Commentaires

Market Update

– Tsys open higher, US 10Y in risk off session as European stocks down 1.2% for a second day on more Deustche Bank concerns, Nikkei and HS down 1.0%. ING shares down 4.6% on reorg plans, DB off ~7.0%. The demand for US dollars has skyrocketed based on data from the ECB -$6.3bln in the latest week, the highest in four years.  Month end extensions for Sept 30th +0.08 yrs for the Barclays Tsy index vs 0.14yrs in Aug & 0.11 12 mnth avg. GOCs slightly higher, 1-2bps wider vs tsys after July GDP came in above exp 0.5% vs 0.3% – most of the improvement attributed to rebound in the oil & gas sector after the May wildfires. Longs seem bid in the pullback, 10s30 0.5bps flatter at 66.5. GOC 10s have outperformed to such an extent recently that longs look cheap, esp off the run 41s.  Provis opening 0.5bps wider on the bid, Ont 48s 97.5/97 after closing 1.5bps wider yest, thou all in yields still scraping the lows , Ont 10s ~1.82% . 

News headlines                                                                                                          

–Asia stocks slide as Deutsche sours mood, oil pulls back (Reuters) Asian stocks extended losses on Friday as worries about the health of Deutsche Bank weighed on financial shares and as oil prices inched back from near-one month highs on scepticism over OPEC’s new plan to curb output.

–Deutsche Bank Drops to Record as Some Clients Reduce Exposure (Bloomberg) Deutsche Bank AG Chief Executive Officer John Cryan rushed to shore up confidence in his beleaguered lender after concern some clients are reducing exposure to the company pushed shares to record lows.

–China September factory activity expands marginally as orders edge up-Caixin PMI (Reuters) China’s factory activity expanded in September as domestic and export orders picked up but the improvement was marginal and manufacturers continued to shed jobs, a private business survey showed on Friday.

–Japan’s Long and Winding Detour to Inflation (WSJ) The Bank of Japan may have shaken up its strategy to jump start inflation, but on the ground, there’s little sign change is coming. Headline consumer inflation remained negative in August, down 0.5% from the year earlier, making Japan the only major economy still so deeply in negative territory.

–Eurozone Inflation Picked Up in September (WSJ) The eurozone’s annual rate of inflation picked up to reach its highest level in almost two years during September, but a sustained rise toward the European Central Bank’s target remains in doubt as the number of people without jobs rose for the second time in three months.

–U.K. economy healthier than seen, GDP update shows (Market Watch) The U.K. economy performed better than previously thought in the period surrounding the nation’s referendum on membership of the European Union, according to a fresh batch of economic data Friday that will be welcomed by the country’s ruling Conservative Party ahead of its annual conference this weekend.

–Petronas weighs sale to exit $27 billion Canadian LNG project, sources say (Financial Post) Malaysian state oil firm Petroliam Nasional Bhd is considering selling its majority stake in a US$27 billion Canadian liquefied natural gas (LNG) plant, three people familiar with the matter said this week.

 Overnight markets

– Overview: US 10yr note futures are up 0.0594% at 131-20, S&P 500 futures are up 0.12% at 2151, Crude oil futures are up 0.15% at $47.9, Gold futures are up 0.35% at $1330.7, DXY is up 0.28% at 95.8.

US Economic Data

-8:30 AM: Personal Income, Aug, 0.2%, est. 0.2% (prior 0.4%)

Personal Spending, Aug, 0.0%, est. 0.1% (prior 0.3%)

PCE Core, m/m, Aug, 0.2%, est. 0.2% (prior 0.1%)

PCE Core, y/y, Aug, 1.7%, est. 1.7% (prior 1.6%)

-9:45 AM: Chicago PMI, Sep, est. 52.0 (prior 51.5)

-10:00 AM: University of Michigan Sentiment, Sep F, est. 90 (prior 89.8)

Canadian Economic Data

-8:30 AM: GDP, m/m, Jul, 0.5%, est. 0.3% (prior 0.60%)

GDP, y/y, Jul, 1.3%, est. 1.0% (prior 1.10%)

Industrial Product Price, m/m, Aug, -0.5%, est. -0.1% (prior 0.2%)

