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Market Update

Tsys lower, curve 2bps steeper with the 10Y above 2.40% for the first time since July 2015 as crude rises over $50 after OPEC decided to cut production yest, its first cut in eight years. Tsys pressured since Asia trading, brief reprieve ~4:00AM. German bunds lower, underperforming tsys in the downtrade, bund curve steeper weighed by sov supply from Spain & France also better than exp German & Italy PMIs. GOCs lower, yields 3-5bps higher led by the 10Y @ 1.63% highest since last Nov.  Provis opening 0.5bps tighter after ending the month 0.5bps wider which in the context of 3 provi & 2 muni deals for $1.44bln is not bad. Alberta, periph spds benefitting from rise in crude, Alta/Ont 46 11.5/11 tightest in a month. TD Q4 eps matched exp ($1.22), thou PCLs were lower, CIBC beat est $2.60 vs $2.48, lower PCLs, raised its dividend $1.24 from $1.21.

News headlines

Global Bonds Suffer Worst Monthly Meltdown as $1.7 Trillion Lost (Bloomberg) The Bloomberg Barclays Global Aggregate Total Return Index lost 4 percent in November, the deepest slump since the gauge’s inception in 1990. Bonds in Europe extended declines with their U.S. peers as OPEC’s agreement on Wednesday to cut oil production added to prospects of higher inflation. The reflation trade has been driving markets since Donald Trump’s presidential election win due to promises of tax cuts and $1 trillion in infrastructure spending. All this has prompted investors to dump debt that was offering near-record-low yields and pile into stocks.

Dollar Slips Before Jobs Data as Oil Trades Near $50; Bonds Drop (Bloomberg) Financial markets started the month on an uncertain footing after a dramatic November, with the dollar retreating from a nine-month high, Treasuries falling and European stocks snapping a two-day advance. The U.S. currency declined against most of its 16 major peers before a payrolls report on Friday, while a measure of euro volatility jumped to the highest since before the Brexit vote as investors brace for Italy’s referendum and Austria’s presidential election on Dec. 4 and the European Central Bank’s policy decision in a week’s time. The slump in Treasuries extended the biggest climb in 10-year yields since 2009. European stocks fell with U.S. equity-index futures, while oil advanced after a more than 9 percent rally on Wednesday.

Jobless claims rise to five-month high (Reuters) The number of Americans filing for unemployment benefits rose more than expected last week, hitting their highest level in five months, but the underlying trend remained consistent with a strengthening labor market. Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 268,000 for the week ended Nov. 26, the Labor Department said on Thursday. That was the highest level since June and marked the second straight week of increases.

UK factory growth cools as weak pound fuels cost pressures: PMI (Reuters) British manufacturing growth cooled unexpectedly in November as factories grappled with soaring costs caused by sterling’s slump after June’s Brexit vote, even before this week’s jump in oil prices. Thursday’s Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) also suggested the weak pound failed to boost exports by as much as in previous months.

CIBC hikes dividend as 20% profit jump beats expectations (Financial Post) Canadian Imperial Bank of Commerce, Canada’s fifth-biggest lender, reported a better-than-expected quarterly profit, driven by strong performance in its capital markets business. The company said the unit gained from higher equity trading and underwriting revenue, as well as a rise in financing activity in the fourth quarter. Net income from capital markets business surged 52.5 per cent to $276 million in the quarter ended Oct. 31.

TD Bank earnings rise on strong U.S. growth (Financial Post)  Toronto-Dominion Bank, Canada’s second-biggest lender, on Thursday reported a rise in fourth-quarter earnings, in line with market expectations, driven by strong growth at its U.S. retail business. The bank said its earnings rose to $1.22 per share in the fourth quarter to Oct.31, up from $1.14 in the same period the year before, matching the average forecast by analysts according to Thomson Reuters I/B/E/S.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.2761% at 124-6, S&P 500 futures are up 0.11% at 2201.25, Crude oil futures are up 2.35% at $50.6, Gold futures are down -0.1% at $1172.7, DXY is down -0.33% at 101.17, CAD/USD is down -0.41% at 0.7473.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market Update

