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Market Update

US tsy yields sharply lower on bear steepening move, heavy volume in TY1 futures (~700k) with the US 10Y 2.285 (+5bps), curve US$ higher, Euro stocks +0.50%, crude steady near $52. Core Euro bonds weaker, in line with tsys, 10Y bund yield seven-week high 0.46%. Weakness in tsys/EGBs attributed to delayed reaction to Yellen’s comments yest and progress on tax reform, also Saudi Arabia set to price $12.5bln jumbo USD deal this aft. GOCs lower in line with tsys, yields 2.5-5.5bps higher led by 10s @2.183 (+7.3bps) – a three year high. Poloz highly anticipated speech at noon. Provis quiet yest, spreads unch with supply expected thou issuers may take a pause given the move in yields and Poloz this aft.

News headlines 

 Atlanta Fed’s Bostic ‘comfortable’ with December hike if economy performs (Reuters) The Atlanta Federal Reserve Bank’s new president, Raphael Bostic, said on Tuesday that recent weak inflation probably means labor markets are still healing from the 2007 to 2009 financial crisis, and he would want “clear evidence” prices were firming before committing to another interest rate increase.

Fed’s Yellen says gradual hikes should continue, despite weak inflation (Reuters) The Federal Reserve needs to continue gradual rate hikes despite broad uncertainty about the path of inflation, Fed Chair Janet Yellen said on Tuesday in remarks that acknowledged the central bank’s struggles to forecast one of its key policy objectives.

U.S. slaps steep duties on Bombardier jets after Boeing complaint (Reuters) The U.S. Commerce Department on Tuesday slapped preliminary anti-subsidy duties on Bombardier Inc’s CSeries jets after rival Boeing Co accused Canada of unfairly subsidizing the aircraft, a move likely to strain trade relations between the neighbors.

Morneau Won’t Budge on Deficits Despite Canada’s Red-Hot Growth (Bloomberg) Canada’s hot economy won’t push Bill Morneau off his deficit spending plans, with the finance minister pledging continued cash for infrastructure and other programs to make the nation’s expansion sustainable in the long-term.

Dollar Gains on Yellen, U.S. Tax Plan; Bonds Slump: Markets Wrap (Bloomberg) The dollar extended gains and bonds fell after Federal Reserve Chair Janet Yellen boosted expectations for an interest-rate rise in December. Stocks advanced as President Donald Trump prepares to lay out his tax-cut plan.

Overnight markets 

Overview: US 10yr note futures are down -0.384% at 125-17, S&P 500 futures are up 0.19% at 2500.25, Crude oil futures are up 0.23% at $52, Gold futures are down -0.67% at $1293, DXY is up 0.47% at 93.399, CAD/USD is up 0.41% at 0.8068.

US Economic Data

Canadian Economic Data

There is no economic data scheduled 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

Both US tsys & GOCs unch to slightly lower, US 10Y 2.22%, GOC 10Y 2.095%, Can/US 10Y +0.5bps @ 12bps. Light volume in TY futures overnite, Fed Kashkari (dove) said inflation remains lows, sees little sign of overheating.  Core European bonds lower , no data, just 2Y German supply, month end extension flows expected to be limited by small extension – 0.06Y for Euro Agg below avg.  Provi spds continuing to narrow yest despite a Jumbo Ontario long deal – $1.5bln longs @ 80.5 – now 80/79.  This morning Winnipeg Airports Authority in the mkt with a thirty year @ ~122 or  Onts + 42.  BCE in the mkt – reopened Oct 22s @ ~103, new 10Y Sep 29 27 @ ~ 153

News headlines 

Citi Says Get Ready for an Oil Squeeze (Bloomberg) Five countries in the group — Libya, Nigeria, Venezuela, Iran and Iraq — may already be pumping at their maximum capacity this year, Ed Morse, the bank’s global head of commodities research, said in an interview. Rather than a surge in output, there’s a risk of a market squeeze emerging as early as 2018, driven by those nations because of weaker investment in exploration and development, he said.

