Commentaires

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

News headlines 

The Race for a Major Tax Overhaul Is On. Here’s One Big Obstacle (Bloomberg) The House narrowly adopted a budget resolution, but a lingering obstacle to overhauling the U.S. tax code re-emerged: whether or how to limit a federal tax break that benefits high-tax states including New York and New Jersey.

Amazon Tops Sales Estimates on Subscribers, Whole Foods (Bloomberg) Amazon.com Inc. showed investors it can run grocery stores, churn out gadgets, expand its cloud-computing business and invest in new markets, all while selling more products online and managing expenses. The company reported third-quarter sales and profit that topped analysts’ estimates. The results reassured investors that the company can integrate its biggest-ever acquisition — Whole Foods Market Inc. — without disrupting its dominating e-commerce performance. Shares rose as much as 8.5 percent in extended trading. The stock closed at $972.43 in New York and has gained 30 percent this year.

Where the Hurricane Impact May Show Up in U.S. GDP Report (Bloomberg)  It will probably take a lot more than hurricanes to blow the U.S. economy off its path of steady growth. That’s the expected takeaway from third-quarter gross domestic product figures due Friday. While Harvey and Irma inflicted extensive damage on parts of Texas and Florida, economists now reckon the storms’ drag was smaller than they’d anticipated. Their median estimate calls for a 2.6 percent annualized rate of growth following a 3.1 percent gain, which would be the best two-quarter performance since early 2015.

Stocks Advance as Euro Falls; Dollar Extends Gain: Markets Wrap (Bloomberg) Stocks in Europe advanced for a second day as the euro headed for its worst week since March. The dollar extended its rally after the U.S. House passed a resolution that brings tax cuts a step closer and speculation mounted a hawkish candidate may become the next Federal Reserve chair.

Total’s Profit Jumps as Big Oil Shows Rebound From Deep Slump (Bloomberg) Total SA posted the highest earnings from pumping oil and gas in more than two years, illustrating the improving fortunes of an industry that’s endured the deepest downturn in a generation.

Janet Yellen out of Fed chair race, one source tells Politico (Economic Times)  President Donald Trump’s search for the next chair of the U.S. Federal Reserve has come down to Fed Governor Jerome Powell and Stanford University economist John Taylor, Politico on Thursday cited one source as saying, while another counseled caution.

Saputo reaches deal to acquire Australian dairy firm for $1.29 billion (BNN) Montreal-based dairy giant Saputo Inc. announced Thursday it has reached a $1.29-billion agreement to acquire Australia’s Murray Goulburn Co-Operative Co. Limited.

Wall Street loves electric cars, America loves trucks (Reuters) Wall Street may love the shares of Silicon Valley electric carmaker Tesla Inc, but Americans love big, fuel-thirsty trucks like Ford Motor Co’s bestselling F-Series pickups and are paying ever higher prices to buy them.

Overnight markets 

Overview: US 10yr note futures are down -0.025% at 124-11, S&P 500 futures are up 0.23% at 2567.5, Crude oil futures are down -0.23% at $52.52, Gold futures are down -0.2% at $1267, DXY is up 0.41% at 94.996, CAD/USD is up 0.28% at 0.7762. 

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

US tsys mixed with longer maturities slightly higher, curve flatter, 10Y 2.424%, lagging the rally in bunds after the ECB unveiled its QE plan which met expectations for a nine-month extension and reduction in purchases to E30bln/mnth. According to a source at Politico, Janet Yellen is out of the running for Fed chair, the USD rising against the EUR on the news.  GOCs better bid in the long end, 0.5bps narrower vs tsys. The BOC’s decision to stay on the sidelines after two successive hikes was not a surprise, yet the downgrading of the inflation forecast contributed to the rally in GOCs, 2bps tighter vs tsys. The BOC auctions $3bln in reopened June 1 2028 bonds at noon with the roll 6.3/6.0. The roll has widened ~1bp since mid Sep after trending narrower after the 28s were first auctioned on July 27th, this is consistent with the widening in the 10Y roll over the past month.

