Commentaires

Market Update

Tsys higher, rising after non farm payrolls came up short of estimates (178k vs 180k) with Oct revised lower, US 10Y 2.40%(-4bps). Tsys higher in Asia on position squaring before employment data as well as Italy referendum this weekend. European rising to session highs after payrolls, outperforming tsys, UK 10Y gilts ~7bps lower, 10Y bunds 4bps lower @ 0.327%. Italian yields 5-6 bps lower before Italy vote Sunday on constitutional reform, a ‘no’ result is expected and PM Renzi has said he would resign should that be the outcome. GOCs opening higher, spds 2bps vs tsys, underpeforming on better than exp Nov Cda employment no.s (10k vs -15k exp) with the unemployment rate down 0.2% to 6.8% the lowest since June . Provis unch yest despite the highest yields since Dec., starting the day unch with supply still likely as today Ont pays out ~4bln Dec 2 cpn pmt.

News headlines  

Stocks Fall With Commodities as Caution Prevails Before Payrolls (Bloomberg) Financial markets are ending the week the way they started, overshadowed by caution, as stocks fall with commodities and a selloff in Treasuries abates. The Stoxx Europe 600 Index extended its first weekly decline in a month and S&P 500 Index futures signaled further losses in U.S. equities as investors shift focus to a report on American payrolls. Oil led raw materials lower as it retreated from a six-week high, the British pound gained against all of its 16 major peers and German bunds ended a three-day slump.

Oil softens after OPEC decision prompts big weekly rally (Reuters) Oil prices fell 1.5 percent to steady at around $53 a barrel on Friday after the biggest weekly rally since 2009 following OPEC’s decision this week to cut crude output in order to rein in a global glut. The market focus now shifts to the implementation and impact of OPEC’s first production agreement since 2008, which will be joined by non-OPEC producers, after data showed output in Russia rose in November to a post-Soviet high.

Fed Should Lead Global Rate Rise, Former BOC Governor Says (Bloomberg) A former Group of Seven central banker says the time has come for the Federal Reserve to lead a coordinated global rate increase. David Dodge, who ran the Bank of Canada between 2001 and 2008, will give a speech in Toronto Friday arguing the best medicine for the world’s economy would be higher interest rates, combined with new government stimulus through spending or tax cuts.

Why 2016 May Be the Year of ‘Peak Housing’ for Canada (Bloomberg) There’s one particularly troubling tidbit to be found amid Canada’s surprisingly strong third-quarter growth: residential investment hit the skids. The annualized 5.5 percent decline in this category was its worst quarterly showing since 2010, notes Macquarie Capital Markets Analyst David Doyle, who views the details of the report as « growing evidence that 2016 will be the year of ‘peak housing’ for Canada. »

China’s Central Bank Is Facing a Major New Headache (Bloomberg) People’s Bank of China Governor Zhou Xiaochuan already has one policy headache with the currency falling to near an eight-year low. He could have an even bigger one next month. That’s when a $50,000 cap on how much foreign currency individuals are allowed to convert each year resets, potentially aggravating capital outflow pressures that are already on the rise. If just 1 percent of China’s almost 1.4 billion people max out those limits, that’s an outflow of about $700 billion — more than the estimated $620 billion that Bloomberg Intelligence estimates indicate has already flowed out in the first 10 months of this year.

National Bank of Canada posts better-than-expected profit (Reuters) National Bank of Canada (NA.TO: Quote), the country’s sixth biggest lender, posted a better-than-expected adjusted profit for the fourth quarter, benefiting from growth in its retail and wealth management businesses. Net income at the bank’s personal and commercial division increased by 7.1 percent to C$196 million ($147 million) in the three months ended Oct.31.

Overnight markets                                                                     

Overview: US 10yr note futures are up 0.2142% at 124-8, S&P 500 futures are down -0.08% at 2190.25, Crude oil futures are down -0.61% at $50.75, Gold futures are up 0.1% at $1170.6, DXY is down 0% at 101.04, CAD/USD is down -0.23% at 0.7525.

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 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