Dollar jumps to 1-month high vs. euro ahead of Yellen speech (MarketWatch) The dollar climbed against most other currencies on Tuesday, rising to a one-month high against the euro as traders continued to digest the German election and looked ahead to a speech on monetary policy from Federal Reserve Chairwoman Janet Yellen.

Alstom and Siemens rail deal runs into French political concerns (Reuters) Siemens is expected to opt for a deal with Alstom rather an alternative with Canada’s Bombardier (BBDb.TO)

Finance Minister ​Bill Morneau convinced tax reforms needed (CBC) Morneau argues the changes will not affect the vast majority of farmers as some have claimed. Nor will they prevent small businesses from using income sprinkling, distributing revenues in paycheques to family members, where those family members are actually working for the business.

Upcoming consumer confidence data could be key (CNBC) The consumer confidence index, published by the Conference Board, is due for release on Tuesday shortly after the opening bell. The consumer confidence index, published by the Conference Board, is due for release on Tuesday shortly after the opening bell.

Overnight markets 

Overview: US 10yr note futures are up 0.087% at 125-27, S&P 500 futures are down -0.09% at 2497.25, Crude oil futures are up 1.26% at $51.3, Gold futures are down -0.24% at $1294.4, DXY is up 0.43% at 92.568, CAD/USD is down -0.22% at 0.8121.

US Economic Data

Canadian Economic Data

There is no economic data scheduled 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 yields slightly lower, curve 0.5bps flatter, US 10Y 2.24% (-1.1bps).  Crude above $51.00 (+1.1%) after OPEC said the latest production cuts are working. Core Euro bonds higher led by German bunds, euro currency lower after Angela Merkel’s win was clouded by strong showing of far right AFD party.  Quiet on the data front this week yet Fed speakers including Yellen tomorrow and Fischer on Thursday could shed some light on the Fes’s balance sheet unwind. Supply this week with the US Tsy auctioning $101bln in 2Y, 5Y & 2Y FRNs.  GOCs slightly lower in the short end, 10Y unch 2.11%, Poloz speech this Wednesday the main focus after Lane warned the central bank is paying close attention to short term rates and the dollar. Provis starting the week 0.5bps tighter , outlook is for more 10 & 30Y supply this week from Ont/QC after Alberta & BC long deals last week, with the GOC curve at the flattest levels in ~10 yrs.

News headlines 

Merkel’s Bloc Regroups After ‘Nightmare Victory’ in Germany (Bloomberg) Angela Merkel’s political bloc is starting to draw lessons from its electoral losses to the Alternative for Germany party as pressure mounts for the chancellor to win back voters lost to the populist right.

Shinzo Abe of Japan Calls Early Election, as a Rival Party Forms (NYTimes) Seizing on anxiety over tensions about North Korea and the opposition’s weakness, Prime Minister Shinzo Abe of Japan called Monday for an early election next month.

Bank of England asks banks to hold more capital on consumer loan risks (Reuters) British lenders need to hold around an extra 10 billion pounds ($13.5 billion) in capital to guard against increased risks from rapidly rising unsecured consumer lending, the Bank of England said on Monday.

TSX futures edge higher with oil prices (Reuters) Canada’s main stock index futures inched higher on Monday as oil prices rose after major producers said at a meeting that the global market was well on its way towards rebalancing.

Iron Ore Succumbs to Bear Market and May Extend Slump Into $50s (Bloomberg) Iron ore has slumped back into a bear market after posting the biggest weekly loss in 16 months amid concern that record demand in China may ease off as mills enact winter output cuts just as data from the top user signals that the economy may be cooling.

U.S. dairy takes aim at Canada’s supply management system in NAFTA talks (TheGlobeandMail) The first punches in what promises to be a bitter fight over Canada’s protected dairy industry are expected to be thrown during this week’s third round of North American Free Trade talks in Ottawa.

Overnight markets 

Overview: US 10yr note futures are up 0.087% at 125-27, S&P 500 futures are down -0.09% at 2497.25, Crude oil futures are up 1.26% at $51.3, Gold futures are down -0.24% at $1294.4, DXY is up 0.43% at 92.568, CAD/USD is down -0.22% at 0.8121.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230