Commentaires

Market Update

Tsys lower  with the 10Y 2.31% (+1bp), lagging the rally in core European bonds esp UK gilts after BOE Carney comments. Equities unch, gold lower for a second day, crude  surged o/n to 52.37 on Iraq conflict.  UK gilts higher, 10Y gilt 1.30% at mth lows,  after Carney suggested raising rates to ‘build a war chest’ for future shocks was not consistent with inflation targeting and the unwind of QE would be gradual. Short end of ‘Sonia’ mkt pricing 80% odds of a rate hike in Nov. GOCs slightly higher, 1bp tighter vs tsys. Provis unch, BC continues to perform – the BC/Ont 48 roll 0.7bps narrower since Friday

News headlines 

Taylor Impresses Trump for Fed Chairman, Warsh Slips (Bloomberg) Stanford University economist John Taylor, a candidate for Federal Reserve chairman, made a favorable impression on President Donald Trump after an hour-long interview at the White House last week, several people familiar with the matter said.

North Korea Warns That Nuclear War Could ‘Break Out Any Moment’ (Bloomberg) North Korea warned that a nuclear war “may break out any moment” as the U.S. and South Korea began one of the largest joint naval drills off both the east and west coasts of the peninsula.

BOE Nears ‘Tipping Point’ as Inflation Climbs to 5 1/2 Year High (Bloomberg) U.K. inflation reached 3 percent for the first time in more than five years in September, taking the economy closer to what one Bank of England official described as a “tipping point” for policy.

Brexit Timeline Pushed Back as May’s Late Push Comes Up Short (Bloomberg) Last-minute efforts by U.K. Prime Minister Theresa May to unblock stalled Brexit talks came up short with European Union officials now looking to December to move negotiations on to discussions about the future EU-U.K. relationship.

China’s Stocks, Bonds, Currency Drop in Unison Before Congress (Bloomberg) Caution is spreading through China’s financial markets before the start of a crucial Communist Party gathering. The Shanghai Composite Index fell for a second day and government bonds retreated, with the 10-year yield rising to an almost three-year high, while the yuan retreated 0.5 percent against the dollar. With analysts expecting little in the way of substantial reforms to emerge from the twice-a-decade congress, which begins Wednesday, investors focused on comments from the chief of the central bank which suggested stronger action to cut corporate leverage.

Spain Jails Separatists as Growth Forecast Lowered on Catalonia (Bloomberg) Spain cut its economic forecast for 2018 as the costs of the Catalan crisis begin to mount. Output will grow by 2.3 percent next year instead of the 2.6 percent previously projected, the economy ministry said in an emailed statement just before midnight, citing the impact of the political standoff in Catalonia, which accounts for a fifth of Spain’s gross domestic product, and the related struggle to approve a budget.

Airbus Snaps Up Bombardier Jet in New Challenge to Boeing (Bloomberg) Airbus SE agreed to acquire a majority stake in Bombardier Inc.’s C Series program and will start assembling the jetliner in the U.S., vaulting a technologically advanced but slow-selling plane onto the front lines of the battle with Boeing Co. over global aircraft sales.

Morgan Stanley’s profit tops estimates as wealth management shines (Financial Times) Morgan Stanley’s exposure to wealth management and cuts at its debt dealing business have once again helped it weather a tough period for investment banks as it delivered improved third quarter profits.

Powell likely next Fed chief, though Yellen best suited: economists (Reuters) Jerome Powell likely will be the next Federal Reserve chairman, according to a slim majority of economists in a Reuters poll – but most of them said current Fed Chair Janet Yellen would be the best option.

Overnight markets 

Overview: US 10yr note futures are up 0.012% at 125-14, S&P 500 futures are down -0.03% at 2555.5, Crude oil futures are up 0.44% at $52.1, Gold futures are down -0.97% at $1290.4, DXY is up 0.25% at 93.546, CAD/USD is up 0.11% at 0.7979

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 tsy & GOC mkts diverging this morning… US tsys lower, yields 2bps higher with the 10Y 2.29% (+2bps) after hawkish comments from Yellen over the weekend. Yellen said the economic drag from Hurricanes will be brief, soft inflation won’t persist. GOCs are bid particularly in the short end with 2-5Y yields 2.5-3bps lower. BOC governor Poloz said he expects the domestic economy to slow in the second half consistent with reaching full capacity, while the addition of   ‘capacity enhancing’ investment means both inflation & wages are not expected to rise as quickly as one would expect at this stage in the cycle. The CAD has spiked higher 1.2533 (+0.50%). The BOC will release its Qtrly Business Outlook Survey at 10:30 which should reflect some moderation in hiring and investment after a strong Q2.

News headlines 

Yellen Calls Inflation the ‘Biggest Surprise’ in the Economy (Bloomberg) Federal Reserve Chair Janet Yellen said that the U.S. central bank expects to continue to raise interest rates gradually as solid growth, a strong labor market and a healthy global economy lift prices even as she recognized that inflation has been surprisingly low.

Catalans Defend Claim to Independence as Spain Prepares to Act (Bloomberg) Catalan President Carles Puigdemont defended his region’s claim to independence as the Spanish government signaled it will move ahead with the process of suspending self-rule this week.

Austrian Vote Paves Way for Nationalist Party to Enter Government (Bloomberg) Austrian voters paved the way for the nationalist Freedom Party to enter government, heralding a shift to the political right that’s likely to make the country a more prickly ally for its European partners.

