Commentaires

Market Update

US tsys trading higher , 10Y yields down 2.5bps 2.29% on the back of sharp rally in UK gilts, German bunds, even as US equity futures extending gains after the S&P closed at a record high yest, crude is higher. Gilt yields 4-6 bps lower led by longs after the DMO announced plans to borrow an extra £4.25bln this year below dealer expectations of as much as £18bln to cover costs related to the decision to leave the EU. Tsys rallied late yest on Japanese earthquake and picked up steam in Europe on gains in EGBs. The US auctions $34bln in 5Y notes at 1:00pm and $13bln 2Y FRNs at 11:30. GOCs higher, tighter vs tsys after weaker core Sept Retail Sales (unch vs 0.5% exp). Provis unch yest in quiet trading with some steepening of the Ont 10s30s credit curve, this morning spds better bid, Ont longs trading up at 92 even as long Ont deal rumoured, Q/Ont 48 spd trading up at 2.6 bps at new lows! continues to grind tighter.

News headlines  

U.S. stock futures point to extension of post-election rally (Reuters) U.S. stock index futures were higher on Tuesday, pointing to an extension of the post-election rally, a day after Wall Street closed at record levels on hopes that President-elect Donald Trump’s policies would prove market friendly. The small cap Russell 2000 index hit a record high on Monday, marking the first time since December 1999 that all four major Wall Street indexes closed at record levels on the same day.

OPEC experts resume talks on oil output cut, delegates upbeat (Reuters) OPEC experts discussing how to implement a plan to cut oil output are likely to reach agreement later on Tuesday, a Nigerian delegate said, a possible sign of progress in finalizing the group’s first supply-limiting deal since 2008. The High-Level Committee – a technical body comprised mainly of OPEC governors and national representatives who report to their respective ministers – started a second day of talks at OPEC headquarters in Vienna at about 0930 GMT (4:30 a.m. ET).

UK public finances better than expected (but still weak) (TheGuardian) Here we go! Britain borrowed less than feared last month, but is still on track to breach this year’s deficit target. Britain borrowed £4.796bn in October, the ONS says. That’s down from £6.4bn in October 2015. That is rather better than the £6bn which the City expected [this excludes the impact of the taxpayers’ stakes in the banking sector].

Metals rally helps knock dollar off 13 1/2-year high (Reuters) The dollar retreated from a six-month peak against the yen on Tuesday, while a push higher for copper and iron ore prices drove commodities-linked currencies higher, led by the Australian dollar. Two bullish weeks for the dollar since the election of Donald Trump looked to be subsiding before the Thanksgiving holiday, and traders said the widening of an oil rally to other commodities was encouraging a squeeze on pro-dollar positions.

Fed Hike Is Certainty for Bond Traders as Market Odds Reach 100% (Bloomberg) A Federal Reserve interest-rate increase next month is as certain as death and taxes for bond traders, as speculation mounts that Donald Trump’s reflationary policies will mean a quicker pace of monetary tightening. The market-implied odds of action at the central bank’s Dec. 13-14 meeting reached 100 percent for the first time, according to Bloomberg calculations based on futures.

George Weston’s restructuring costs fall, profit rises 72% (TheGlobeAndMail) George Weston Ltd. is reporting a big increase in third-quarter profit, mostly because of a decline in restructuring charges, compared with the same time last year. The parent company of Loblaw and Weston Foods says net income available to common shareholders was $254-million, up 72 per cent from $147-million in the comparable period last year.

Overnight markets                                                                     

Overview: US 10yr note futures are up 0.1742% at 125-25, S&P 500 futures are up 0.23% at 2198, Crude oil futures are down -0.68% at $47.91, Gold futures are up 0.28% at $1213.2, DXY is up 0.06% at 101.11, CAD/USD is down -0.03% at 0.7454.

