Comments

Market Update

Tsys slightly higher , 10Y 1.68%, TY futures close to highs of o/n range on low volume (300k), equities higher (S&P +4) before Oct Payrolls (85k exp).  GM strike expected to distort data, subtracting overall figure by ~50k and adding 0.1% to unem rate (3.6 vs 3.5).  GOCs slightly lower & flatter, continuing to undo some of the post BOC movement, which saw 5s30s steepen 5bps and Ca/US 8-12bps tighter. Futures mkts are priced for ~50% odds of a rate cut by March, which considering the uncertain global trade outlook is fair even as domestic data has held up well.

News headlines

U.S. Futures, Stocks Rise; Bonds Drift Before Jobs: Markets Wrap (Bloomberg) U.S. index futures climbed with European stocks on Friday as investors weighed better-than-expected Chinese manufacturing data against uncertainty over an interim trade deal. Treasuries were steady ahead of American payrolls figures.

TSX futures tick up on higher oil prices (Reuters) Stock futures pointed to a higher opening for Canada’s main stock index on Friday, supported by gains in oil prices on the back of a surprise bounce in Chinese factory activity.

General Motors strike looms over U.S. October job growth (Reuters) U.S. job growth likely slowed sharply in October, weighed down by a strike at General Motors (GM.N), while the unemployment rate is expected to tick up from near a 50-year low of 3.5%.

Phase one trade deal with China is in good shape: U.S. Commerce chief (Reuters) The initial “phase one” trade pact with China appears to be in good shape and is likely to be signed around mid-November, although a finite date is still in question, U.S. Commerce Secretary Wilbur Ross said on Friday.

Wall Street Week Ahead: Travel, leisure company reports set to give view of economy, consumer (Reuters) A wide swath of the U.S. travel and leisure industry is set to provide insight next week on the state of the economy, including trends in consumer spending, fallout from U.S.-China trade tensions and any damaging impact from the stronger U.S. dollar.

Trump says U.S., China to announce new venue to ink trade deal soon (Reuters) U.S. President Donald Trump said on Thursday the United States and China would soon announce a new site where he and Chinese President Xi Jinping will sign a “Phase One” trade deal after Chile canceled a planned summit set for mid-November.

China’s proposed digital currency more about policing than progress (Reuters) As China prepares to become the first country to launch a digitized domestic currency, market participants and experts say it is a testament to both financial innovation and Beijing’s desire to have fail-safe control over its cash economy.

UK manufacturing decline slows after new Brexit stockpiling rush: PMI (Reuters) A renewed rush to stockpile ahead of another aborted Brexit deadline limited losses for British manufacturers last month, though not by enough to prevent a sixth month of contraction, a survey showed on Friday.

Market Overview: US 10yr note futures are up 0.06% at 130-12, S&P 500 futures are up 0.14% at 3040, Crude oil futures are up 0.79% at $54.61, Gold futures are down -0.13% at $1512.8, DXY is down -0.11% at 97.249, CAD/USD is down 0% at 0.7597.

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Oct  Survey: 85k  Prior: 136k
	Change in Private Payrolls, Oct  Survey: 80k  Prior: 114k
	Change in Manufact. Payrolls, Oct  Survey: -55k  Prior: -2k
	Unemployment Rate, Oct  Survey: 3.60%  Prior: 3.50%
	Average Hourly Earnings MoM, Oct  Survey: 0.30%  Prior: 0.00%
	Average Hourly Earnings YoY, Oct  Survey: 3.00%  Prior: 2.90%
	Average Weekly Hours All Employees, Oct  Survey: 34.4  Prior: 34.4
	Labor Force Participation Rate, Oct  Survey: 63.10%  Prior: 63.20%
09:45 AM	Markit US Manufacturing PMI, Oct F  Survey: 51.50  Prior: 51.50
10:00 AM	ISM Manufacturing, Oct  Survey: 48.9  Prior: 47.8
	ISM Prices Paid, Oct  Survey: 50.0  Prior: 49.7
	Construction Spending MoM, Sep  Survey: 0.20%  Prior: 0.10%

Canadian Economic Data

09:30 AM

Markit Canada Manufacturing PMI, Oct  Survey: —  Prior: 51.0

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update

Tsys trading higher on ‘risk off’, 10Y 1.73% (-4bps), heavy volume in TY futures (590k). China said to have doubts over a long-term trade deal, S&P futures fell 13pts mid morning on the news but have since retraced 50% of the losses.  Sep Per Inc/Spending as expected, PCE core lower (unch vs +0.1%). MNI Chicago PMI on tap.  GOCs higher, in line with tsys, 10Y ~18bps lower and 5s30s 6bps steeper since dovish BOC yest – consensus had been building the BOC would be on hold thru 2020, so it came as a shock the BOC disclosed it had discussed an ‘insurance’ cut for yest meeting.  2Y auction at noon – $3bln new Feb 2022s with the WI/2Y roll 0.5/0.3

News headlines

Fed cuts rates for the third time as US economy slows (CNN) The Federal Reserve cut interest rates for the third time this year as the US economy continued slowing amid ongoing trade disputes and weak global growth. The federal funds rate, which affects the cost of mortgages, credit cards and other borrowing, will now hover between 1.5% and 1.75%. Federal Reserve Chairman Jerome Powell strongly suggested at a press conference Wednesday that the Fed would hold rates steady for the foreseeable future. Powell said the current level is “likely to remain appropriate” given the Fed’s economic outlook of moderate economic growth, a strong labor market and inflation growing at around 2%.

