Comments
16/10/2017
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.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.506% | 2 Year | 1.509% |
| 5 Year | 1.696% | 5 Year | 1.915% |
| 10 Year | 2.009% | 10 Year | 2.284% |
| 30 Year | 2.374% | 30 Year | 2.813% |
US Economic Data
| 8:30 AM | Empire Manufacturing, Oct 30.2 est 20.4 (24.4 prior) |
| 10/16 – 10/20 | Monthly Budget Statement, Sep est 6.0b (33.4b prior) |
Canadian Economic Data
| 8:30 AM | Int’l Securities Transactions, Aug 9.85b (23.95b prior) |
| 10:00 AM | Bloomberg Nanos Confidence, Oct 13th (58.4 prior) |
| 10:30 AM | Business Outlook Futures Sales, 3Q (31.00 prior) |
| BoC Senior Loan Officer Survey |
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
13/10/2017
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.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.569% | 2 Year | 1.521% |
| 5 Year | 1.76% | 5 Year | 1.948% |
| 10 Year | 2.079% | 10 Year | 2.327% |
| 30 Year | 2.437% | 30 Year | 2.855% |
US Economic Data
| 8:30 AM | CPI MoM, Sep 0.5% est 0.6% (prior 0.4%) |
| CPI Ex Food and Energy MoM, Sep 0.1% est 0.2% (0.2% prior) | |
| CPI YoY, Sep 2.2% est 2.3% (1.9% prior) | |
| CPI Ex Food and Energy YoY, Sep 1.7% est 1.8% (1.7% prior) | |
| CPI Core index SA, Sep 252.860 est 253.059 (252.540 prior) | |
| CPI Index NSA, Sep 2446.819 est 246.911 (245.519 prior) | |
| Real Avg Weekly Earnings YoY, Sep 0.6% (0.9% prior) | |
| Real Avg Hourly Earning Yoy, Sep 0.7% (0.6% prior) | |
| Retail Sales Advance MoM, Sep 1.6% est 1.7% (-0.2% prior) | |
| Retail Sales Ex Auto MoM, Sep 1.0% est 0.9% (0.2% prior) | |
| Retail Sales Ex Auto and Gas, Sep 1.0% est 0.4% (-0.1% prior) | |
| Retail Sales Control Group, Sep 0.4% est 0.4% (-0.2% prior) | |
| 10:00 AM | U of Mich. Sentiment, Oct est 95.0 (95.1 prior) |
| Business Inventories, Aug est 0.7% (0.2% prior) | |
| 10/13-10/20 | Monthly Budget Statement, Sep est 6.0b (33.4b prior) |
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
12/10/2017
Market Update
US tsys higher, yields 1.5-2bps lower led by the 7-10Y with the 10Y 2.33(-1.8bps), Euro equities lower, S&P futures -4 pts. Tsys saw heavy buying in Asia hours according to MNI with block trade in TY futs around the European open (~4.3k). Core Euro bonds higher, gilts lagging on news of deadlock in Brexit talks. Given that a hike by the Fed in Dec is ~80% priced in upcoming inflation data take on more importance, especially given the uncertainty reflected in the latest FOMC minutes over whether low inflation is transitory or not. GOCs higher in line with tsys, 10Y close to 2.10% resistance. Primary corp mkt busy with Enbridge hybrid pricing as well as Nissan 3Y @ 79. We were active in Nissan post issue.
News headlines
Inside the Fed’s September Meeting: The Annotated Minutes (Bloomberg) In September, the Federal Reserve maintained plans for a third interest rate increase in 2017; in October, it announced the start of its program to shrink its balance sheet.
Warsh Leads Yellen, Powell in Tight Race for Fed Chair (Bloomberg) Former Federal Reserve Governor Kevin Warsh has emerged as the leading candidate to run the central bank next year, jumping ahead of current Chair Janet Yellen, according to a Bloomberg survey of economists Oct. 6–11. Fed Governor Jerome Powell—until now seen as a long-shot—vaulted into a tie for second with Yellen behind Warsh in the poll.
