Crude reversing earlier gains now flat @ 56.33. Core EGB curves flatter as well, gilt curve 2bps flatter led by the long end- UK Budget tomorrow with some analysts expecting a cut in gilt issuance for 2017-18 fy from this year’s GBP 114.2bln. German 10Y bund yield 1bp lower @ 0.35%, long end leading with 30Y @ new low 1.20% – gross EGB supply falls to only E2.2bln (Finland 10Y and Germany 30Y) from over E35bln last week, seasonal slowing of issuance into y/e.  GOCs higher outperforming tsys in 10s by ~1.5bps  after spike  in CGBS , longs lagging on the curve. Yest saw Can/US end 1-2bps cheaper led by the long end after more 30Y provi/corp supply – $300mln Manitoba 48s @  86 (onts +12), deal went so-so, $430mln CU longs @ 124 (guidance 126 +/- 3) broke 1wider.

News headlines 

Yellen Says She’ll Leave Fed Once Powell Is Sworn In as Chairman (Bloomberg) Federal Reserve Chair Janet Yellen said she will step down from its Board of Governors once her successor is sworn into the office, widening the scope for President Donald Trump to shape the U.S. central bank’s leadership for years to come.

AT&T, U.S. Prepare to Battle in Court Over Time Warner Merger (Bloomberg) A defiant Randall Stephenson told antitrust enforcers that AT&T Inc. would see them in court after the Justice Department sued to block the company’s $85.4 billion bid to buy Time Warner Inc.

Brexit-Hit Banks to Start Moving Staff Abroad in Early 2018 (Bloomberg) U.K. politicians are fighting to get a deal early next year that will ease businesses’ panic about Brexit. For some industries, it’s probably too late. Barring some major breakthrough, global banks will implement their relocation plans early next year to guarantee they’re able to have new offices inside the European Union running by the time the U.K. exits, people with knowledge of the matter said. There’s little Prime Minister Theresa May can do to stop lenders from executing their contingency plans, if they haven’t already, said one of the people.

Merkel Tells Her German Rivals: Back Me or Face Voters Again (Bloomberg) German Chancellor Angela Merkel said she’s ready to face voters again to break the country’s political stalemate, betting they won’t blame her for failed talks on forming a coalition.

Global Stocks Gain as Bonds Rise; Dollar Slips: Markets Wrap (Bloomberg) Stocks pushed higher, while bonds across Europe followed a rise in Treasuries after the European Central Bank was said to be likely to make only small adjustments to its guidance on monetary policy next year.

Turkey Lifts Bank-Funding Cost as Lira Drops to All-Time Low (Bloomberg) The Turkish lira weakened to a record low and bonds tumbled, pressuring policy makers to find ways of staunching a market rout that’s putting them at odds with President Recep Tayyip Erdogan.

Royal Bank of Canada Designated a Global Systemically Important Bank (Newswire) Royal Bank of Canada (RY on TSX and NYSE) today announced it has been named a Global Systemically Important Bank (G-SIB) by the Financial Stability Board (FSB), based in Basel, Switzerland. This designation reflects the size and scale of RBC’s global operations.

Nebraska OKs ‘alternative route’ for Keystone XL pipeline (CBC) TransCanada Corp.’s Keystone XL pipeline won approval Monday from regulators in Nebraska, but state regulators did not OK the company’s preferred route. Instead, the commission approved the so-called « mainline alternative route » for the pipeline, which is a slightly different path from the preferred route proposed by TransCanada. Pipeline opponents were cheered by the result.

Overnight markets

Overview: US 10yr note futures are up 0.05% at 124-24, S&P 500 futures are up 0.32% at 2590.25, Crude oil futures are up 0.14% at $56.5, Gold futures are up 0.23% at $1278.2, DXY is up 0.05% at 94.126, CAD/USD is down -0.12% at 0.7809.

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 tsys trading modestly lower, yields 0.5-1bp higher, 10Y 2.355%, TY futures bottom  o/n range. Tsy’s earlier boost from bunds after breakdown in German govt coalition now being unwound with reports Merkel unwilling to accept breakdown in coalition talks; German yields unch  while the Euro has given up very little (0.20%) of its o/n gains. UK gilts lower after reports PM May is willing to increase her ‘divorce’ payment to the EU. GOCs lower, spds  ~0.5bps wider vs tsys. Can/US consolidating across the curve after recent gains, the CAD close to 1.28 resistance with NAFTA talks the main risk this week as the data calendar is fairly thin with only Sep retail sales (Thurs) in top tier.  We feel there is asymmetric risk to Can/US in the face of a potential failure in NAFTA talks.  Provi spreads opening 0.5bps wider , supply likely to thin out this week after a busy week on the issuance front last week – $1.3bln in provi & $2.5bln CMBs.

News headlines  

Merkel’s Attempt to Form a New German Government Collapses (Bloomberg) German Chancellor Angela Merkel’s bid to form a new government failed, raising the prospect of fresh elections in Europe’s largest economy and casting doubt on the future of its longest-serving leader.

Euro Shrugs Off German Impasse as Stocks Rebound: Markets Wrap (Bloomberg) The euro pared a decline and stocks gained as investors judged the failure of German Chancellor Angela Merkel’s coalition talks unlikely to harm the outlook for the region’s economy. Sterling strengthened after reports the U.K. may make concessions to smooth Brexit negotiations.

Republicans’ Sprint to a Tax Overhaul: Public Votes, Private Talks (Bloomberg) The Republican tax-overhaul effort is in for a marathon debate on the Senate floor at the end of this month, with dozens of doomed Democratic amendments. But the real action will be elsewhere, behind closed doors.

Trump Counts on Fed to Help Sustain Economic Bump From Tax Plan (Bloomberg)  The Trump administration is banking on the Federal Reserve not to squelch any bump in economic growth from the Republican tax plan. White House chief economist Kevin Hassett argues that the tax overhaul will boost productivity, allowing the U.S. economy to grow more rapidly without risking a damaging bout of higher inflation that would be an anathema to the Fed.

U.K. Preparing Enhanced Brexit Cash Offer Ahead of Summit (Bloomberg) The U.K. could be about to improve its financial offer to the European Union ahead of a crucial meeting of the bloc’s leaders in December. Members of Prime Minister Theresa May’s divided cabinet will consider Britain’s divorce from the EU at a meeting Monday afternoon of the Brexit sub-committee that could be key to unlocking the most controversial matter in the negotiations — money.

China’s Shadow Bank Clampdown Hits Stock Market (Bloomberg) Chinese stocks rallied in late trade as markets took a closer look at the nation’s new plans to rein in shadow banks and some traders speculated that state funds would act to stem excessive losses.

Nebraska to decide fate of controversial Keystone XL pipeline (Reuters) Nebraska regulators will announce their decision on Monday on whether to approve TransCanada Corp’s Keystone XL pipeline route through the state, the last big hurdle for the long-delayed project.

Canada, Mexico to question U.S. auto content demands at NAFTA talks (Reuters) Canada and Mexico will not make counterproposals to U.S. demands for tougher NAFTA automotive content rules but instead will offer rebuttals and pepper American negotiators with technical questions on Monday, people familiar with the talks said.

Overnight markets

Overview: US 10yr note futures are up 0.113% at 125-02, S&P 500 futures are down -0.01% at 2576, Crude oil futures are down -0.58% at $56.22, Gold futures are down -0.26% at $1293.1, DXY is up 0.1% at 93.754, CAD/USD is up 0.18% at 0.7819.

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 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