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Market Update

Tsys trading lower yields 0.5 – 1.5bps higher with the 10Y 2.33 (+1.2bps), prices reversing early gains pressured by losses in European govt bonds. Euro equities down ~1.0%, the largest drop since August 29th , crude unch 56.90. Sharp selloff in German bunds, peripheral spds 1-2bps wider. The European commission’s new forecast sees  Eurozone GDP at 2.2% this yr vs 1.7% in the Spring, while ECB member Coeure said the Euro area recovery is the strongest ‘in almost twenty years’ . The US Treasury auctions $15bln in new 30Y bonds at 1:00pm, 30Y yields ~2.80% vs 2.87% at the last auction Oct12th which saw foreign participation rise from 8.3% to 12.2% the highest since March. GOCs trading lower, slightly underperforming tsys in the short end, provis unch after closing 1-2bps wider yest despite strong demand for BC 30y yest .

News headlines 

Trump Hits China for Unfair Trade But Blames Past U.S. Leaders (Bloomberg) President Donald Trump said China is taking advantage of American workers and American companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow.

Saudi Billionaires Look to Move Funds to Escape Asset Freeze (Bloomberg) Wealthy Saudis are moving assets out of the region to avoid the risk of getting caught up in what authorities call a crackdown on corruption, according to six people with knowledge of the matter.

U.K. Cabinet Minister Resigns Over Secret Israeli Meetings (Bloomberg) Priti Patel resigned as U.K. international development secretary over talks with the Israeli government behind Prime Minister Theresa May’s back after more revelations of undisclosed visits came to light.

Brexit Talks Resume With EU Wary of U.K. Political Risk (Bloomberg) Brexit talks resumed Thursday with no indication that a breakthrough is in reach: the Europeans are taking a cautious approach even as both sides hope for an agreement by year-end.

Volatility Spikes, Exactly a Year After Trump Market Turmoil (Bloomberg) That’s what it seemed like late in Asian trading Thursday, when the Nikkei 225 Stock Average suddenly started to swoon, staging its biggest reversal (points-wise) since exactly a year ago. That’s when Donald Trump’s shock U.S. election victory rocked markets around the world — before they bounced back the next day

Dollar Declines as Stocks Drop; Treasuries Steady: Markets Wrap (Bloomberg) The dollar declined and Treasury yields fluctuated as President Donald Trump challenged China over what he called unfair trade practices. European stocks fell after a volatile session in Asian markets, while the euro and bund yields rose after the European Commission lifted its growth forecasts.

House Panel Set to Vote as Senate Enters Fray: Tax Debate Update (Bloomberg) It’s crunch time for Republican tax-writers on Thursday. The House Ways and Means Committee enters its final day of hammering out its tax-cut legislation, while a Senate panel plans to reveal its own version.

Airbus open to further Bombardier cooperation as it eyes Canadian fighter jet deal (Financial Post) Airbus SE could cooperate further with Bombardier Inc beyond a recent venture in the CSeries jets, if its fighter jet is permitted to compete in a Canadian military procurement, and its partners agree, an executive said on Wednesday.

Stock futures lower with earnings, housing data in focus (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Thursday as investors assessed corporate earnings and awaited monthly housing data.

Overnight markets

Overview: US 10yr note futures are down -0.075% at 125-05, S&P 500 futures are down -0.55% at 2576.75, Crude oil futures are up 0.04% at $56.83, Gold futures are up 0.26% at $1287, DXY is down -0.24% at 94.634, CAD/USD is down -0.15% at 0.7869.

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 higher, flatter with the 10Y 2.313%, TY futures in a narrow overnight range on moderate volume (322k), underperforming core EGBs with some pre auction selling into $23bln 10Y auction at 1:00. Core Euro bonds higher led by gilts, curve 3bps flatter, large 7.5k block by in 10Y gilt futures with the contract at new high since Sep 14^th. 10Y bund higher for a fifth day, 10Y 0.313% . GOCs higher in line with tsys led by long end – the BOC auctions $3.7bln in 5Y bonds at 12:00pm, reopened March 2023s with the M23/S22 roll 5.5/5.3 compared to the 5Y benchmark roll @ 3.9/3.8 – both rolls fairly range bound since the first March 23 auction Oct 4^th , while the 5/10 curve is 6bps flatter.

News headlines 

Trump Lands in China Seeking Progress on Trade, North Korea (Bloomberg) President Donald Trump toured parts of Beijing on Wednesday after arriving for a high-stakes state visit where he’ll look for wins from Xi Jinping on everything from the U.S.’s massive trade deficit to reining in North Korea.

Democrats, Eyeing Midterms, Score Wins in Key Governor Races (Bloomberg) The only two governors’ races in the U.S. this year ended in victory for Democrats, as voters turned away Republicans aligned with President Donald Trump and telegraphed a fight for his party’s hold on Congress in 2018 midterm elections.

May on Brink of Losing Second Top Minister in One Week (Bloomberg) Prime Minister Theresa May ordered her international development secretary to abandon a visit to Africa and return home immediately, suggesting she’s on the point of firing a member of her cabinet as the U.K. government faces fresh turmoil in the midst of Brext talks.