Raw Materials Price Index, m/m, Aug, -0.7%, est. -1.0% (prior -2.7%)

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 slightly lower, yields ~1.5bps higher with the curve steeper, muted reaction to Q2 GDP rev/initial claims. Not much follow thru to late aft tsy selloff after OPEC deal to cap production in Nov.  Crude basically unch $46.95 Euro bonds in catchup mode, yields 2-4bps higher in Germany & UK, German 10Y yield -0.12% close to 11 week low. Bunds weighed by stronger Sep CPI, thou Commerzbank layoff news. Fed Lockhart (non voter) said Fed is closer to raising rates, supported consensus view to leave rates unch at FOMC meeting last week. GOCs unch after 8:30 US data, provi spds holding firm in the selloff yest, opening unch this morn, Ont looking to issue poss this morn given mkt tone.

News headlines                                                                                          

–Stocks Jump as OPEC Splits Markets; Indian Assets Drop on Attack (Bloomberg) Stocks rallied in Asia and Europe after OPEC’s surprise announcement of a deal to cut crude output spurred a surge in oil late Wednesday. India’s assets fell after it attacked terrorist targets in Pakistan.

–In U-Turn, Saudis Choose Higher Prices Over Free Oil Markets (Bloomberg) Saudi Arabia has ended its flirtation with free oil markets. It took the kingdom’s new oil minister, Khalid Al-Falih, just six months to blink, ending the country’s two-year policy of pump-at-will. The decision at this week’s meeting of the Organization of Petroleum Exporting Countries in Algiers to cut production was necessitated by Saudi Arabia’s tattered finances.

–German inflation to hit 16-month high in September, state data suggest (Reuters) German inflation appears to have picked up more than expected in September, possibly reaching its highest level in 16 months, regional data suggested, an encouraging sign for the ECB that price pressures are reviving in Europe’s biggest economy.

–UK trade minister says Germany risks becoming ‘world’s greatest ATM’ after Brexit (Reuters) Germany risks becoming the world’s biggest cash machine after Brexit because it may end up paying for a failing European Union that is in danger of imploding, Britain’s trade minister said on Thursday.

–Fed’s Harker says December rate rise appropriate on current trajectory (Reuters) December’s U.S. Federal Reserve meeting would be an appropriate time to increase interest rates if the economy continues to move in the direction that it anticipates, Philadelphia Fed President Patrick Harker said on Thursday.

–Fed, BOJ add shine to risk-parity strategy (Reuters) The Federal Reserve and Bank of Japan’s actions last week have given a second wind to an alternative investment strategy that relies on cheap money and low market volatility to produce outsized returns.                                                                          

Overnight markets

– Overview: US 10yr note futures are down -0.1427% at 131-8, S&P 500 futures are down -0.17% at 2159.5, Crude oil futures are down -0.02% at $47.04, Gold futures are down -0.24% at $1320.5, DXY is up 0.2% at 95.618.

US Economic Data 

-8:30 AM: GDP Annualized QoQ, 2Q T, 1.4%, est. 1.3% (prior 1.1%)

GDP Price Index, 2Q T, 2.3%, est. 2.3% (prior 2.3%)

Core PCE QoQ, 2Q T, 1.8%, est. 1.8% (prior 1.8%)

Personal Consumption, 2Q T, 4.3%, est. 4.4% (prior  4.4%)

Wholesale Inventories MoM, Aug P, -0.1%, est. 0.0% (prior 0.0%)

Initial Jobless Claims, Sep 24^th, 254k, est. 260k (prior 252k, revised 251k)

Continuing Claims, Sep 17^th, 2062k, est. 2129k (prior 2113k, revised 2108k)

-10:00 AM: Pending Home Sales MoM, Aug, est. 0.0% (prior 1.3%)

Pending Home Sales NSA YoY, Aug, est. 2.6% (prior -2.2%)

Canadian Economic Data

-7:00 AM:  CFIB Business Barometer, Sep, 59.0 (prior 59.8)

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 lower, just off the lows of the session, US 10Y 1.575 (+1.5bps),little reaction to better than exp August Durable goods taking their cue from selloff in core European bonds, with gilts and bunds both lower & steeper. Gains in German stocks on rebound in Deutsche Bank shares, as well as supply from Germany (2Y) % France (long inflation indexed bond) weighing on bunds. Crude back above $45 on signs Saudi Arabia is willing to cut production, hope for a deal with Iran in Algiers. GOCs lower in line with tsys, 5s10s ~0.5bps steeper after eight straight days of narrowing (9bps). 10s30s steeper bias with off the run long rolls wider – 41/37 roll looks cheap as we pointed out in yest research piece. Provis opening unch after widening slightly yest mostly in 5yrs.

