Commentaires

Market Update

Tsys open slightly weaker pre Oct payrolls, Us 10Y 2.35%, low volume in TY futures (22k), narrow overnite range. Very little movement in EGBs as well, UK gilts weighed by better than expected UK service PMI for Oct (55.6 vs 53.3), also profit taking after yest BOE’s ‘dovish rate hike’.  GOCs lower in line with tsys, 10Y 1.962% before Cda empl data. Two year auction went well, Feb20/2Y roll closing 0.2bps tighter @ 3.2/3.0. Provis open unch after ending yest 0.5bps wider, Ont 48/27 curve unch 9.8/9.6.

News headlines 

Storm Surge Set to Boost U.S. Payrolls, Reversing September’s Loss (Bloomberg) Employers added 312,000 workers in October, according to the Bloomberg survey median, after two hurricanes helped reduce payrolls by 33,000 a month earlier, the first decline since 2010. While the projected gain would be the largest in two years as people resumed work, economists say the effects on the job market from hurricanes Harvey and Irma will linger through year-end.

Powell Lauds Economy’s Progress, Vows Vigilance on Market Risks (Bloomberg) Jerome Powell, President Donald Trump’s pick to lead the Federal Reserve, talked up the strength of the U.S. economy as he pledged to guard against financial market risks.

Here Are the Big Tax Changes House Republicans Are Proposing (Bloomberg) House Republicans announced a tax proposal Thursday that would cut the U.S. corporate tax rate to 20 percent, reduce most of the individual tax brackets, and cap the mortgage-interest deduction on new purchases of homes.

Homebuilders Slide After GOP Tax Plan Caps Mortgage-Interest Break (Bloomberg) The U.S. real estate industry reeled as the House Republican tax bill proposed capping the mortgage-interest deduction, a long-cherished incentive many Americans have had to buy a house.

A Few Tremors, No Major Quakes in Equities After Tax Proposals (Bloomberg) It sent a quick shock through a couple odd corners of the market, but in the end the House’s tax proposal blended enough risk and reward for equity investors to leave them unfazed. Concern among bulls that they may have been mildly misled about the benefits to business was mixed with relief about retirement-account limits.

French Government Eases Grip on Renault With $1.4 Billion Sale (Bloomberg) France gave up some of its control over Renault SA with the sale of a 4.7 percent stake in the carmaker that was acquired in a contentious power struggle two years ago. The government sold 14 million Renault shares for 1.21 billion euros ($1.4 billion), reducing its stake back to its historical level of 15 percent, the state’s investment agency APE said. Renault acquired 1.4 million shares as part of the transaction and plans to offer them to employees, the Boulogne-Billancourt-based company said in a statement Friday.

Venezuela Will Seek to Restructure Its Debt (Bloomberg)  President Nicolas Maduro said Venezuela will seek to restructure its global debt after the state oil company makes one more payment, blaming U.S. sanctions for making it impossible to find new financing.

U.S. cuts softwood lumber duties on all Canadian producers – except for 2 companies (Global News) Canadian softwood lumber producers will be hit only slightly less forcefully as the U.S. government reduced export duties for most Canadian producers after ongoing political talks failed to reach a deal.

Overnight markets

Overview: US 10yr note futures are down -0.012% at 125-04, S&P 500 futures are up 0.07% at 2578.5, Crude oil futures are up 0.29% at $54.7, Gold futures are down -0.25% at $1274.9, DXY is up 0.09% at 94.77, CAD/USD is up 0.13% at 0.7797. 

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 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