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Market Update

US tsys trading higher on ‘risk off’ tone following latest N. Korea threats, US 10Y 2.25% (-2.7bps), tsy futures near highs on heavier than avg volume (350k TY futures), Dec Eurodollars higher USD down for 2nd day after FOMC rally on Wed, crude unch @ 50.45, gold close to one-month lows after yest 1.6% decline. GOCs higher, outperforming tsys by 2-3bps after August CPI came in weaker 0.1% vs 0.2% exp, 1.4% y/y vs 1.5%. Active day in corps yest with $1bln Enbridge hybrids 60NC10Y hybrids, $350mln 3.4Y CWB deposit note @ 120.1 and $250mln CIXCN 10Y @ 179.7.   Enbridge hybrids way oversubscribed, broke $1 higher, 10bps tighter (315/305 pxd @ 325).

News headlines 

S&P Strips Hong Kong of AAA Rating After China Downgrade (Bloomberg) S&P Global Ratings cut Hong Kong’s credit rating a day after it downgraded China for the first time since 1999, a move that reflects the “strong institutional and political linkages” between the special administrative region and the mainland, the ratings firm said.

Euro-Area Economy Is on Track for Best Quarter Since 2015 (Bloomberg) The euro-area economy may have grown at the fastest pace in more than two years in the third quarter after an unexpected upturn in September.

May to Reboot Brexit Plan by Requesting Transition Period (Bloomberg) U.K. Prime Minister Theresa May will reboot her Brexit strategy on Friday by proposing a period of transition after the split with the European Union even if that means continuing to send money to Brussels and observing its rules until 2021.

Despite tough talk, Canada seen unlikely to walk away from NAFTA (Reuters) Despite Canada’s threats to walk away from NAFTA talks if necessary, its limited success in diversifying exports leaves the nation too reliant on U.S. markets to play hardball, government insiders and trade experts say.

Canada annual inflation rate increases to 1.4 percent in August (Reuters) Canada’s annual inflation rate in August increased to 1.4 percent, up from 1.2 percent in July, fueled by the transportation and shelter indexes, Statistics Canada said on Friday. Canada July retail sales up 0.4 percent on autos, food. Canadian retail sales increased by 0.4 percent in July from June to C$49.13 billion ($40.02 billion), as sales grew at motor vehicles and parts dealers, and food and beverage stores, Statistics Canada said on Friday.

Oil prices steady as OPEC ministers discuss supply cut pact (Reuters) Oil prices were steady on Friday, as investors waited to see whether major producers meeting in Vienna would back an extension to output cuts beyond March next year.

Overnight markets 

Overview: US 10yr note futures are up 0.137% at 125-26, S&P 500 futures are down -0.23% at 2495.25, Crude oil futures are down -0.45% at $50.32, Gold futures are up 0.18% at $1297.1, DXY is down -0.27% at 92.011, CAD/USD is down -0.16% at 0.8125.

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

News headlines 

Dollar Rebounds as FOMC Meeting Makes Case for Profit Taking (Bloomberg) The Bloomberg Dollar Spot Index rose for the first time in three days, with higher Treasury yields lending support to the currency as investors’ focus turns to the Federal Reserve meeting that begins on Tuesday.

The Bank of Japan just showed how dull the country’s economy is right now (Business Insider) The Bank of Japan (BoJ) produced few surprises at its September monetary policy meeting, keeping interest rates, asset purchases and its assessment on the Japanese economy unchanged from July.

What Google Wants With HTC’s Smartphone Business (WSJ) Google’s $1.1 billion deal with HTC carries risks, but the internet giant needs more scale if it is to maintain its influence in the smartphone business. If nothing else, Google’s deal with HTC should settle the question of whether it is serious about making its own phones.

From Russia with fuel – North Korean ships may be undermining sanctions (Reuters) At least eight North Korean ships that left Russia with a cargo of fuel this year headed for their homeland despite declaring other destinations, a ploy that U.S. officials say is often used to undermine sanctions. Reuters has no evidence of wrongdoing by the vessels, whose movements were recorded in Reuters ship-tracking data. Changing a ship’s destination once underway is not forbidden and it is unclear whether any of the ships unloaded fuel in North Korea.