Tsys sharply lower, yields 5-6bps higher, 10Y 2.36% weighed by soaring oil on news of OPEC agreement on cut in production by 1.2mln b/d to 32.5mln, this was less than the 1.4mln b/d expected. US data mixed: ADP employment stronger, 216k vs 170k exp, thou Pers inc/spend weaker than exp. GOC yields also trending higher, 10Y 1.56% (+5bps) , Cda/US tighter 2-3bps despite a stronger Sep GDP – 0.3% vs 0.1% exp. Provi spds opening bid, spds 1bp tighter, demand is strong with Dec 1st ext and higher yields enticing buyers. Busy day in corps yest with $4bln in supply – $3bln BNS 5 & 10Y dep note, HSBC $1bln 7Y senior. The 10Y BNS looked somewhat expensive @ 107, yet given BMO 25s trade closer to 95, 12 bps is not bad. This also makes longer dated NVCC look attractive TD 4.859 31/26 @ 205.

News headlines  

U.S. stock futures rise on optimism of big OPEC output cut (Reuters) U.S. stock index futures edged up on Wednesday as oil prices soared on optimism of a bigger-than-expected output cut. Oil prices jumped 8.4 percent after Saudi Arabia’s energy minister said the OPEC and other producers, gathered in Vienna, were close to a deal.

OPEC Agrees to Cut Output by 1.2 Million Barrels a Day (Bloomberg) OPEC reached an agreement to cut oil production by 1.2 million barrels to 32.5 million barrels a day at its ministerial meeting in Vienna, Bloomberg News reports, citing a delegate to the group.

Euro-Area Inflation Accelerates Before Key ECB Decision on QE (Bloomberg) Euro-area inflation accelerated in November, continuing its slow improvement before a crucial European Central Bank meeting next week. Consumer prices rose 0.6 percent from a year earlier, following a 0.5 percent increase in October, the European Union’s statistics office in Luxembourg said on Wednesday. Core inflation was unchanged at 0.8 percent in November. Both readings match the median estimate on Bloomberg surveys of economists.

Steel, Iron-Ore Prices Hammered by China Curbs (WSJ) Steel and iron-ore prices in China plunged on Wednesday after exchanges there lowered the daily trading limit and raised margin requirements in an effort to curb speculation. Shanghai steel-rebar futures for delivery in December pared some losses in late Asia trade to close 5.1% lower at 3,044 yuan ($441) a metric ton. Dalian iron-ore futures for delivery in January ended down 6.0% at 598 yuan a ton.

RBS fails Bank of England stress test (TheGuardian) Royal Bank of Scotland has emerged as the biggest failure in the Bank of England’s annual health check of the UK banking system. The bank, which is 73% owned by taxpayers, issued a plan on Wednesday to Threadneedle Street intended to bolster its financial strength by an estimated £2bn.

Sterling dips after best month vs euro since 2009 (Reuters) Sterling fell by half a percent against the dollar and euro in morning trade in London on Wednesday, with dealers citing month-end rebalancing by investors after its strongest performance against the single currency since early 2009.

Ottawa approves two pipelines, rejects one while imposing tanker ban on northern B.C. coast (Financial Post) Prime Minister Justin Trudeau announced approvals for two major export pipelines Tuesday, while dismissing a third pipeline and imposing a ban on oil tanker traffic on the northern section of B.C.’s coast. Prime Minister Justin Trudeau announced approvals for two major export pipelines Tuesday, while dismissing a third pipeline and imposing a ban on oil tanker traffic on the northern section of B.C.’s coast.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.562% at 124-13, S&P 500 futures are up 0.34% at 2211.25, Crude oil futures are up 7.87% at $48.79, Gold futures are down -0.41% at $1185.9, DXY is up 0.22% at 101.15, CAD/USD is down -0.33% at 0.747.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market Update

