Comments

Market Update

Tsys down sharply in early NA trade on heavy volume, falling with bunds on stronger Euro PMIs & earnings (GM, MCD), US 10Y above 2.40% (2.41%, +4bps) for the first time since May. Bunds (10Y 0.477% +5bps) also heavy ahead of Thursday’s ECB meeting and tapering decision where bond purchases are widely expected to be cut to 30bln/mnth with a nine month extension. GOCs opening lower in line with tsys, GOC curve ~2bps steeper 2s10s, 10Y 2.07%. BOC decision tommorrow likely to keep prices farely range bound with risk to short end unperrformance given that the pendulum has swung back to barely 15 chance of a hike from 50% a  month ago, meanwhile the BOC’s core measures of inflation have been moving higher along with wages (AHE 2.2% in Sep). In corps, Toromont Industries (BBB) in the mkt with a 10Y @ 180 (+/- 5). Provis opening 0.5-1 bp tighter led by longs, Ont 48s 74.5 new low, Ont 48/27 curve continuing to compress 8bps from 12bps at the start of the month. 

News headlines 

House Conservatives Say Tax Bill Draft Is Coming Within Days (Bloomberg) House and Senate leaders laid out an ambitious schedule for drafting and releasing tax legislation over the next few weeks — a set of deadlines that must be met to try to achieve President Donald Trump’s goal of delivering major tax-rate cuts by year’s end.

Trump Says He’s ‘Very, Very Close’ to Naming Fed Chair Nominee (Bloomberg) President Donald Trump told reporters Monday he is “very, very close” to announcing his nominee for chairman of the Federal Reserve. Trump said in an interview with Fox Business Network aired Sunday and Monday he’s considering Stanford University economist John Taylor and Federal Reserve Governor Jerome Powell for the top job at the central bank, and indicated Fed Chair Janet Yellen remains in the running for renomination to a second four-year term.

Euro-Area Companies Expand Workforce as Order Growth Picks Up (Bloomberg) The euro-area economy maintained its strong momentum at the start of the final quarter of this year, with rising workloads encouraging companies to take on new staff at the sharpest pace in more than a decade.

For Markets, It’s the ECB’s QE Exit That May Matter Most (Bloomberg)  When it comes to the market impact of central banks scaling down their balance sheets, it’s the European Central Bank that may matter more than the Federal Reserve and other peers.

Ex-HSBC Currency Trader Convicted of Fraud for Front-Running (Bloomberg) Former HSBC Holdings Plc currency trader Mark Johnson was found guilty of fraud for front-running a $3.5 billion client order, a victory for U.S. prosecutors as they seek to root out misconduct in global financial markets.

Bonds Slide, Euro Gains Before ECB; Gold Retreats: Markets Wrap (Bloomberg) A lack of conviction was on display in many areas of global markets on Tuesday, with investors eyeing a slew of catalysts stretching from the impending ECB meeting and the crisis in Catalonia to the odds of U.S. tax reform and the next Fed chair. Bonds stood out amid the drift, retreating as the dollar steadied and the euro advanced

China’s Xi Elevated in Party Constitution, Joining Mao, Deng (Bloomberg) China’s ruling Communist Party approved a revised charter that enshrined President Xi Jinping’s name under its guiding principles, elevating him to a status that eluded his two immediate predecessors.

Euro zone business remained strong as prices rise sharply: PMI (Reuters) Private sector growth across the euro zone slowed more sharply than predicted this month, a survey showed on Tuesday, but activity remained strong even though firms increased prices at the steepest rate in over six years.

Overnight markets 

Overview: US 10yr note futures are down -0.188% at 124-22, S&P 500 futures are up 0.18% at 2568, Crude oil futures are up 0.56% at $52.19, Gold futures are down -0.23% at $1277.9, DXY is down -0.02% at 93.913, CAD/USD is up 0.05% at 0.7903. 

US Economic Data

Canadian Economic Data

There is no Canadian Economic Data 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

Risk on trade in mkts has tsys on the backfoot, more than reversing yesterday’s rally with the 10Y 2.355 (+3.5bps) after the US senate passed the budget vote paving the way for tax reform. S&P futures +4.75, crude lower as US inventories rose and news Iraq is working to restore oil flows from the Kirkuk region. GOCs outperforming tsys by 3-5 bps after both  August retail sales and Sep CPI disappointed with retail sales volumes  falling the most since March 2016. CPI rose to 1.6% due to higher gasoline prices which was expected. ex-gasoline CPI rose 1.1%

News headlines 

Trump Advisers Lean Toward Taylor or Powell for Fed (Bloomberg) President Donald Trump’s closest advisers are steering him toward choosing either Stanford economist John Taylor or Federal Reserve Board Governor Jerome Powell to be the next Fed chief, according to several people familiar with the process.

U.S. Senate Adopts Budget, Giving Momentum to Trump’s Tax-Cut Plans (Bloomberg) The Senate adopted a fiscal 2018 budget resolution Thursday that House GOP leaders agreed to accept, a show of unity aimed at speeding consideration of President Donald Trump’s plan to enact tax cuts.

Abe’s Coalition May Lose Two-Thirds Majority, Poll Shows (Bloomberg)  Japanese Prime Minister Shinzo Abe’s ruling coalition is projected to lose its two-thirds majority in Sunday’s general election, a Nikkei poll showed, potentially slowing the premier’s push to revise the nation’s pacifist constitution.