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

US tsys trading higher, yields 1-4 bps lower, curve flatter, US 10Y 2.32 (-4bps).  Tsys saw buying in Asian hours then tapering off in Europe as German bunds declined on higher oil – speculation of a deal at the next OPEC meeting in Vienna. Fed Fischer said there’s a need for fiscal measures/infrastructure investment to lift growth. The US tsy auctions 2/5/7Y notes for $88bln this week. Inflation expectations have surged since Trump won the election, based on 10Y breakevens while mkts are pricing in ~98% odds of a rate hike at the Dec 14th FOMC.  GOCs are higher, with spds 2bps wider vs tsys. Provis openign unch after closing 1-2 bps tighter last week, Ont 10/30 credit curve 0.5bps tighter – Ont 10Y spds at the tighest lvls since Aug 2015 despite significant provi & corp supply last week there was good appetite for longer spd product in advance of the Dec 1 extension & higher GOC yields.

News headlines 

Futures up as oil prices rise; Fed’s Fischer in focus (Reuters) U.S. stock index futures inched up on Monday, supported by higher oil prices and the lingering effects of a rally sparked by Donald Trump’s surprise victory in the U.S. election.

Oil Climbs as Iran, Iraq Signal Deal Hope Before Vienna Meeting (Bloomberg) Oil extended gains as Iran signaled optimism OPEC will agree to a supply-cut deal and Iraq said it will offer new proposals to help bolster the group’s unity before members meet next week in Vienna. Prices rose as much as 2.1 percent in New York, adding to last week’s 5.3 percent gain. Iran Oil Minister Bijan Namdar Zanganeh said it’s “highly probable” members will reach a consensus, according to comments published by Shana news service.

German growth to pick up significantly in fourth quarter: Bundesbank (Reuters) Manufacturing is expected to drive a rebound in German economic growth in the fourth quarter after several lackluster months, Germany’s central bank said in a monthly report on Monday. With sentiment improving and new orders rising, employment growth is expected to continue, boosting the euro zone’s biggest economy after several relatively modest quarters, the Bundesbank said.

Japan October exports fall more than expected as strong yen drags (Reuters) Japan’s exports fell in October for a 13th consecutive month and by more than expected as the strength of the yen and sluggish foreign demand weighed on trade, although current yen weakness could change the outlook. Ministry of Finance (MOF) data showed on Monday that exports fell 10.3 percent in the year to October, pulled down by a strong rise in the value of the yen and lower export volumes, much weaker than the expected 8.6 percent drop and September’s 6.9 percent decline.

BoE to raise deposit ‘insurance’ after pound’s Brexit plunge (Reuters) The Bank of England has proposed raising « insurance » on bank account deposits back to 85,000 pounds ($105,000) from Jan. 30, 2017, to reflect the sharp fall in sterling following Britain’s decision to leave the European Union. The level of deposit account protection is set under EU rules at 100,000 euros or its equivalent in member states that do not use the single currency.

First cluster of diamonds to be auctioned from Quebec mine (TheGlobeAndMail) Stornoway Diamond Corp. is selling its first cluster of Quebec gemstones this week, the introductory auction of what it believes will be a strong market for its diamonds in the years ahead as overall industry supply begins to dwindle. The Longueuil, Que.-based producer will test the value of its initial batch of diamonds on the open market in Antwerp, Belgium, in a multiday sale ending Nov. 23. Stornoway said it will sell about 91,000 carats of gemstones in roughly two dozen lots arranged by size and quality in a tender process organized by diamond broker Bonas Group. The best offer takes each lot.

Ottawa to announce coal phase-out, aims for virtual elimination by 2030 (TheGlobeAndMail) The Liberal government is set to announce its plan to virtually eliminate the use of traditional coal-fired electricity by 2030, but will offer some flexibility to the provinces, sources have told The Globe and Mail. Environment Minister Catherine McKenna is expected to reveal the coal-phase-out plan Monday as one of a series of measures that Ottawa is unveiling ahead of the first ministers’ meeting in December, when Prime Minister Justin Trudeau hopes to conclude a pan-Canadian climate accord.