Merkel’s Hand Weakened Ahead of Coalition Talks After Loss (Bloomberg) German Chancellor Angela Merkel heads into potentially laborious talks this week to form a national government weakened after her Christian Democratic Union suffered a defeat in Volkswagen AG’s home state.

Commodities Rise as Oil and Copper Gain; Euro Down: Markets Wrap (Bloomberg) Stocks in Europe nudged higher, led by miners, as gains in oil and copper drove Bloomberg’s gauge of commodity prices to a seven-month high. The euro weakened and Spanish shares fell after Spain’s government gave Catalonia a new deadline to back down from its independence claim.

Theresa May Heads to Brussels to Try and Break Brexit Deadlock (Bloomberg) Over dinner in Brussels, Prime Minister Theresa May will plead with Europe’s top negotiator to help unlock Brexit negotiations, as politicians back in London are sounding out cross-party alliances to try to stop the U.K. leaving the European Union without a deal.

Iraq Seizes Oil Fields as Fighting Flares Over Kurds’ State Push (Bloomberg) Iraqi forces advanced toward the disputed city of Kirkuk, as the government sharply intensified its efforts to stall moves toward a Kurdish state by seizing the oil fields that would underpin its economy. Crude exports from the disputed area were flowing normally on Monday.

Ottawa to cut small business tax rate to 9% (CBC) Ottawa will announce plans today to cut the small business tax rate from 10.5 per cent to nine per cent on Monday, CBC News has learned, as it attempts to quell a backlash to proposed tax reforms that have stung the Trudeau government.

Bombardier exploring options for aerospace businesses: Report (BNN) Canadian train-and-plane maker Bombardier Inc (BBDb.TO) is exploring options for its aerospace businesses, including a sale of some operations, Bloomberg reported on Sunday.

Canadian oil producers alter strategies in face of oil supply certainty (CBC) A shift in global oil markets sentiment is under way, replacing decades of scarcity fears with confidence in surpluses, capping oil prices and forcing changes in the way the industry works, observers say.

Overnight markets 

Overview: US 10yr note futures are down -0.025% at 125-22, S&P 500 futures are up 0.06% at 2554.25, Crude oil futures are up 1.69% at $52.32, Gold futures are up 0.23% at $1307.6, DXY is up 0.1% at 93.18, CAD/USD is up 0.58% at 0.7975. 

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 rising sharply after Sep CPI/retail sales misses- particularly the latter with core CPI 0.1% vs 0.2% exp, retail sales were relatively firm, , US 10Y 2.33%, trailing the strong gains in core Euro bonds where longer term yields are 2-3bps lower. TY futures confined to a fairly narrow 3tick range o/n on below avg volume (270k contracts) before key CPI/retail sales data.  Bank earnings mixed – BOA beat est, Wells Fargo missed with the stock down ~3% premkt.  The 10Y bund yield fell to a two week low 0.42% – according to Reuters the ECB is considering a nine month extension to their bond buying program. 10Y gilt more volatile, prices moving back to unch after testing recent lows earlier, supported by gains in bunds. GOCs well bid, keeping up pace with tsys, curve 2bps flatter post 8:30 US data. Provincials opening unch, spds near recent tights, unch yest despite 2 deals – BC  & QC 10Y deals .

News headlines 

ECB to Consider Cutting QE Purchases in Half Next Year (Bloomberg) European Central Bank officials are considering cutting their monthly bond buying by at least half starting in January and keeping their program active for at least nine months, according to officials familiar with the debate.

China Exports Remain Resilient as Rising Imports Signal Strength (Bloomberg) China’s overseas shipments rose from a year earlier, narrowly missing estimates, the latest sign that Asian trade is holding up on robust external demand and a brighter global outlook.

Trump Expected to Disavow Iran Nuclear Deal, Not Abandon It (Bloomberg) President Donald Trump is expected on Friday to refuse to certify that the multinational accord to curb Iran’s nuclear program sufficiently serves U.S. interests, though he will stop short of abandoning it, according to two senior administration officials.

Oil Set for Weekly Gain on Rebalancing Signs From U.S. to China (Bloomberg) Oil is heading for the biggest weekly gain since mid-September as a drop in U.S. crude stockpiles and near-record Chinese imports added to signs the global market is rebalancing.

Bonds Gain After ECB QE Report; Stocks Advance: Markets Wrap (Bloomberg) Bonds in Europe gained after a report that the European Central Bank may continue asset purchases for at least nine months after it starts tapering in January. Stocks advanced after Chinese trade data underscored the resilience of the global recovery.

Europe’s Best Developed Stock Market May Get Election Boost (Bloomberg) Even the chance of a far-right party getting into power in Sunday’s Austrian election isn’t expected to spoil the run for investors in Europe’s best-performing developed stock market this year.

Bombardier to miss year-end streetcar delivery target (Toronto Star) Bombardier will miss yet another target on its troubled TTC streetcar order, falling at least five cars short of the 40 it was supposed to deliver this year. In a statement released Thursday, the Montreal-based rail manufacturer said it will supply 35 streetcars in 2017, for a cumulative total of 65 since the order began. The company blamed the latest delay on “issues with the supply chain.”

Quebec won’t budge on Uber rules with hours left before deadline (CBC News) The Quebec government has announced it is standing firm on the main tenets of its new rules regulating how ride-hailing company Uber operates in the province.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-11, S&P 500 futures are up 0.12% at 2552.5, Crude oil futures are up 2% at $51.61, Gold futures are down -0.13% at $1294.8, DXY is up 0.17% at 93.214, CAD/USD is up 0.24% at 0.7997. 

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