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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

Market Update

Tsys little changed , 10Y 2.40%, on heavy volume in TY futures (>400k). Busy week ahead with FOMC decision Wednesday and Oct payrolls Friday. The next Fed chair is also expected to have announced this week. Payrolls are forecast to have risen 300k this month, largely a rebound from hurricane related weakness in Sep. GOCs higher in line with tsys, 10Y 1.97% at seven week low (Sep8th), with empty data calendar today but Aug GDP tomorrow (exp 0.1%/3.5% y/y). Last week saw Can/US spreads move to new three month narrows across the curve, while the CAD fell to the lowest since early July. With the output gap essentially closed, the BOC focused on downside risks to growth such as Nafta, elevated household debt. While near term odds of a rate hike have been pared down substantially over the past couple of weeks , mkts continue to anticipate a rate hike by July of next year. Provinicial spreads opening 0.5-1bp wider from Fri,  more 10Y supply expected (Ont, QC, BC…)

News headlines 

Trump Leans Toward Powell for Fed With Announcement Next Week (Bloomberg) President Donald Trump stoked the sense of drama surrounding his choice for the next Fed chairman Friday as he tweeted out a video teasing an announcement he said would come next week.

White House Braces for First Actions in Mueller’s Russia Probe (Bloomberg) The first public glimpse into Special Counsel Robert Mueller’s probe of alleged collusion by Donald Trump’s campaign with Russian meddling in the presidential election may come Monday, with the disclosure of possible charges against one or more people.

HSBC’s Asia Push Bearing Fruit for Gulliver Before Hand-Off (Bloomberg) HSBC Holdings Plc’s $100 billion bet on Asia is bearing fruit, driving its third consecutive increase in quarterly revenue just months before Chief Executive Officer Stuart Gulliver hands the reins to John Flint.

Catalonia’s Parallel World Runs Into Harsh Spanish Reality (Bloomberg) As children return to school and parents to their jobs, it could be like any other week in the Spanish region of Catalonia. But for those who support President Carles Puigdemont and his separatists, it’s the first working day of Europe’s newest republic.

U.S. Stocks Bounce Back on Earnings, Budget Vote: Markets Wrap (Bloomberg) Most U.S. stocks climbed amid a raft of robust earnings reports, speculation about the Federal Reserve’s next leader and congressional action on taxes. The S&P 500 Index rebounded from yesterday’s drop as results from Twitter Inc. to Ford Motor Co. topped estimates. Biotechnology shares buckled, pulling the Nasdaq 100 Stock Index lower, after Celgene Corp.’s cut to its forecast sent drugmakers tumbling. The dollar rose to the highest in 15 weeks, while oil hovered above $52 a barrel.

Bond Traders Confront Fears in Week That May Change Everything (Bloomberg) The next five trading days will bring a torrent of market-moving information: President Donald Trump is poised to finally announce his nominee to lead the Federal Reserve; U.S. central bankers have an interest-rate decision to make; the first possible charges from special counsel Robert Mueller’s probe into Russian meddling in the 2016 presidential election; a House committee is set to release a tax bill; and the Treasury will unveil plans to issue more debt to make up for lost funding from the Fed. Oh, and investors will also get the latest reading on the nation’s job market and the central bank’s preferred inflation gauge.

U.S. Economy Notches Solid 3% Growth, Despite Hurricanes (Wall Street Journal) The U.S. economy posted its best six-month stretch of growth in three years despite two hurricanes, a sign that it might be breaking out of its long-running slow-growth trend, with the help of soaring stock prices and rising business and consumer confidence.

Morneau Shepell​ sees no impact from pension legislation (Reuters) Morneau Shepell Inc (MSI.TO), the human resources management company at the heart of conflict-of-interest allegations against Canadian Finance Minister Bill Morneau, said on Friday it would not benefit from pension or tax legislation proposed by the Liberal government.

U.S. regulator wants to loosen leash on Wells Fargo: sources (Reuters) A leading U.S. regulator wants to make it easier for Wells Fargo to pay employees when they leave, loosening a restriction in place since a phony accounts scandal hit the bank last year, according to people familiar with the matter.

Overnight markets 

Overview: US 10yr note futures are up 0.163% at 124-26, S&P 500 futures are down -0.19% at 2573.5, Crude oil futures are up 0.04% at $53.92, Gold futures are down -0.01% at $1271.7, DXY is down -0.27% at 94.659, CAD/USD is up 0.23% at 0.779.

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