Commentaires

Market Update

US tsys higher, 10Y 2.36 (-1.3bps), rising with gilts after the BOE hiked rates to 0.50%, heavy volume in TY futures (>375k). Focus on Trump announcement of Powell as Fed chair as well as tax cut/reform bill later today. Tsys higher in Asia even as the Nikkei rose 0.5% on solid earnings from Honda & Sony, a WSJ article suggested US tax cuts would be gradual and phased in over 10 yrs. Gilts sharply higher after BOE decision, the accompanying statement left out language that additional hikes would be necessary. GOCs higher in line with tsys, Can/US 2-3bps wider out the curve on profit taking. 2Y auction at noon – $2.6bln in new Feb 1 2020 bonds with the WI roll 3.6/3.4 which seems cheap relative to the 2Y roll (Nov/Aug19) roll @ 2.7 and the Mar20/2Y roll 2.3/1.7.  Provis opening firmer to start, Ont 27s 63.5/63, Newf 10Y deal expected and well spoken for.

News headlines 

Trump Selects Powell for Fed Chairman, Replacing Yellen (Bloomberg) President Donald Trump plans to nominate Federal Reserve Governor Jerome Powell to the top job at the U.S. central bank, according to four people familiar with the decision. In Powell, he’ll select a former private-equity executive who favors continuing gradual interest-rate increases and sympathizes with White House calls to ease financial regulations. The president will announce his decision Thursday at 3 p.m. Washington time from the Rose Garden, the White House said in a statement. Powell declined to comment when approached by a reporter outside his Washington-area home.

Bank of England Rate Decision Tests Carney’s Credibility (Bloomberg) Since taking over as governor of the Bank of England four years ago, Mark Carney laid the groundwork for an interest-rate increase multiple times. All he delivered was a single cut after last year’s referendum to leave the European Union

What We Know About the GOP Tax Bill Ahead of Today’s Rollout (Bloomberg) House Republican leaders plan to unveil a tax bill Thursday that would cut the corporate tax rate to 20 percent and leave it there — abandoning an earlier plan to phase out the rate cut over time, said a person familiar with discussions on the bill.

Corporate Tax Cut to Be Phased Out After a Decade (Bloomberg) House tax writers are planning on phasing out the proposed corporate rate of 20 percent after a decade, according to a Republican lawmaker familiar with the negotiations. Cutting the corporate tax rate to 20 percent from 35 percent is a key provision of the tax legislation that Republican congressional leaders plan to unveil on Thursday. But there have been conflicting reports about when the rate cut would take effect — or how long it would last.

Dollar Drops as Powell Set for Fed Nod; Bonds Slip: Markets Wrap (Bloomberg) The dollar declined and Treasury yields steadied as investors digested news that President Donald Trump is poised to name Jerome Powell to lead the Federal Reserve. The euro rose after data showed euro-area manufacturing is expanding at one of the fastest rates this millennium.

Musk Says Production Is Still Hell as Gigafactory Delays Model 3 (Bloomberg) Tesla Inc. still hasn’t figured out how to overcome manufacturing challenges that threaten its viability, with battery factory-line glitches delaying production of its cheapest car. The electric-car maker won’t build 5,000 units per week of its Model 3 sedan until sometime in March, three months later than planned. “I have to tell you I was really depressed about three or four weeks ago,” Chief Executive Officer Elon Musk said on a call with analysts Wednesday after Tesla reported a record quarterly loss and cash burn.

Facebook Tops Sales Projections While Russia Ad Inquiry Unfolds (Bloomberg) Facebook Inc. has been under fire for Russian abuse of its platform leading up to the 2016 U.S. election. Now, the world’s largest social network said it will boost spending next year to confront the problem and fund new business initiatives.

Canada to admit 340,000 immigrants a year by 2020 (CTV) The federal government sought Wednesday to introduce more stability into Canada’s immigration system by introducing a plan that sets out a gradual rise in admissions over the next three years. By 2020, Canada will see an increase of 13 per cent in overall immigration numbers, with the vast majority coming under economic programs designed to address skills shortages and gaps in the labour market as the population ages and the birth rate declines.

Sharp rebound in Toronto home sales signals market may have hit bottom (Financial Post) Toronto home sales tumbled in October from a year earlier and prices were down 15.1 per cent from their April peak, but sales rose sharply from September, suggesting the housing market in Canada’s largest city may be steadying, data showed on Thursday.

Bombardier to deliver fewer C Series aircraft than expected in 2017 (CBC) Bombardier Inc. says it will likely deliver fewer C Series aircraft this year than originally expected due to engine delivery delays. The company says it now expects to deliver 20 to 22 C Series jets for 2017 compared with its earlier guidance for about 30.

Canada infrastructure bank on track to open in 2017: Minister (Reuters) Canada’s new infrastructure bank is on track to be up and running by the end of the year and will look to attract investment from major pension funds, the country’s infrastructure minister said on Wednesday.