Overnight markets 

Overview: US 10yr note futures are up 0.112% at 125-25, S&P 500 futures are down -0.05% at 2504, Crude oil futures are down -0.99% at $50.19, Gold futures are down -1.58% at $1295.6, DXY is down -0.07% at 92.439, CAD/USD is up 0.27% at 0.8093.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market Update

US tsys higher, TY futures in a narrow overnite range before FOMC, 10Y 2.23% (-1.4bps).  GOCs unch after giving up earlier gains with the 10Y 2.09%. GOCs wider by ~2bps vs tsys mostly in 2s, reversing recent outperformance, CAD +0.36% , WTI +1.1%, EUR higher for a fifth day.  Core Euro bonds higher, bund yields ~1bp lower, gilts lagging after significant beat for August UK retail sales (+2.8% vs 1.4%).  Fed unlikely to raise rates today yet odds of a Dec hike remain elevated at 53%,  while the issue of   balance sheet tapering will likely emphasize its gradualist nature.

News headlines 

Fed to Pack Up Crisis Tool, Debate Next Hike: Decision-Day Guide (Bloomberg) Will the Federal Reserve raise interest rates again this year? That’s the big question investors are hoping policy makers clarify when they conclude a two-day meeting Wednesday. Fed officials are widely expected to leave rates unchanged as they announce a start date for the gradual unwinding of the U.S. central bank’s $4.5 trillion balance sheet. That milestone, 10 years after the onset of the financial crisis, has been so well telegraphed by officials that it looks likely to be a non-event in financial markets.

Key Republican Says No Deal on Bipartisan Obamacare Fix Bill (Bloomberg) A crucial GOP senator says that after weeks of effort, there’s not enough agreement among lawmakers to advance a small package of bipartisan changes that would stabilize Obamacare’s health insurance markets.

U.K. Retail Sales Rise More Than Forecast as Consumers Stir (Bloomberg) U.K. retail sales rose in August at their fastest pace in four months, providing further evidence of a tentative pickup in consumer spending.

Carney’s Rate Message Is Slowly Resonating With Economists (Bloomberg) Economists are gradually starting to buy what Mark Carney is selling. After Bank of England policy makers said last week that an interest-rate increase may be needed in coming months, 11 firms now expect a hike in the fourth quarter of this year, according to a Bloomberg survey. While that’s still a minority, it’s up from three last month and may climb further as economists continue to tear up their forecasts in light of the bank’s hawkish shift.

Canada posts C$17.8 billion deficit in 2016-2017 (Reuters) Canada posted a budget deficit of C$17.8 billion ($14.5 billion) for the 2016-17 fiscal year, the Finance Department said on Tuesday, below the preliminary deficit of C$21.85 billion reported in May and well above the C$1.0 billion deficit the year before.

Volkswagen Comeback Pushes Europe Bond Sales Past Trillion Euros (Bloomberg) Volkswagen AG’s return from debt market exile following its 2015 diesel emissions scandal has helped propel European bond sales past 1 trillion euros ($1.2 trillion) one month earlier than in 2016.

ECB Stimulus Is Finally Reaching the Whole Euro Zone (Bloomberg) Back in 2013, when the region was reeling from recent debt crises, the European Central Bank’s monetary policy wasn’t being reflected in lending rates in the region’s south. Greece and Portugal were both about to see serious bouts of deflation, but the transmission of ECB interest rates – at the lowest level in the institution’s history to that point – to business loans in those countries had been virtually severed.

Overnight markets 

Overview: US 10yr note futures are up 0.074% at 126-03, S&P 500 futures are up 0.02% at 2505.25, Crude oil futures are up 1.17% at $50.06, Gold futures are up 0.43% at $1316.3, DXY is down -0.09% at 91.711, CAD/USD is down -0.37% at 0.8165.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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