Comments

Market Update

US tsys higher, yields 1bp lower across the curve on avg volume, 10Y 1.833%, S&P futures little changed (-2.5) after reaching record high yest. Second tier data in the US included Consumer Sentiment & Pending Home Sales before FOMC tomorrow. According to the South China Morning Post Trump and Xi will meet in Chile Nov 17th to sign interim trade deal. CAD continuing to creep higher, 1.3046 before BOC & August GDP.  GOCs higher & tighter vs tsys led by 10s, this coming after yesterday’s $0.70 underperformance in CGBs vs TY futures. We could see some follow thru to this morning’s short covering in Can/US going into BOC/GDP considering the steady cheapening since March.

News headlines

U.S. Futures Dip, Europe Stocks Drop as Bonds Rise: Markets Wrap (Bloomberg) U.S. index futures drifted lower and European stocks dropped as investors weighed some of the season’s biggest corporate earnings and the possibility of a Federal Reserve rate cut this week. Treasuries edged higher and most euro-area bonds rose.

TSX futures fall as crude prices slip (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Tuesday as oil prices dropped on expectations of rising U.S. crude inventories.

Bank of Canada seen on hold, inviting ‘hot-money’ flows (Reuters) The Bank of Canada is likely to keep interest rates steady on Wednesday in its first policy announcement since the federal election, despite signs that investors seeking higher-yielding currencies are shifting more money into Canadian dollars.

Three-peat? Fed copies 1990s playbook in bid to avert a downturn (Reuters) In the midst of what became a golden decade for the U.S. Federal Reserve, central bankers twice in the 1990s cut interest rates in short bursts that managed to help the U.S. economy continue growing despite slowing investment and weak growth overseas.

U.S.-China tensions spur progress on giant Asia trade pact (Reuters) Tensions between the United States and China have given new impetus to a China-backed trade pact and there is a chance of major progress, if not final agreement, when Southeast Asian leaders meet in Bangkok this week, analysts say.

China to ease foreign investments curbs, won’t force tech transfers: vice minister (Reuters) China will eliminate all restrictions on foreign investments not included in its self-styled “negative lists”, a vice commerce minister said on Tuesday, signaling upcoming directives.

Ukraine PM wants new three-year deal with IMF (Reuters) Ukrainian Prime Minister Oleksiy Honcharuk said on Tuesday his government wanted to sign a new three-year loan agreement with the International Monetary Fund and he expected to reach an agreement with its officials on the content in the coming weeks.

Largest China Convertible Bond Draws $1.1 Trillion in Bids (Bloomberg) Investors seized the chance to take part in China’s largest convertible bond sale, showing just how coveted the equity-like securities have become.

Market Overview: US 10yr note futures are up 0.06% at 129-08, S&P 500 futures are down -0.11% at 3033, Crude oil futures are down -1.22% at $55.13, Gold futures are down -0.5% at $1488.3, DXY is up 0.09% at 97.848, CAD/USD is up 0.01% at 0.7659.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.709%	2 Year	1.636%
5 Year	1.632%	5 Year	1.659%
10 Year	1.612%	10 Year	1.837%
30 Year	1.749%	30 Year	2.329%

US Economic Data

09:00 AM	S&P CoreLogic CS 20-City MoM SA, Aug  Survey: -0.10%  Prior: 0.02%
	S&P CoreLogic CS 20-City YoY NSA, Aug  Survey: 2.10%  Prior: 2.00%
	S&P CoreLogic CS 20-City NSA Index, Aug  Survey: —  Prior: 218.00
10:00 AM	Conf. Board Consumer Confidence, Oct  Survey: 128.0  Prior: 125.1
	Pending Home Sales MoM, Sep  Survey: 0.90%  Prior: 1.60%
	Pending Home Sales NSA YoY, Sep  Survey: 3.60%  Prior: 1.10%

Canadian Economic Data

There is no Canadian economic data 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, 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 lower on avg volume (382k), 10Y 1.84% (+5bps), tsy curve 1bp steeper 2s10s @19bps. Big data week highlighted by FOMC (25bp cut expected) & Payrolls. Equity futures continuing higher (S&P +12, Nasdaq +39) with the S&P500 poised to hit a record high  – 35% of S&P firms reporting earnings this week, so far 80% have beaten on EPS and 65% on sales (MNI), with only 32% mentioning the word ‘recession’ in their earnings call according to CNBC.  Core EGBs lower, pressured after Donald Tusk, president of the European Council, announced a 3 month extension to Brexit deadline until Jan 31st. In Canada, GOCs weaker in line with tsys, 10Y highest since Sep 16th.  BOC decision Wednesday – no change in rates exp, risk is that outlook actually improves since Sep meeting considering improved data flow and progress on trade , USMCA.