Bank of Canada holds rates, warns economy will be ‘tested’ (BNN) The Bank of Canada forecast a weaker outlook for the domestic economy amid heightened global downside risks, potentially giving itself more leeway to lower borrowing costs. In a decision Wednesday, policy makers kept their current 1.75 per cent policy rate unchanged for an eighth straight meeting, calling the level “appropriate” even as they cut their growth forecasts for the next two years.

China casts doubts that a long-term trade deal is possible with Trump (BNNBloomberg) Chinese officials are casting doubts about reaching a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing a “phase one” agreement. In private conversations with visitors to Beijing and other interlocutors in recent weeks, Chinese officials have warned they won’t budge on the thorniest issues, according to people familiar with the matter. They remain concerned about President Donald Trump’s impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks.

Hong Kong falls into first recession in 10 years: government estimate (BI) Hong Kong slid into recession for the first time since the global financial crisis in the third quarter, advance estimates showed on Thursday, weighed down by increasingly violent anti-government protests and the protracted U.S.-China trade war. The economy shrank 3.2% in July-September from the preceding period, contracting for a second straight quarter and meeting the technical definition of a recession, according to the preliminary government data.

Apple forecasts strong holiday sales due to Apple Watch, AirPods and streaming (CBC) Apple is forecasting sales for the crucial holiday shopping quarter higher than Wall Street expectations, with chief executive Tim Cook saying that new iPhone 11 models were off to “a very, very good start” as sales of AirPods, Apple Watches and streaming services continue to rise. The outlook released Wednesday reaffirms Cook’s strategy to remake a company that consistently depended on iPhone sales for well over half its revenue to one that depends on services and wearables. Since 2017, Cook has had to implement the strategy while also shepherding Apple through a trade dispute between two of its most important markets, the United States and China.

Boeing CEO grilled on 737 Max 8 system failures, his $23M pay package (CBC) Boeing chief executive Dennis Muilenburg acknowledged the company made mistakes in the development of a key safety system at the centre of two fatal 737 Max 8 crashes, and was hammered over his compensation at a U.S. House hearing on Wednesday. Muilenburg acknowledged “we made some mistakes” on the development of Maneuvering Characteristics Augmentation System (MCAS), an anti-stall system that automatically pushed the plane’s nose down, leaving pilots fighting for control.

Beijing could ax extra tariffs on U.S. farm products to boost imports – China trade association chief (Reuters) Beijing could remove extra tariffs imposed since last year on U.S. farm products to ease the way for importers to buy up to $50 billion worth, rather than direct them to buy specific amounts, the head of a government-backed trade association said.

Market Overview: US 10yr note futures are up 0.35% at 129-30, S&P 500 futures are down -0.22% at 3041, Crude oil futures are down -1.09% at $54.46, Gold futures are up 0.85% at $1509.4, DXY is down -0.38% at 97.276, CAD/USD is down 0% at 0.7599.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.532%	2 Year	1.58%
5 Year	1.422%	5 Year	1.577%
10 Year	1.418%	10 Year	1.735%
30 Year	1.598%	30 Year	2.209%

US Economic Data

07:30 AM	Challenger Job Cuts YoY, Oct  Survey: —  )Actual: -33.50% Prior: -24.80%
08:30 AM	Employment Cost Index, 3Q  Survey: 0.70%  )Actual: 0.70% Prior: 0.60%
	Personal Income, Sep  Survey: 0.30%  )Actual: 0.30% Prior: 0.40%
	Personal Spending, Sep  Survey: 0.30%  )Actual: 0.20% Prior: 0.10%
	Real Personal Spending, Sep  Survey: 0.20%  )Actual: 0.20% Prior: 0.10%
	PCE Deflator MoM, Sep  Survey: 0.00%  )Actual: 0.00% Prior: 0.00%
	PCE Deflator YoY, Sep  Survey: 1.40%  )Actual: 1.30% Prior: 1.40%
	PCE Core Deflator MoM, Sep  Survey: 0.10%  )Actual: 0.00% Prior: 0.10%
	PCE Core Deflator YoY, Sep  Survey: 1.70%  )Actual: 1.70% Prior: 1.80%
	Initial Jobless Claims, 46296  Survey: 215k  )Actual: 218k Prior: 212k
	Continuing Claims, 43739  Survey: 1679k  )Actual: 1690k Prior: 1682k
09:45 AM	MNI Chicago PMI, Oct  Survey: 4800.00%  Prior: 4710.00%
	Bloomberg Consumer Comfort, 46.66  Survey: —  Prior: 63.40

