Comments

Market Update

US tsys slightly lower, curve flatter, US 10Y 2.325%, on below avg volume in TY futures (172k). Mkt awaits Fed Governor Powell speech at 9:10 and Friday payrolls data.  Euro stocks slightly higher, crude below $50 on record high US exports last week. Core Euro bonds higher, 10Y bund/tsy spd hovering near three month low – ECB minutes from Sep 7 meeting offered little new insight. UK gilts higher, yields 2-3bps lower after PM May’s speech yest failed to inspire much confidence in her Brexit strategy amid reports 30 mps were plotting to remove her from office. In Canada, GOCs also biding time before Sep employment data tomorrow, 10Y 2.11%.  Provincial spreads opening 0.5bps tighter this morning – talk of Ont/QC 10Y.

News headlines 

Puerto Rico’s Benchmark Bond Falls to a Record Low (Bloomberg) Puerto Rico’s general-obligation bonds due in 2035 found a new low on Wednesday, falling to 32 cents on the dollar. The benchmark bond, one of its most actively traded securities over the past week, has been on the decline since Hurricane Maria slammed into the island last month and raised creditor concerns over debt recovery rates. President Donald Trump, who visited the territory on Tuesday, suggested the island’s debt will be wiped out to help it recover from the devastation.

Spain’s de Guindos Says Catalonia’s Independence Push Is Doomed (Bloomberg) Spanish Economy Minister Luis de Guindos ruled out any sort of mediated talks with separatist leaders and said Catalan banks have signaled they may move out of the region if the push for independence continues.

Saudi King, Putin to Talk Oil Pact on ‘Epochal’ Russia Visit (Bloomberg) President Vladimir Putin began talks with Saudi King Salman bin Abdulaziz, who’s making a historic first visit to Russia by a monarch of the Gulf kingdom as the two energy superpowers seek an understanding on whether to extend an agreement curbing oil supplies.

TransCanada Announces Termination of Energy East Pipeline and Eastern Mainline Projects (Market Wired) “After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications. TransCanada will also notify Quebec’s Ministère du Developpement durable, de l’Environnement, et Lutte contre les changements climatiques that it is withdrawing the Energy East project from the environmental review process.”

Montreal home prices rise as inventory falls 12% in September (BNN) The balance of power in Montreal’s housing market has tilted further in owners’ favour as listings dipped in September. The inventory of active listings of properties available for sale across the Montreal metropolitan area fell 12 per cent year-over-year in September, according to the city’s real estate board. Total property sales rose six per cent, led by growth in the condo and so-called “plex” market.

Shopify shares slide after company called ‘get-rich-quick scheme’ (The Star) Shopify Inc. tumbled as much as 10 per cent after Citron Research began shorting the stock, saying the Canadian e-commerce company’s claims that it’s minting millionaires should be investigated, and questioning its ability to scale up.

Overnight markets 

Overview: US 10yr note futures are down 0% at 125-11, S&P 500 futures are up 0.13% at 2539.5, Crude oil futures are up 0.16% at $50.06, Gold futures are up 0.31% at $1280.7, DXY is up 0.16% at 93.607, CAD/USD is up 0.15% at 0.8003.

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 higher, yields 1-2bps lower, US 10Y 2.30 (-2bps). ADP employment rose 135k as expected last month. Fed Fischer said on BBG that low rates have been less successful than expected, while he still expects higher inflation.  Trump close to picking Fed chair, with a short list of four candidates and Powell – a noted dove said to be favored. EGBs higher led by German bunds, bund futures at week highs as the 10Y part of the curve leads move higher after successful 10Y auction, risk-off as Spain widens further. In Canada, GOCs higher in line with tsys, curve maintain steeper bias since GDP/Poloz last week.  The BOC auctions new 5Y bonds at noon, $3.9bln March 1 23s with the WI roll 1bp tighter 6.2/6.0 vs 7.0 yest , a big move considering the 5Y roll (Sep 22/Mar 22) is unch 3.9/3.8 and the June 23/5Y roll unch as well (7.8).  Walt Disney in the mkt yest with a 7Y Maple @ 81, bonds unch on the break (guidance was 84 +/- 3)

News headlines 

Trump Aides Deliver Him a Shortlist of Fed Candidates (Bloomberg) President Donald Trump’s advisers have given him a final list of people they’re recommending as candidates to lead the Federal Reserve and have ended the search, according to seven people familiar with the matter.

U.K. Services Growth Picks Up Though Warning Signs Cloud Outlook (Bloomberg) U.K. services activity unexpectedly accelerated in September and price pressures increased, according to a report by IHS Markit

Amazon Hit With $294 Million Bill in EU Tax Crackdown (Bloomberg) Amazon.com Inc. was hit by a European Union order to pay 250 million euros ($294 million) plus interest in back taxes to Luxembourg as the world’s biggest online retailer became the latest U.S. giant to fall foul of the bloc’s state-aid rules.