News headlines

U.S. Futures Rise as Fed Meeting Nears; Bonds Fall: Markets Wrap (Bloomberg) U.S. index futures climbed while stocks in Europe struggled for traction at the start of a week in which big corporate earnings continue to roll in and the Federal Reserve is expected to cut interest rates. Treasuries dropped, pushing the 10-year yield to a six-week high.

TSX futures little changed as trade hopes offset weaker oil (Reuters) Futures for Canada’s main stock index barely moved on Monday, as a fall in oil prices was offset by increased expectations of a Sino-U.S. trade deal.

Hong Kong enters recession as protests again erupt in flames (Reuters) Hong Kong has fallen into recession, hit by five months of anti-government protests that erupted in flames at the weekend, and is unlikely to achieve any growth this year, the city’s Financial Secretary said.

IMF urges Lebanon reforms, protesters keep up pressure (Reuters) The International Monetary Fund said on Monday Lebanon should urgently implement reforms to restore confidence and economic stability, as protesters kept up the pressure on politicians they accuse of corruption by setting up new road blocks.

Italian Bonds Stumble as Cracks Start Showing in Political Calm (Bloomberg) Bond buyers just got a reminder that owning Italian debt isn’t quite the breeze it felt like in recent months.

Loonie erodes U.S. dollar’s high-yielding status as BoC, Fed decisions loom (BNN) When the Canadian and U.S. central banks announce policy decisions on Oct. 30, traders are betting that the divergent decisions will allow the loonie to blunt the U.S. dollar’s status as the highest yielding Group-of-10 currency.

France orders EDF to tackle nuclear project failings (Reuters) EDF must present an action plan within a month on how to tackle skills shortages and other problems that have caused delays at key nuclear projects and damaged the reputation of the industry, French Finance Minister Bruno Le Maire said on Monday.

Market Overview: US 10yr note futures are down -0.193% at 129-09, S&P 500 futures are up 0.29% at 3029, Crude oil futures are down -0.32% at $56.48, Gold futures are down -0.04% at $1504.7, DXY is down -0.12% at 97.718, CAD/USD is up 0.04% at 0.7656.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.679%	2 Year	1.642%
5 Year	1.598%	5 Year	1.654%
10 Year	1.568%	10 Year	1.831%
30 Year	1.701%	30 Year	2.319%

US Economic Data

08:30 AM	Chicago Fed Nat Activity Index, Sep  Survey: 0.00 Actual: -0.45 Prior: 0.10
	Wholesale Inventories MoM, Sep P  Survey: 0.30% Actual: -0.30% Prior: 0.20%
10:30 AM	Dallas Fed Manf. Activity, Oct  Survey: 1.0  Prior: 1.5

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Oct 25  Survey: —  Prior: 57.5

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 after very low volume o/n session (205k TY futures), equity futures giving up early gains (S&P -2.0, Nasdaq -2.75), US 10Y 1.75% (-1.5bps). Amazon down 6.5% pre-mkt on earnings miss and lower guidance. University of Michigan sentiment at 10:00 – the preliminary reading for October saw a drop in long-term inflation expectations to a record low 2.2%. Next week data picks up with focus on expected 25bp rate cut from the Fed on Wednesday. GOCs mixed curve slightly flatter with the 10Y 1.52%. BOC meeting next week with no change in rates or outlook expected, despite downgrading of Q3 growth forecasts after wholesale trade volumes fell 1.3% in August.