Canadian Economic Data

06:00 AM	CFIB Business Barometer, Oct  Survey: —  Actual: 59.80 Prior: 59.30
08:30 AM	GDP MoM, Aug  Survey: 0.20%  Actual: 0.10% Prior: 0.00%
	GDP YoY, Aug  Survey: 1.40% Actual: 1.30% Prior: 1.30%
	Industrial Product Price MoM, Sep  Survey: 0.20%  )Actual: -0.10% Prior: 0.20%
	Raw Materials Price Index MoM, Sep  Survey: 2.50%  )Actual: 0.00% Prior: -1.80%



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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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

Market Update

US tsys trading slightly higher led by the long end, low volume in TY futures (215k), US equity futures unch,  quiet conditions before FOMC decision this aft. A third rate cut is priced in for the Fed today, what will be in focus is outlook for additional ‘adjustments’.  Tsy quarterly refunding statement & Q3 GDP at 8:30.   Tsy refunding not expected to see changes in auction sizes, potential issuance linked to repo market, a ‘SOFR’ FRN and a 20Y tsy fixed issue.  Core EGBs outperforming, 10Y gilt 2.5bps lower – the UK will hold a general election Dec 12th  in another referendum on Brexit.  GOCs higher, in line with tsys, 10Y 1.58%. BOC at 10:00am expected to leave rates unch at 1.75%, in view of last week’s upbeat BOC survey, inflation tracking at BOC target.

News headlines

Stocks Drift as Traders Await Fed Decision, Powell: Markets Wrap (Bloomberg) U.S. equity-index futures drifted alongside stocks in Europe on Wednesday while Asian shares were mixed as markets largely entered a holding pattern in the countdown to the Federal Reserve’s policy decision. Treasuries ticked higher and the dollar slipped.

TSX futures slip ahead of Fed, BoC rate decisions (Reuters) Canada’s main stock index futures inched lower on Wednesday, ahead of policy decisions from the U.S. Federal Reserve and the Bank of Canada.

Outlier status leaves Bank of Canada atop the interest rate heap (BNN) The Bank of Canada is widely expected to hold interest rates steady for an eighth-straight meeting on Wednesday, probably leaving the country with the highest policy rate among the world’s major economies.

Fed prepares to pause after third rate cut (BNN) Jerome Powell may be getting ready to pause this year’s monetary easing campaign.

With balance sheet in background, markets focus on Fed’s rate decision (Reuters) When Federal Reserve officials conclude their two-day policy meeting on Wednesday, they may at last have succeeded in divorcing the actions they take in managing the U.S. central bank’s massive balance sheet from interest rate decisions.

U.S. economy likely lost further ground in third quarter (Reuters) The U.S. economy likely slowed further in the third quarter, held back by a moderation in consumer spending and declining business investment, which could spur the Federal Reserve to cut interest rates again to keep the expansion on course.

In U.S.-China talks, Beijing’s refusal to spell out farm buys is big sticking point (Reuters) U.S. President Donald Trump’s demand that Beijing commit to big purchases of American farm products has become a major sticking point in talks to end the Sino-U.S. trade war, according to several people briefed on the negotiations.

France outshines Germany as euro zone economic gloom deepens (Reuters) Strong domestic stimulus is helping France shrug off a global slowdown even as export-dependent Germany heads closer to a recession, starkly divergent data on the euro zone’s two leading economies showed on Wednesday.

Market Overview: US 10yr note futures are up 0.048% at 129-11, S&P 500 futures are up 0.03% at 3036.75, Crude oil futures are up 0.11% at $55.6, Gold futures are up 0.4% at $1496.6, DXY is down -0.04% at 97.652, CAD/USD is down -0.04% at 0.7644.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.697%	2 Year	1.634%
5 Year	1.611%	5 Year	1.65%
10 Year	1.588%	10 Year	1.823%
30 Year	1.729%	30 Year	2.316%

US Economic Data

07:00 AM	MBA Mortgage Applications, Oct 25  Survey: —  Actual: 0.60% Prior: -11.90%
08:15 AM	ADP Employment Change, Oct  Survey: 110k  Actual: 125k Prior: 135k Revised 93k
08:30 AM	GDP Annualized QoQ, 3Q A  Survey: 1.60%  Prior: 2.00%
	Personal Consumption, 3Q A  Survey: 2.60%  Prior: 4.60%
	GDP Price Index, 3Q A  Survey: 1.90%  Prior: 2.40%
	Core PCE QoQ, 3Q A  Survey: 2.20%  Prior: 1.90%
02:00 PM	FOMC Rate Decision (Upper Bound), Oct 30  Survey: 1.75%  Prior: 2.00%
	FOMC Rate Decision (Lower Bound), Oct 30  Survey: 1.50%  Prior: 1.75%

Canadian Economic Data

10:00 AM

Bank of Canada Rate Decision, Oct 30 Survey: 1.75%  Prior: 1.75%

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

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