U.S. Stocks Add to Records as Treasuries Advance: Markets Wrap (Bloomberg) U.S. equities added to records as car sales boosted industrial shares, while Treasury yields turned lower and the dollar erased gains after touching a two-month high.

Toronto home sales fall again, prices down 15.5 percent from peak (Reuters) Toronto home sales plunged in September from a year earlier and prices were down 15.5 percent from their April peak, but sales and prices inched up from August, suggesting housing in Canada’s largest city may be stabilizing, data showed on Wednesday.

Canada growth to surpass potential output -BoC’s Leduc (Daily Mail) Canada’s economic growth is expected to decline over the next few quarters but continue to exceed the rate of potential output, a top official at the Bank of Canada said on Tuesday in a speech that added another dovish tone to the bank’s message.

Hurricane recovery helps boost U.S. September new auto sales (Reuters) Major automakers on Tuesday posted higher U.S. new vehicle sales in September as consumers in hurricane-hit parts of the country replaced flood-damaged cars, extending a rally in their shares that began when Hurricane Harvey hit southeast Texas in late August.

Overnight markets 

Overview: US 10yr note futures are up 0.199% at 125-19, S&P 500 futures are down -0.08% at 2530.75, Crude oil futures are down -0.26% at $50.29, Gold futures are up 0.71% at $1283.6, DXY is down -0.27% at 93.315, CAD/USD is down -0.22% at 0.8026

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 tsys lower, 10Y yield higher for a fifth day, closing in on 2.35%, now 2.345%, on moderate volume in TY futures. Equities firmer (S&P futs +2.25), crude weaker (WTI -0.19 50.40).  Expect a muted session today with calendar empty , only Fed Powell remarks this morning with Q&A . Gilts leading EGBs lower, reversing yesterday’s gains, weaker UK construction PMI having little impact. GOCs lower, underperforming tsys in the belly by 0.5-1bp. Yesterday’s late day selling saw Cda/US close 2-3bps wider. The BOC auctions a new 5Y tomorrow -$3.9bln in March 23s with the current 5Y (Sep22/Mar22) roll 3.9/3.7 and the WI roll 7.2 bid – this speaks to the relative richness of the Sep 22s. The 5Y roll looks close to 2stds rich having narrowed 0.5bps since the last 5Y auction August 23rd , while the Jun23/Sep 22 roll has widened 3bps over the same period.

News headlines 

Dollar Rises on Signs of Economic Strength, New Fed Chief Talk (Bloomberg) The dollar rose for a second day after U.S. factory data released Monday beat estimates, supporting the case for the Federal Reserve to raise interest rates. The Aussie dropped after the Reserve Bank of Australia said a stronger currency would hurt growth.

Dollar Drifts as Euro Rises; Stocks Pause Advance: Markets Wrap (Bloomberg) Both European stocks and the dollar lost some momentum on Tuesday as investors digested recent strong gains spurred by the prospect of tax cuts in the world’s biggest economy and growing optimism for global growth. The euro shrugged off tensions in Catalonia to strengthen.

Saudi Arabia to Plan Russia Deals, Deepening Energy Ties (Bloomberg) Saudi Arabia is looking at unprecedented deals to acquire oil and gas assets in Russia, deepening ties between the world’s largest energy exporters as the Saudi king prepares to visit Moscow later this week.

U.K. Construction Unexpectedly Shrinks as Confidence Weakens (Bloomberg) IHS Markit’s Purchasing Managers’ Index fell to 48.1, the lowest since the aftermath of the EU referendum in 2016 and far weaker than economists had forecast. Crucially, it’s also below the 50 level that divides expansion from contraction. The pound fell after the report, dropping 0.2 percent to $1.3254 as of 9:45 a.m.

Clothing retailer Roots prices shares in IPO at between $14 and $16 (CBC) Clothing retailer Roots Corp. says it is looking to price its initial public offering at between $14 and $16 per share. Roots says the total size of the offering being sold to the public is expected to $200 million or $230 million, if an over-allotment option is fully exercised.

Liberals hear fresh warnings on tax reform as consultations end (Macleans) With its public outreach winding down, the Trudeau government received fresh warnings Monday from major industry associations about the negative fallout from its controversial tax-reform proposals. Business leaders sent new letters to Ottawa insisting the proposed tax changes, which the Liberals have said are aimed at creating more fairness in the system, will cause considerable collateral damage in the economy.

Ontario’s minimum wage increases to $11.60/hour (CTV) The minimum wage increased by 20 cents to $11.60 an hour.That rate applies to most positions, excluding liquor servers, students under 18, hunting and fishing guides and homeworkers. Another increase will take effect on January 1st, with the minimum wage jumping to $14 an hour.The Liberal government has also promised to raise the minimum wage to $15 an hour in 2019.

Overnight markets 

Overview: US 10yr note futures are down -0.037% at 125-07, S&P 500 futures are up 0.09% at 2528.5, Crude oil futures are down -0.3% at $50.43, Gold futures are down -0.23% at $1272.9, DXY is up 0.01% at 93.573, CAD/USD is down -0.04% 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