News headlines

Muted data and Brexit woes douse stocks rally (Reuters) Geopolitical tensions, muted economic data and mixed earnings stymied global stocks and weighed on crude oil prices on Friday with sterling hovering just above one week lows amid a new bout of Brexit anxiety.

Weak euro zone economy justifies ECB’s latest stimulus: Wunsch (Reuters) A recent string of dismal economic indicators justifies the European Central Bank’s move last month to provide more stimulus, and the bank can ease more if it needs to, Governing Council member Pierre Wunsch said. While ultra-loose policy raises valid concerns about financial stability, the move was still necessary and gives incoming ECB boss Christine Lagarde time to prepare for a broader review of the bank’s strategy, Wunsch, Belgium’s central bank governor, told Reuters in an interview.

U.S. Fed seen cutting rates next week and then hitting pause button (BNNBloomberg) Federal Reserve officials will signal they’re likely to take a break from cutting interest rates after lowering them again next week, according to a majority of economists surveyed by Bloomberg.In an Oct. 21-24 poll of 40 economists, 85 per cent said they anticipate the Federal Open Market Committee will reduce rates by a quarter percentage point when it wraps up a two-day meeting in Washington on Wednesday. That would lower the target range for the Fed’s benchmark rate to 1.5 per cent to 1.75 per cent.

Alberta counting on oil and pipeline surge to balance the books: budget (FP) Following spending cuts across the private sector, the Alberta government tabled a budget Thursday that makes deep cuts to the public sector, but that relies on a surge in oil and gas revenues to balance the books in four years. Alberta Finance Minister Travis Toews said his province has had “a spending problem” as he tabled a budget that included a 2.8 per cent cut to operating expenses over the next four years and a 7.7 per cent reduction in the size of the public service in the same period. Next year, the province expects to cut 764 jobs.

Canadian home prices, sales to resume climb after brief lull: CMHC (FP) The outlook is upbeat for housing in Canada next year with construction starts, sales and prices expected to rebound on the back of economic and demographic support, according to the country’s largest public mortgage provider. Housing starts will range between 194,000 and 204,300 next year, showing a return to form after two years of declines, Canada Mortgage and Housing Corp. said in its annual housing market outlook.

China says willing to increase ags, industrial goods imports from Brazil (Reuters) China is willing to increase its imports of agricultural and industrial goods from Brazil in order to enhance bilateral trade, Chinese Vice Premier Hu Chunhua said on Friday.

Johnson says of Brexit: we should be leaving on October 31 (Reuters) Prime Minister Boris Johnson said on Friday it was up to the European Union to decide a delay to Brexit but that Britain should be leaving on Oct. 31. “At the moment it is up to the EU, as you know, to decide whether or not they are going to give us an extension. As things stand we can leave on Oct. 31,” Johnson said. “We should be leaving on Oct. 31.”

Amazon profit declines for first time in two years; shares drop (BNNBloomberg) Amazon.com Inc.’s effort to get packages from warehouse to doorstep in a single day helped push the retail giant to its first year-over-year quarterly profit decline since early 2017.

Market Overview: US 10yr note futures are down -0.012% at 129-27, S&P 500 futures are up 0.02% at 3005, Crude oil futures are down -0.09% at $56.18, Gold futures are up 0.52% at $1512.5, DXY is up 0.03% at 97.665, CAD/USD is down -0.04% at 0.7654.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.635%	2 Year	1.586%
5 Year	1.545%	5 Year	1.585%
10 Year	1.519%	10 Year	1.766%
30 Year	1.631%	30 Year	2.262%

US Economic Data

10:00 AM	U. of Mich. Sentiment, Oct F  Survey: 9600.00%  Prior: 9600.00%
	U. of Mich. Current Conditions, Oct F  Survey: —  Prior: 11340.00%
	U. of Mich. Expectations, Oct F  Survey: —  Prior: 8480.00%
	U. of Mich. 1 Yr Inflation, Oct F  Survey: —  Prior: 2.50%
	U. of Mich. 5-10 Yr Inflation, Oct F  Survey: —  Prior: 2.20%
02:00 PM	Monthly Budget Statement, Sep  Survey: $83.0b  Prior: $119.1b

Canadian Economic Data

There is no Canadian economic data 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, 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