Gulf Stocks Lose $6.8 Billion in 72 Hours Amid Saudi Purge (Bloomberg) Saudi Arabia’s anti-corruption purge and deepening feud with Iran have spurred a selloff across Gulf stock markets to the tune of almost $7 billion, a sign of the volatility to come as governments in the region push ahead with reforms.

Stocks Slip on Banking Earnings; Dollar Declines: Markets Wrap (Bloomberg) European equities fell, weighed down by financial shares as third-quarter earnings season continued. The dollar weakened and Treasury yields edged lower amid concern about the progress of U.S. tax reforms and as President Donald Trump arrived in China on a state visit.

Slow Down, Bulls: Four Signs This Oil Rally May Not Have Legs (Bloomberg) The rally that pushed crude to a two-year high is showing signs of losing strength, and we may soon see a reversal in prices. Here’s what to look out for in the oil market in months to come.

Encana’s profit slips 7 percent as production falls (Reuters) Canadian oil and gas producer Encana Corp’s profit fell 7.3 percent in the third quarter, hurt by lower oil and gas production. The Calgary-based company said on Wednesday its net profit slipped to $294 million or 30 cents per share in the quarter ended Sept. 30, from $317 million or 37 cents per share, a year earlier.

Overnight markets

Overview: US 10yr note futures are down -0.025% at 125-13, S&P 500 futures are down -0.07% at 2585, Crude oil futures are down -0.26% at $57.05, Gold futures are up 0.48% at $1281.9, DXY is down -0.07% at 94.851, CAD/USD is down -0.36% at 0.7854.

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 slightly weaker, 10Y yield 2.325% (+1bp), curve flatter led by longs after block buy in ultra longs (ULZ) at 167-04. Equity futures steady (S&P -0.75), crude higher for a 4th day 57.40 amid widening of Saudi corruption crackdown. Core Euro bonds mixed – gilt yields 2bps lower, recovering earlier losses , led by  the long end on solid demand for new 2048 gilt linker syndication amid upcoming m/e large index extension (1Y in linkers). GOCs trading higher, outperforming tsys by 0.5-1bps, 10Y approaching 1.90% (1.91 – 1.5bps). Provincials closing better bid again yest on no supply

News headlines 

Why the Next Four Days Will Be Crucial for the GOP Tax Bill (Bloomberg) The House tax-writing committee begins debate Monday on the GOP’s proposed overhaul, kicking off four frantic days for lobbyists and lawmakers to revise a bill that represents President Donald Trump’s final hope for a signature legislative achievement this year.

Trump Softens Tone on North Korea, Urges Deal on Nuclear Weapons (Bloomberg) President Donald Trump toned down his harsh rhetoric toward North Korea during a visit to Seoul, telling reporters the Pyongyang regime should “come to the table” to make a deal and refusing to rule out direct talks.

Saudi Corruption Purge Snares $33 Billion of Net Worth (Bloomberg) Crown Prince Mohammed bin Salman’s crackdown on some of Saudi Arabia’s richest and most powerful men has put $33 billion of personal wealth at risk.

Nikkei 225 Stock Average Rises to Highest Close Since 1992 (Bloomberg)  Japanese stocks rallied, with the Nikkei 225 Stock Average reaching its highest close since January 1992, bolstered by strong corporate earnings and the yen’s weakness against the dollar.

Stocks Rise as Trump Talks Asia Trade; Bonds Gain: Markets Wrap (Bloomberg) U.S. stocks climbed and bonds advanced, while the dollar slipped as President Donald Trump tried to tackle trade on his Asia tour. A crackdown on corruption in Saudi Arabia sent oil soaring to its highest price in more than two years.

With Two Months to Go, U.S. Faces ‘Mad Dash’ to Adjust to MiFID (Bloomberg) For thousands of brokers, traders and money managers based in the U.S., time is running out. A shock wave is about to emanate from Brussels, the capital of the 28-nation European Union. That may as well be the dark side of the moon for some toiling away at financial firms in the U.S. A sweeping set of financial regulations dubbed MiFID II will take hold on Jan. 3, affecting everything from investment research to the booking of transactions. Most have heard of it, but they haven’t all fully addressed what will likely become a seismic industry shift.

Valeant beats profit estimate on Bausch and Lomb strength (Reuters) Canada’s Valeant Pharmaceuticals International Inc (VRX.N) (VRX.TO) reported a better-than-expected quarterly profit due to strength in its Bausch and Lomb eye-care business, sending its shares up 11.7 percent in premarket trading.

Stephen Bronfman denies link to offshore trust, but documents show it helped expand family business (CBC) Liberal fundraiser Stephen Bronfman, under fire for his ties to an offshore trust in the Cayman Islands exposed in the Paradise Papers, insisted Monday that he “has never funded nor used offshore trusts.”

Overnight markets

Overview: US 10yr note futures are down -0.037% at 125-10, S&P 500 futures are down -0.02% at 2588.25, Crude oil futures are down -0.1% at $57.29, Gold futures are down -0.31% at $1277.6, DXY is up 0.34% at 95.08, CAD/USD is up 0.46% at 0.7835

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