Shanghai Stocks Soar on City’s Free-Trade Port Plan (Bloomberg) Traders are snapping up stocks with Shanghai in their name after the city’s Communist Party chief confirmed plans to set up a free trade port that would aim to ease restrictions for incoming cargo.

Dollar, Stocks Get Lift From Tax Move; Bonds Fall: Markets Wrap (Bloomberg)  The dollar climbed and Treasuries fell after the latest developments in Washington buoyed optimism about tax reform and odds rose that an insider may become the next Fed chief. European stocks edged higher on the back of rising metal prices and positive corporate earnings.

Merkel Settles the Brexit Game: Ball in Both EU and U.K. Courts (Bloomberg)  German Chancellor Angela Merkel — preoccupied with the aftermath of her own election, and the need to form a coalition — ignored the back and forth. But at a key summit in Brussels she took on the role of chair umpire.

Catalan Banks Say Business Normal After Calls to Pull Cash (Bloomberg) CaixaBank SA and Banco Sabadell SA said business was normal after Catalan separatists called on supporters to make cash withdrawals, singling out lenders that have moved their legal domiciles out of the region.

Canada finance minister says will adopt blind trust, divest assets (Reuters) Canada’s Finance Minister Bill Morneau said on Thursday he will place his assets in a blind trust and divest all his stock in a publicly traded family business, amid opposition allegations that these holdings put him in a conflict of interest.

UK business minister travels to Canada for talks on Bombardier deal (Reuters)  British Business Secretary Greg Clark will hold talks in Canada on Friday to discuss Airbus SE’s plans to buy a majority stake in Bombardier’s C-Series jetliner program aimed at helping it avoid high U.S. import tariffs.

Overnight markets 

Overview: US 10yr note futures are down -0.262% at 124-30, S&P 500 futures are up 0.2% at 2565.5, Crude oil futures are down -0.55% at $51.01, Gold futures are down -0.41% at $1284.7, DXY is up 0.14% at 93.399, CAD/USD is up 0.57% at 0.7964. 

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

Risk on trade in mkts has tsys on the backfoot, more than reversing yesterday’s rally with the 10Y 2.355 (+3.5bps) after the US senate passed the budget vote paving the way for tax reform. S&P futures +4.75, crude lower as US inventories rose and news Iraq is working to restore oil flows from the Kirkuk region. GOCs outperforming tsys by 3-5 bps after both  August retail sales and Sep CPI disappointed with retail sales volumes  falling the most since March 2016. CPI rose to 1.6% due to higher gasoline prices which was expected. ex-gasoline CPI rose 1.1%

News headlines 

Trump Advisers Lean Toward Taylor or Powell for Fed (Bloomberg) President Donald Trump’s closest advisers are steering him toward choosing either Stanford economist John Taylor or Federal Reserve Board Governor Jerome Powell to be the next Fed chief, according to several people familiar with the process.

U.S. Senate Adopts Budget, Giving Momentum to Trump’s Tax-Cut Plans (Bloomberg) The Senate adopted a fiscal 2018 budget resolution Thursday that House GOP leaders agreed to accept, a show of unity aimed at speeding consideration of President Donald Trump’s plan to enact tax cuts.

Abe’s Coalition May Lose Two-Thirds Majority, Poll Shows (Bloomberg)  Japanese Prime Minister Shinzo Abe’s ruling coalition is projected to lose its two-thirds majority in Sunday’s general election, a Nikkei poll showed, potentially slowing the premier’s push to revise the nation’s pacifist constitution.

Shanghai Stocks Soar on City’s Free-Trade Port Plan (Bloomberg) Traders are snapping up stocks with Shanghai in their name after the city’s Communist Party chief confirmed plans to set up a free trade port that would aim to ease restrictions for incoming cargo.

Dollar, Stocks Get Lift From Tax Move; Bonds Fall: Markets Wrap (Bloomberg)  The dollar climbed and Treasuries fell after the latest developments in Washington buoyed optimism about tax reform and odds rose that an insider may become the next Fed chief. European stocks edged higher on the back of rising metal prices and positive corporate earnings.

Merkel Settles the Brexit Game: Ball in Both EU and U.K. Courts (Bloomberg)  German Chancellor Angela Merkel — preoccupied with the aftermath of her own election, and the need to form a coalition — ignored the back and forth. But at a key summit in Brussels she took on the role of chair umpire.

Catalan Banks Say Business Normal After Calls to Pull Cash (Bloomberg) CaixaBank SA and Banco Sabadell SA said business was normal after Catalan separatists called on supporters to make cash withdrawals, singling out lenders that have moved their legal domiciles out of the region.

Canada finance minister says will adopt blind trust, divest assets (Reuters) Canada’s Finance Minister Bill Morneau said on Thursday he will place his assets in a blind trust and divest all his stock in a publicly traded family business, amid opposition allegations that these holdings put him in a conflict of interest.

UK business minister travels to Canada for talks on Bombardier deal (Reuters)  British Business Secretary Greg Clark will hold talks in Canada on Friday to discuss Airbus SE’s plans to buy a majority stake in Bombardier’s C-Series jetliner program aimed at helping it avoid high U.S. import tariffs.

Overnight markets 

Overview: US 10yr note futures are down -0.262% at 124-30, S&P 500 futures are up 0.2% at 2565.5, Crude oil futures are down -0.55% at $51.01, Gold futures are down -0.41% at $1284.7, DXY is up 0.14% at 93.399, CAD/USD is up 0.57% at 0.7964. 

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