Pound May Enter Bumpy Ride Into Year-End on BOE, Brexit: Chart (Bloomberg) Currency traders are getting more concerned about the political fate of Prime Minister Theresa May and the impasse in Brexit negotiations. Demand for options that are out of the money relative to those in the money has risen to the highest in two months, suggesting that investors anticipate wider swings in sterling. The Bank of England reviews its benchmark bank rate on Nov. 2, adding to the clamor for hedges.
Catalans Face a Deadline Dilemma (Bloomberg) Prime Minister Mariano Rajoy gave his Catalan antagonist Carles Puigdemont five days to clarify whether he has declared independence from Spain or not as the country prepared for its national holiday on Thursday.
Trump Rethinks State-Local Tax Issue Over Middle-Class Concerns (Bloomberg) Months after the White House proposed ending a tax break for people in high-tax states, President Donald Trump grew angry when he learned that the change would hurt some middle-income taxpayers, according to two people familiar with his thinking.
Canada’s Metro to sell majority stake in Couche Tard for C$1.5 bln (Reuters) Canada’s Metro Inc said on Wednesday it would sell a major portion of its stake in Alimentation Couche Tard Inc to fund its C$4.5 billion acquisition of pharmacy chain Jean Coutu Group.
Employee-discount tax change removed as feds face uproar (Toronto Star) The federal government appears to be doing away with a controversial tax policy interpretation that would have seen employees taxed for discounts they get at work.
BlackBerry signs license deal with Florida’s BLU, ends patent dispute (Reuters) BlackBerry Ltd (BB.TO) said on Thursday it signed a new license agreement with BLU Products Inc, a Florida-based maker of low-end Android phones, that would end patent disputes between the two companies.
Overnight markets
Overview: US 10yr note futures are up 0.075% at 125-11, S&P 500 futures are down -0.15% at 2549.25, Crude oil futures are down -1.38% at $50.59, Gold futures are up 0.65% at $1297.3, DXY is up 0.08% at 93.09, CAD/USD is up 0.06% at 0.8021.
| Cda Benchmarks | Yield | Tsy Benchmarks | Yield |
| 2 Year | 1.566% | 2 Year | 1.509% |
| 5 Year | 1.77% | 5 Year | 1.941% |
| 10 Year | 2.105% | 10 Year | 2.334% |
| 30 Year | 2.455% | 30 Year | 2.871% |
US Economic Data
| 8:30 AM | PPI Final Demand MoM, Sep 0.4% est 0.4% (0.2% prior) |
| PPI Ex Food and Energy MoM, Sep 0.4% est 0.2% (0.1% prior) | |
| PPI Ex Food, Energy, Trade MoM, Sep 0.2% est 0.2% (0.2% prior) | |
| PPI Final Demand YoY, Sep 2.6% est 2.6% (2.4%prior) | |
| PPI Ex Food and Energy YoY, Sep 2.2% est 2.0% (2.0% prior) | |
| PPI Ex Food, Energy, Trade YoY, Sep 2.1% (1.9% prior) | |
| Initial Jobless Claims, Oct 7th 243k est 250k (260k prior) | |
| Continuing Claims, Sep 30th 1889k est 1930k (1938k prior) | |
| 9:45 AM | Bloomberg Consumer Comfort, Oct 8th (49.9 prior) |
| 10/12-10/20 | Monthly Budget Statement, Sep est 6.0b (33.4b prior) |
Canadian Economic Data
| 8:30 AM | New Housing Price Index MoM, Aug 0.1% est 0.2% (0.4% prior) |
| New Housing Price Index YoY, Aug 3.8% (4.8% prior) | |
| Teranet/National Bank HPI MoM, Sep -0.8% (0.6% prior) | |
| Teranet/National Bank HPI YoY, Sep 11.4% (13.1% prior) | |
| Teranet/National Bank HP Index, Sep 220.33 (222.03 prior) |
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