News headlines                                                           

–Stocks Rally as Deutsche Bank Slump Ends, Oil Gains Before Talks (Bloomberg) European stocks advanced as investors took heart from a pickup in shares of beleaguered lender Deutsche Bank AG. Crude oil climbed before a meeting of major producers in Algiers, and the dollar strengthened. A gauge of European banks climbed for the first time in four days as Deutsche Bank agreed to sell its U.K. insurance unit and Chief Executive Officer John Cryan ruled out a capital increase. Oil stabilized around $45 a barrel before the gathering OPEC members to discuss ways to boost oil prices, including potential output constraints. A gauge of the dollar rose from a two-week low.

–Oil climbs after industry data shows U.S. inventory draw (Reuters)  Oil prices rose on Wednesday, after sharp losses in the previous session, as industry data showed a surprise draw in U.S. crude stocks, although worries over a lack of agreement among producers to curb output kept a lid on gains. Brent crude rose 28 cents to $46.25 a barrel by 0905 GMT after settling down $1.38 on Tuesday. U.S. West Texas Intermediate (WTI) crude was up 20 cents at $44.87 a barrel after closing $1.26 a barrel lower the previous day.

–German government prepare Deutsche Bank rescue plan: Die Zeit (Reuters) The German government and financial authorities are preparing a rescue plan for Deutsche Bank (DBKGn.DE) in case the lender would be unable to raise capital itself to pay for costly litigation, German weekly Die Zeit reported. According to the draft plan, Deutsche Bank would be enabled to sell assets to other lenders at prices that would ease the strain on the lender and not put an additional burden on the bank, the paper said.

–Federal Liberals approve Petronas LNG project in B.C. — with numerous conditions (Financial Post) Prime Minister Justin Trudeau’s government has approved Petroliam Nasional Bhd’s $36 billion Pacific NorthWest liquefied natural gas project on British Columbia’s Pacific coast. Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc made the announcement near Vancouver late Tuesday. It was Prime Minister Justin Trudeau’s first decision on a major energy project after a pro-environment campaign swept him to power last year.

–China’s economy less healthy in third quarter than data suggest-private survey (Reuters) China’s economy was less healthy in the third quarter than a recent spate of upbeat data suggest, with growth coming exclusively from manufacturing and property while the services and retail sectors faltered, a private survey showed. Manufacturing posted its fastest expansion nationally, with 53 percent of companies seeing revenue gains, up 3 percent from a year earlier, a quarterly survey of more than 3,100 firms by China Beige Book International (CBB) showed.

–BlackBerry Misses Sales Estimates; Stops Making Smartphones (Bloomberg) BlackBerry Ltd. reported fiscal second-quarter sales that missed analyst estimates and said it will stop making its iconic smartphones and focus on its software business. The shares rose in premarket trading in New York.                                                                                                                      

Overnight markets 

– Overview: US 10yr note futures are down -0.0594% at 131-15, S&P 500 futures are up 0.02% at 2153.25, Crude oil futures are up 0.6% at $44.94, Gold futures are down -0.14% at $1328.6, DXY is down -0.01% at 95.427.

US Economic Data 

-8:30 AM: Durables Goods Orders, Aug P, 0.0%, est. -1.5% (prior 4.4%, revised 3.6%)

Durables Ex Transportation, Aug P, -0.4%, est. -0.5% (prior 1.3%, revised 1.1%)

Cap Goods Orders Nondef Ex Air, Aug P, 0.6%, est. -0.1% (prior 1.5%, revised 0.8%)

Cap Goods Orders Ship Nondef Ex Air, Aug, -0.4%,  est. 0.1% (prior -0.5%, revised -0.7%)

Canadian Economic Data

-There is major economic data release 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, David Leclair-Legault

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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