Overnight markets

Overview: US 10yr note futures are up 0.1742% at 125-25, S&P 500 futures are up 0.25% at 2186.25, Crude oil futures are up 2.71% at $46.93, Gold futures are up 0.46% at $1214.2, DXY is down -0.39% at 100.82, CAD/USD is down -0.62% at 0.7449.

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

US tsys higher, yields 2-3bps lower with the 10Y 2.283 (-2bps) at the lower end of the o/n range. Early Asian trade saw follow thru selling from Thurs, 10s hit 2.34% new high before rebounding in Europe with bunds. Bunds recovering from earlier weakness, ECB Pres Draghi reiterating accommodative stance on mon policy, doesn’t see any inflation threat. GOCs higher, maintaining gains after Cdn CPI came in as exp for Oct , 0.2% with the core softer 0.2% vs 0.3% (1.7% y/y vs 1.8%). Provincial spreads closed another 1-2bps yest, Ont issued reopened 10s @ 84bps which was very well received closing 83/82. CMB spds also moving in, yet 10Y CMBs look particularly attractive vs Onts, the Ont/CMB 26 spd at the bottom of the range ~27bps. (26-31 bps 6mnth range). PSP Capital (Aaa/AAA) priced its 7Y @ 83 bps vs GOC curve or ~8bps over ontarios.

News headlines  

Dollar Extends Trump-Trade Rally as Gold Declines With Stocks (Bloomberg) The dollar jumped versus all of its major counterparts, adding to its best rally in more than 15 years against the yen and its longest winning run since the euro was created. Central banks in Asia were compelled to take steps to shore up their currencies, while the greenback’s strength also weighed on commodities from metals to oil.

ECB’s Draghi, Weidmann differ on inflation ahead of key decision (Reuters) European Central Bank chief Mario Draghi said on Friday the rebound in euro zone inflation was weak, while his top critic, Bundesbank head Jens Weidmann, said price pressures would build eventually and ‘extra care’ was needed with even temporary unconventional measures.

Hot China house prices cool in October as curbs on speculation bite (Reuters) China’s booming property market showed early signs of a softening in October after a fast and furious price rally that propped up economic growth this year. A National Bureau of Statistics (NBS) survey out on Friday showed October’s monthly price growth virtually halved to 1.1 percent from September’s 2.1 percent, as most of China’s first- and second-tier cities posted slowing price growth.

Volkswagen to cut 30,000 jobs at VW brand by 2020 (Reuters) Volkswagen (VOWG_p.DE) and its powerful labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for avoiding forced redundancies in Germany until 2025, a compromise which leaves the carmaker’s profitability still lagging rivals. The turnaround plan announced on Friday will lead to 3.7 billion euros ($3.9 billion) in annual efficiency gains and lift the VW brand’s operating margin to 4 percent by 2020, from an expected 2 percent this year.

CMHC’s mortgage insurance business vulnerable to sharply rising interest rates (TheGlobeAndMail) A sudden sharp rise in interest rates that could cause Canadian home prices to plunge 30 per cent would trigger more than $1-billion in losses to the country’s government-backed mortgage insurer, according to the results of stress tests released today by the federal housing agency.

Canada is naive if it thinks Donald Trump will play nice on NAFTA (Financial Post) There are two Donald Trumps. There’s the firebrand xenophobe progressives see, the one who spouted conspiracy theories and insults during his shockingly abrasive, fear-mongering campaign. The other Trump is more recent, and less scary: The one who gave a surprisingly conciliatory victory speech in the wee hours of Nov. 9; who praised Hillary Clinton for her service to her country; who at times seems more a would-be statesman than a rabble-rouser; the one who’s going to temper his incendiary campaign positions — which, you know, he maybe only said to get elected.

Overnight markets                                                                     

Overview: US 10yr note futures are down -0.062% at 126-0, S&P 500 futures are down -0.02% at 2183.75, Crude oil futures are down -0.07% at $45.39, Gold futures are down -0.41% at $1211.9, DXY is up 0.2% at 101.09, CAD/USD is up 0.03% at 0.7393.

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