Overnight markets

Overview: US 10yr note futures are up 0.075% at 125-00, S&P 500 futures are down -0.05% at 2573.5, Crude oil futures are down -0.07% at $54.26, Gold futures are down -0.09% at $1276.1, DXY is down -0.15% at 94.677, CAD/USD is down -0.14% at 0.7784

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 weaker, near overnight lows after stronger Oct ADP (235k vs 200k exp), 10Y 2.395% (+1.8bps) before ISM & FOMC later. European equities higher for a fifth day to the highest in more than two years, S&P futures up 9.5pts, crude extending rally above $55.00 the highest since April. Treasuries seeing a bid after  quarterly refunding left  coupion sizes unch with no mention of ultra longs – next week’s  slate of auctions 3, 10 and 30Y unch at $63bln , cpn sizes to increase next February to offset the imminent rolloff of Fed tsy holdings, estimated at ~250bln next yr. In Canada, GOCs are lower , in line with tsys, longs seeing decent month end buying yest afternoon with 10s30s 1bp narrowing back below 35bps. Robust activity in provincials with $1.4bln in month end 10Y supply from Ontario and Quebec easily absorbed, spreads ending 1-2bps tighterat new multi-year lows  led by longer maturities. This morning spds are in another 0.5ps.

News headlines 

Fed Chair Drama Steals Spotlight From FOMC: Decision Day Guide (Bloomberg) As investors eagerly await President Donald Trump’s Federal Reserve chair nomination, the central bank’s policy-setting committee will meet quietly in the background this week. If all goes as expected, they’ll announce on Wednesday that they’re holding interest rates unchanged.

New York City Terror Attack With Truck Kills 8; Suspect Held (Bloomberg) A suspected terrorist plowed a truck down a bicycle path in lower Manhattan blocks from the site of the World Trade Center, killing eight and seriously wounding several more before an officer shot and arrested him.

Trump Says He’s Ordering Tougher Vetting After Attack Kills Eight in New York (Bloomberg) President Donald Trump ordered the Department of Homeland Security to bolster the vetting of immigrants coming into the U.S. after an Uzbek man allegedly drove a truck down a bike path in New York, killing eight and injuring almost a dozen more.

GOP Braces for ‘All Hell’ to Break Loose When Tax Bill Finally Drops (Bloomberg) House tax writers pushed back the reveal of their highly guarded, long awaited tax bill by a day, a sign that disputes among Republican lawmakers are threatening their effort to pass comprehensive legislation by Thanksgiving.

House Tax Writers Plan to Keep Top Individual Rate at 39.6% (Bloomberg)  House Republican tax writers are planning to keep the top individual income tax rate at 39.6 percent, according to two people familiar with the negotiations. The top rate may apply to taxpayers with adjusted gross incomes of about $1 million and higher, said the people who asked not to be named because the discussions are private.

Stocks Gain as Metals Surge; Crude Extends Rally: Markets Wrap (Bloomberg) Stocks started the month on a positive note, with mining shares spurring gains in Europe as nickel led a surge in industrial-metal prices. Oil headed for an eight-month high after U.S. industry data showed inventories declined last week.

Oil in Longest Rally in 3 Months on Signs of U.S. Stockpile Drop (Bloomberg) Oil rose above $55 a barrel in New York in the longest winning streak in three months as U.S. industry data showed both crude and gasoline inventories declined last week. Futures advanced for a fifth day, having added 5.5 percent since Oct. 25, while in London Brent crude rose to a new two-year high. Crude stockpiles dropped by 5.09 million barrels, while gasoline supplies fell by 7.7 million last week, the American Petroleum Institute was said to report. A Bloomberg survey also forecast a decline in oil inventories — the fifth in six weeks — before government data Wednesday.

Watchdog raids offices of Canadian grocery retailers in bread price-fixing probe (Financial Post) The Competition Bureau says it has raided the offices of certain companies in a criminal investigation tied to alleged price fixing following statements released by some of the country’s largest grocery chains.

Foreign buyers inch back into Vancouver housing market (Reuters) Foreign buyers have started inching back into the Vancouver housing market, more than a year after the province of British Columbia imposed a foreign buyer tax on real estate deals, according to government data released on Tuesday.

Overnight markets

Overview: US 10yr note futures are down -0.113% at 124-26, S&P 500 futures are up 0.38% at 2582.5, Crude oil futures are up 1.14% at $55, Gold futures are up 0.41% at $1275.7, DXY is up 0.15% at 94.697, CAD/USD is up 0.05% at 0.7754.

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 lower, flatter, 10Y 2.374%, on above avg volume in TY futures (370k). Prices fairly flat in Asia but faded in Europe with EGBs, gilts lower despite weaker Eurozone inflation data, thou flows light with Germany out for one day holiday. GOCs higher, spds 1-2bps narrower vs tsys after August GDP came fell 0.1% (+0.1% exp) – the first decline since Oct ‘16, while Producer Prices & Raw Material prices also came in below expectations. Provis starting former, Ontarios trading up in tens & longs. 