Tsys trading lower, yields 1-3 bps higher, US 10Y 2.35 after Q3 GDP came in better than exp at 3.2% – the strongest qtr in two yrs, with upward revisions to PCE & residential fixed invest. Crude taking another leg lower on less hope of a production cut at Wed meeting after Iran oil minister said country won’t cut production. Core Euro bonds mixed with long end UK gilts weighed by new long 2056 linker supply for £ 2.25bln, thou the order book was said to be in excess of £11bln. Tsys could see support in the next couple of days from m/e extension buying as well as talk of a huge sale imbalance from equities to fixed income according to GS.  In Canada, GOCs lower after 8:30 data, curve 1bp steeper with the 10Y 1.56% vs last Tuesday’s 1.62% intraday high. BOC Poloz speech highlighting the strength of Cdn service sector had little impact, he noted there is still considerable uncertainty. Provis unch, supply talk from QC (longs) & Ontario – both are already well spoken for.

News headlines  

U.S. stock futures slightly higher ahead of economic data (Reuters) U.S. stock index futures were slightly higher on Tuesday, a day after stocks posted their worst performance in nearly a month, with investors awaiting a raft of economic data including GDP numbers. Wall Street closed lower on Monday, dragged down by financial and consumer discretionary sectors, as some investors booked profits on the heels of a record-setting week.

Oil Retreats Below $47 Before OPEC Meeting as Rand Falls on Zuma (Bloomberg) Oil retreated back below $47 as OPEC members failed to bridge differences on production cuts, while a rally in metals ran out of steam. The rand plunged after President Jacob Zuma survived a leadership threat. Commodity and energy producers were the biggest decliners in the Stoxx Europe 600 Index. Crude slid as Iraq and Iran raised objections over the distribution of output reductions and Russia said it’s not planning to attend crucial talks with the Organization of Petroleum Exporting Countries on Wednesday. Copper slumped for the first time in seven days and the Bloomberg Dollar Spot Index ended a two-day loss.

Euro-Area Confidence Rises as ECB Reviews Asset-Purchase Program (Bloomberg) Euro-area economic confidence inched up ahead of a much-anticipated European Central Bank decision that will take place amid signs of brightening prospects for the 19-country region. An index of executive and consumer sentiment increased to 106.5 in November from a revised 106.4 in October, the European Commission in Brussels said on Tuesday. That compares with a forecast of 106.8 in a Bloomberg survey.

Services, not manufacturing or resources, driving economic recovery: Stephen Poloz (Financial Post) Stephen Poloz, the governor of the Bank of Canada, told a Toronto-based think-tank that services, and not manufacturing or resources, will drive Canada’s near term economic growth. Poloz spoke at a meeting of the C.D. Howe Institute in Toronto on Monday night. He said manufacturing and natural resources remain important parts of the Canadian economy, but it’s been 60 years since the number of Canadians employed in the goods sector surpassed those working in services.

‘A key test’: Canadian oil executives await Trudeau’s grand bargain on pipelines (Financial Post) Many in Canada’s business community will be watching if Prime Minister Justin Trudeau’s pipeline decisions, expected as early as Tuesday, deliver on his “grand bargain” — carbon pricing for pipeline approvals. “This is a key test of whether the Trudeau government is going to balance the needs of a resource-based economy with those of a climate agenda,” said John Manley, president and CEO of the Business Council of Canada.

Scotiabank profit climbs 9% to $2.01 billion, beating market expectations (Financial Post) Bank of Nova Scotia, Canada’s third-biggest lender, reported a better-than-expected rise in fourth-quarter earnings, driven by a strong performance from its domestic and international banking businesses. The bank is reporting $2.01 billion of net income for the three months ended Oct. 31, up from $1.84 billion a year earlier.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.1492% at 125-15, S&P 500 futures are up 0.02% at 2201.25, Crude oil futures are down -3.74% at $45.32, Gold futures are down -0.75% at $1184.8, DXY is up 0.13% at 101.46, CAD/USD is up 0.42% at 0.7426.

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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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