Commentaires

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

Market Update

US tsys slightly lower, yields 0.5-1bp higher, US 10Y 2.343%, prices well of the lows of the o/n session, rallying since mid morning with European bonds, also Block trade in TY futures (7.35k) . UK gilts outperforming after lower than exp UK Man PMI. German bunds also off the lows, modrate risk off after Catalan referendum led to ~10bp widening in 10Y bund-Spain spread.  GOCs lower in line with tsys, longs lagging 10s30s ~5bps steeper since Poloz/GDP .  Odds of a rate hike at this month’s BOC have been cut in half to ~23% from 50% last week with Cda/US 8-10bps tighter post July GDP.  The BOC is back to being ‘data dependent’ meaning this Friday’s employment data will be closely scrutinized -particularly the wage component as it impacts the output gap – the latter increasingly looks do be a more important determininant of mon policy going forward.

News headlines 

At Least 50 Killed as Gunman Opens Fire at Las Vegas Concert (Bloomberg) A gunman perched high on the 32nd floor of a Las Vegas Strip casino unleashed a shower of bullets down on an outdoor country music festival below, killing at least 50 people and wounding more than 200 as tens of thousands of frantic concert-goers screamed and ran for their lives, officials said Monday. It was the worst mass shooting in modern U.S. history.

Spanish Bonds, Stocks Fall as Catalan Breakaway Risks Rise (Bloomberg) Spain’s benchmark bonds fell to the lowest in almost three months after Catalan separatist leaders signaled they may be moving toward a unilateral declaration of independence.

Euro Factories Add Jobs in Struggle to Keep Up With Orders (Bloomberg) A Purchasing Managers Index for the region’s manufacturing industry rose to 58.1 in September from 57.4 the previous month, London-based IHS Markit said on Monday. That compares with a preliminary reading of 58.2 and is the highest level in more than six and a half years. A gauge for employment rose at the fastest pace since the survey began in 1997.

Dollar Rises on Fed Outlook; Spain Woes Hit Euro: Markets Wrap (Bloomberg) The dollar strengthened as investors contemplated the prospects of a new — and potentially less dovish — Federal Reserve chief as well as the chances of U.S. tax cuts. The euro underperformed in the wake of a contentious vote for independence in the Spanish region of Catalonia.

An Asian Stock Market Beats Peers But Few Traders Get to Profit (Bloomberg) Australia’s stocks finally got a chance to outperform most of their Asia-Pacific peers, but few were around to appreciate it. The S&P/ASX 200 index rose as much as 1.2 percent Monday as China’s official factory gauge climbed to a five-year high, signaling robust growth in Australia’s largest trading partner. The gauge closed 0.8 percent higher, the most in two months. The MSCI Asia Pacific Index was little changed and Japan’s stock gauges were mixed. Australia’s main stock measure has closed for the day, while Philippines, Singapore and Thailand’s benchmarks are slowly gaining ground.

Canadian producer prices rise on energy, petroleum products (Reuters) Canadian producer prices rose in August on higher costs for energy and petroleum products as refineries in the United States were shut down due to Hurricane Harvey, data from Statistics Canada showed on Friday. The 0.3 percent increase was shy of economists’ forecasts for a gain of 0.5 percent, while figure for July was downwardly revised to show a decline of 1.6 percent from the originally reported 1.5 percent decrease.

RBC says housing affordability measure worst since 1990, Toronto hits worst level ever (CP24) Housing affordability in Canada hit the worst level in 27 years in the second quarter of this year, according to a Royal Bank of Canada report. RBC Economics said in a report Friday that its housing affordability measure for Canada deteriorated for the eighth straight quarter. The Toronto area was the hardest hit, where RBC says affordability declined the most compared to the previous year and hit the worst level ever measured in the city.

Metro, Jean Coutu formalize $4.5B deal to combine grocery, pharmacy chains (CBC)  Metro Inc. has formalized its $4.5-billion takeover offer for Jean Coutu pharmacy group, which will operate as a separate division of the grocery company. Shareholders of Jean Coutu are being offered a combination of cash and shares worth about $24.50 per share.

Overnight markets 

Overview: US 10yr note futures are down -0.112% at 125-06, S&P 500 futures are up 0.17% at 2520.25, Crude oil futures are down -2.15% at $50.56, Gold futures are down -0.72% at $1275.6, DXY is up 0.53% at 93.572, CAD/USD is up 0.31% at 0.7994.

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 moving higher after lower August PCE (0.1% vs 0.2% exp) after quiet overnite session, US 10Y 2.30% (-0.5bps) , avg volume in TY futures (250k) after two heavy session s Wed & Thurs.  Core Euro bonds outperforming, bund yields 2-3bps lower gilts moving lower since mid morning despite downward revision to Q2 GDP. Carney said the BOE is set to raise rates for the first time in a decade.   GOCs sharply higher after July GDP miss  – 0.0% vs 0.1% exp, curve 3bps steeper , 2s ~11bps lower since Wed Poloz.

News headlines  

Most Economists Agree: Trump Tax Plan Will Widen Budget Deficit (Bloomberg) Twenty-one of 26 economists surveyed by Bloomberg News after Trump and Republican congressional leaders rolled out their tax plan this week predicted it will widen the budget gap over the next 10 years. That forecast flies in the face of Treasury Secretary Steven Mnuchin’s assertion that the program will slash deficits by spurring faster economic growth and thus more federal revenue.

Euro-Area Inflation Stuck Too Low as ECB Debates Stimulus (Bloomberg) Inflation in the euro area failed to pick up in September and underlying price growth weakened, keeping the European Central Bank waiting for the last chapter in the story of the region’s recovery.

UK growth slows to four-year low as BoE prepares rate rise (Reuters) Britain’s economy grew at its slowest pace since 2013 in the 12 months after last year’s Brexit vote, data showed on Friday, painting a subdued picture as the Bank of England prepares to raise interest rates for the first time in a decade.

Exporters, traders feel Canadian dollar pain as Bank of Canada avoids guidance (Reuters) The Bank of Canada’s journey from dove to hawk and back again this year has sent the currency market on a wild ride and put pressure on the central bank to provide better direction, despite eschewing its forward guidance policy years ago.

BlackBerry shares soar by 12% as software sales hit record (The Guardian) The transformation of BlackBerry from a bombed-out, loss-making smartphone maker to a new-look software firm appears to be working: the Canadian business has reported better-than-expected quarterly profits, boosting its shares by more than 12%.

VW’s dieselgate bill hits $30 billion after another charge (Reuters) Volkswagen (VOWG_p.DE) is taking another $3 billion charge to fix diesel engines in the United States, lifting the total bill for its emissions test cheating scandal to around $30 billion.

U.S. economy accelerates in second quarter; hurricanes expected to slow growth (Reuters) The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma. Gross domestic product increased at a 3.1 percent annual rate in the April-June period, the Commerce Department said in its third estimate on Thursday.

Overnight markets 

Overview: US 10yr note futures are up 0.012% at 125-18, S&P 500 futures are down -0.06% at 2506.25, Crude oil futures are up 0.14% at $51.63, Gold futures are up 0.03% at $1289.1, DXY is up 0.02% at 93.105, CAD/USD is up 0.17% at 0.8033.  

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