Commentaires

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

Market Update

US tsy yields another 2.5-4bps higher after solid US durable goods orders, US 10Y 2.47% (+3bps), heavy volume in TY futures (520k), pressured by weaker EGBs, stronger US Sep Durable Goods new highs in USDJPY, equities weaker (S&P fut -3.5). Core Euro bonds weaker led by UK gilts, 10Y gilt above 1.38% resis, 1.40% six month high following stronger UK GDP. GOCs lower in line with tsys, curve 1.5bps steeper before BOC decision and MPR at 10:00. BOC widely expected to leave rates unch, so attention will focus on updated forecasts for growth & inflation, as well as the output gap (0.5% in last update, 0.75% last fall), which at this point is close to zero based on stronger growth in the second qtr.

News headlines 

U.K. Growth Surprise Clears Path for Bank of England Rate Rise (Bloomberg) The U.K. economy’s surprise acceleration has paved the way for the Bank of England to raise interest rates for the first time in a decade next week. The pound rose and investors increased bets on a tightening of monetary policy on Nov. 2 after initial data showed 0.4 percent growth last quarter, more than economists forecast and the fastest pace of the year so far. This is the last major economic report BOE officials will get on the health of the economy before their crucial meeting.

Flake’s Blistering Attack on Trump Is the Latest Crack in GOP Unity (Bloomberg) Republican Senator Jeff Flake of Arizona announced he won’t seek re-election and then delivered a blistering attack on Donald Trump on the Senate floor, the second GOP senator to publicly excoriate the president on the day the party wanted to put a proposed tax overhaul at the forefront.

Yellen Finds Unlikely Advocate at White House: Trump (Bloomberg) The incumbent Federal Reserve chair was impressive in an Oval Office interview with Trump on Thursday, several people familiar with the matter said. She made clear to the president that she wants to keep her job, set no preconditions for appointment to a second term, and offered suggestions for the vice chairman position that were welcomed by the Trump team.

Bond Market’s 2.4% Moment of Truth Elicits Warning From Gundlach (Bloomberg) The 10-year Treasury yield rose five basis points Tuesday to 2.42 percent, closing above 2.4 percent for the first time in five months. The yield had previously failed to sustain increases above that mark on several occasions since May, making it a bellwether of the potential for yields to return to their highs of the past year.

Treasuries Extend Drop With Havens; Pound Rallies: Markets Wrap (Bloomberg) U.S. Treasuries extended their declines and the dollar held at a three-month high amid continued optimism over the global growth outlook. Safe haven assets such as the yen and gold slipped, while stocks in Europe rose and S&P 500 futures slipped as the earnings season continued to unfold

Loonie Underpriced in Big Banks’ Eyes as 2017 Hike Risk Remains (Bloomberg) Wednesday’s Bank of Canada meeting is set to revive a six-month surge in the loonie that’s stalled in recent weeks, according to the country’s biggest lenders. That’s good news for speculators who remain near the most bullish on the currency since 2012.

Air Canada reports third quarter profit, boosted by one-time tax recovery (CTV) Air Canada earned $1.79 billion in its latest quarter, boosted by a one-time $793-million tax recovery. The airline (TSX:AC) says the profit amounted to $6.44 per diluted share compared with a profit of $768 million or $2.74 per diluted share in the same quarter last year. On an adjusted basis, Air Canada says it earned $950 million or $3.43 per diluted share in the quarter, up from $821 million or $2.93 per diluted share in the third quarter of 2016.

Bank of Canada widely expected to keep brakes on interest rates (CBC) With no change in interest rates expected when the Bank of Canada announces its latest decision this morning, economists and markets will be eyeing the latest update on the central bank’s outlook for the economy for hints on future hikes.

Exclusive: Canada pushed for Airbus deal as Bombardier courted China (Reuters) The Canadian government encouraged Bombardier to make a deal with Airbus SE for its CSeries planes to thwart a potential venture with Chinese investors, according to five sources familiar with the matter. It signaled its preference for Airbus after Bombardier failed to reach an agreement with Boeing Co earlier this year that would have given the U.S. company a stake in the CSeries jetliners, according to the sources. The Canadian government’s role has not been previously reported.

Canada to unveil smaller budget deficit, hopes will shift focus (Reuters) Canada’s Liberal government unveiled a smaller-than-forecast budget deficit on Tuesday as it pressed forward with more stimulus spending on families, but did not project the budget would return to balance in the next five years.

Overnight markets 

Overview: US 10yr note futures are down -0.301% at 124-12, S&P 500 futures are down -0.13% at 2564, Crude oil futures are down -0.27% at $52.33, Gold futures are down -0.3% at $1274.5, DXY is down -0.01% at 93.764, CAD/USD is up 0.17% at 0.7876.

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 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