News headlines 

ECB unveils plan to cut, but extend, its massive bond-buying program (CNBC)  The European Central Bank (ECB) decided Thursday to cut the level of bonds it purchases every month, but extend the length of time that its stimulus program runs. Its purchases will fall to 30 billion euros ($35 billion) from 60 billion euros, starting in January. The central bank said it will extend its monetary stimulus program until at last September of next year.

House Leaders Face State-and-Local Storm to Begin Tax Debate (Bloomberg) House leaders announced plans to press on with a budget vote Thursday that represents an attempt to stick to their ambitious goal of delivering tax-overhaul legislation by year’s end.

Trump Wants to Make Own Mark on Fed But Calls Yellen ‘Terrific’ (Bloomberg) President Donald Trump said he’s thinking about giving Janet Yellen another term as U.S. Federal Reserve chair as he balances the desire to put his stamp on the central bank with the risk of changing leadership amid a stock market rally.

Saudi Crown Prince Backs Extending OPEC Cuts Into 2018 (Bloomberg)  Saudi Arabian Crown Prince Mohammed bin Salman backed the extension of OPEC production cuts beyond March 2018, making it all but certain the cartel and its allies will roll over the curbs at a meeting next month.

Catalan Brinkmanship Enters Crunch Time as Spain Readies to Act (Bloomberg) Regional President Carles Puigdemont faces a make-or-break decision that could either ease tensions or see him unilaterally declare Catalonia a sovereign republic. It risks deepening the biggest constitutional crisis in western Europe’s fifth-largest country since an attempted coup in 1981.

Barclays and Deutsche Bank Fall Behind U.S. Peers Again in Trading (Bloomberg) Deutsche Bank AG and Barclays Plc, reported declines in trading revenue that were worse than analysts had expected and exceeded falls at U.S. rivals, a sign that Europe’s biggest securities firms are further losing their grip. Revenue from trading stocks and bonds at Frankfurt-based Deutsche Bank slid 30 percent to 1.5 billion euros ($1.8 billion), compared with the average decline of about 15 percent at the five biggest U.S. investment banks. London-based Barclays reported a fall of 31 percent to 977 million pounds, missing estimates from UBS Group AG and Jefferies Group LLC.

Chinese construction group to buy Canada’s Aecon (Reuters) Canadian construction company Aecon Group Inc (ARE.TO) said on Thursday it agreed to be bought by China’s CCC International Holding Ltd in a deal with an enterprise value of C$1.51 billion ($1.18 billion).

Restaurant Brands earns $91.4M in third quarter, boosts dividend (BNN) Restaurant Brands International Inc. (QSR.TO) says it earned US$91.4 million in its latest quarter as sales at its Burger King restaurants improved. The company, which is also the parent company of Tim Hortons and Popeyes Louisiana Kitchen, also boosted its quarterly dividend by a penny to 21 cents per share.

Twitter stock jumps as much as 11% as the social media company nears first profitable quarter (CNBC) Twitter stock jumped as much as 11 percent in premarket trading Thursday after the company beat expectations on revenue and gave higher-than-expected guidance for the fourth quarter.The company said in its guidance for next quarter that if it hit the high end of its adjusted EBITDA estimates of $220 million to $240 million, it could be GAAP profitable.

Canada’s Teck Resources third-quarter profit surges on higher coal, metal prices (Reuters) Canada’s Teck Resources Ltd, the world’s second-biggest exporter of steelmaking coal, said its third-quarter profit more than doubled from a year ago, lifted by higher coal and metal prices.

Overnight markets 

Overview: US 10yr note futures are up 0.088% at 124-18, S&P 500 futures are up 0.1% at 2561, Crude oil futures are up 0.04% at $52.2, Gold futures are down -0.21% at $1276.3, DXY is up 0.37% at 94.054, CAD/USD is up 0.1% at 0.7807. 

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