News headlines 

House Panel’s Talk of Phased-In Tax Cut Counters Trump’s Wishes (Bloomberg) House tax writers are discussing a gradual phase-in for President Donald Trump and Republican leaders’ proposed corporate tax-rate cut — on a schedule that would put the rate at 20 percent in 2022, according to a member of the chamber’s tax-writing committee and a person familiar with the discussions.

Trump Plans to Announce Fed Chair Nominee on Thursday (Bloomberg) The president is leaning toward picking Federal Reserve Governor Jerome Powell to lead the U.S. central bank, according to three people familiar with the the matter. Other candidates on his shortlist include current Fed Chair Janet Yellen, Stanford University economist John Taylor, former Fed governor Kevin Warsh and National Economic Council Director Gary Cohn.

Mueller’s Opening Moves Show Focus on Trump-Russia Collusion (Bloomberg) The first charges unsealed in Special Counsel Robert Mueller’s probe of the presidential election suggest a sweeping investigation, but one focus is clear: He’s building a case that Donald Trump’s campaign was in close touch with Russian officials who aimed to defeat Hillary Clinton.

Catalonia’s Independence Movement Unravels as Rajoy Prevails (Bloomberg) Catalan leader Carles Puigdemont kept his followers guessing as to the next step in his pursuit of an independent republic, after fleeing to Belgium where he’s expected to emerge on Tuesday. As Spain consolidated its grip on Catalonia’s once semi-autonomous government, Catalan separatists were left leaderless after Puigdemont fled without even telling senior members of his party of his plans, according to a party official. Facing the threat of up to 30 years in a Spanish jail, he is expected to seek asylum in Belgium along with key members of the ousted administration, the official said

BNP Paribas Posts Lower Trading Revenue on Fixed-Income Drop (Bloomberg) BNP Paribas SA couldn’t avoid the trading slump that dragged down results at its biggest U.S. and European competitors in the third quarter, as low interest rates and tepid demand from clients curbed activity.

BOJ Keeps Stimulus Unchanged as It Trims Inflation Outlook (Bloomberg) The Bank of Japan left its massive monetary stimulus program unchanged even as it trimmed its inflation forecasts, signaling further divergence ahead from its global peers. Governor Haruhiko Kuroda and the board voted on Tuesday to maintain the central bank’s yield curve control program and asset purchases, a result predicted by all 43 economists surveyed by Bloomberg. The vote was 8-1, with new board member Goushi Kataoka dissenting.

U.S. Stocks Drop at Start of Big Week for Earnings: Markets Wrap (Bloomberg) U.S. stock indexes saw their first declines in more than a week as investors prepared for a big week of earnings reports and monitored the progress of tax legislation. “Earnings will be center stage, and then tax reform,” Ernie Cecilia, the chief investment officer at Bryn Mawr Trust Co. in Pennsylvania, said by phone. “Those are the two, whatever order you want to put them in.”

Euro-Area Inflation Unexpectedly Slows as Economy Powers On (Bloomberg) Euro-area inflation unexpectedly slowed in October despite the bloc’s strengthening economy, underlining why the European Central Bank last week kept its exit from monetary stimulus wide open.

WestJet Q3 profit up from year ago as it carries more passengers (BNN) WestJet Airlines Ltd. saw its third-quarter profit grow by about 20 per cent compared with a year ago as it increased capacity and traffic.

U.S. business group worries Trump unprepared for commercial talks with China (Reuters) A top U.S. business lobby in China said on Tuesday it was concerned U.S. President Donald Trump’s administration was not making sufficient preparation for talks on imbalances in the bilateral economic relationship ahead of his November visit.

Canada foreign minister says NAFTA talks feature ‘troubling proposals’ (Reuters) Negotiations over a deal to update the North American Free Trade Agreement (NAFTA) have included some “troubling proposals” from the United States, Canada’s Foreign Minister Chrystia Freeland said on Monday.

Up to 200 killed at North Korea’s nuclear test site: report (USA Today) Up to 200 workers could have been killed after a tunnel collapsed at North Korea’s nuclear test site, according to a media report. Japanese broadcaster TV Asahi said around 100 people were trapped when the unfinished tunnel caved in at the Punggye-ri site, which lies south of the Mantapsan mountain, 50 miles from the border with China. The Telegraph reported that the incident occurred on Oct. 10, citing South Korean news agency Yonhap.

Overnight markets

Overview: US 10yr note futures are down -0.037% at 124-31, S&P 500 futures are up 0.18% at 2572.75, Crude oil futures are up 0.07% at $54.19, Gold futures are down -0.21% at $1275, DXY is up 0% at 94.563, CAD/USD is up 0.49% at 0.7754.

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