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Market Update

US tsys unwinding most of earlier gains on Brexit headlines, heavy volume (570k TY futures), yields 1-2 bps lower led by the 7Y , with the 10Y 1.75 (-2bps), UK gilts retracing yest losses as Brexit deal optimism fades, thou latest news on DUP accepting latest proposals. S&P futures -0.3%, crude 53.05 (+0.26).   US retail sales expected +0.3% in Sep after 0.4% Aug (BBG), Fed releases Beige Book at 2:00PM. GOCs trailing tsys before Sep CPI –  median 2.1% vs 1.9% in Aug.

News headlines

Stocks Drop Amid Hong Kong Stress; Treasuries Gain: Markets Wrap (Bloomberg) American equity-index futures slipped on Wednesday while European shares struggled for traction as tensions over Hong Kong mounted and earnings season rolled on. Treasuries gained and the dollar was steady.

Futures slip on renewed U.S.-China trade war concerns (Reuters) U.S. stock index futures dipped on Wednesday as a new U.S. bill taking a hard line on China stoked fresh concerns about a prolonged trade war, but more positive results from the banking sector provided some relief and signaled a solid start to the third-quarter earnings season.

TSX futures edge up ahead of inflation report (Reuters) Canada’s main stock index futures were slightly higher on Wednesday ahead of the inflation data scheduled later in the day.

Oil Steady After Two Days of Losses as Demand Outlook Worsens (Bloomberg) Oil steadied near $53 a barrel after two days of declines as the fragile economic environment and unresolved U.S.-China trade war continue to deteriorate the outlook for global fuel demand.

U.S. ‘deeply concerned’ about untrackable China ships carrying Iran oil: officials (Reuters) The White House is warning Chinese shipping companies against turning off their ships’ transponders to hide Iranian oil shipments in violation of U.S. sanctions, two senior administration officials said.

Germany eyes emergency measures for Brexit market panic: source (Reuters) Germany could use emergency measures to counter any market panic from a hard Brexit, an official with direct knowledge of the matter said, such as banning bets on falling share prices, a step last used in the financial crisis.

U.S. dollar to remain dominant currency; euro, renminbi rising gradually: UBS survey (Reuters) The U.S. dollar will remain the world’s leading reserve currency over the next 25 years, with the euro and renminbi expected to further increase their share of total central bank reserves, according to UBS’ survey of sovereign institutions including major central banks released on Wednesday.

EU-British Brexit talks to resume in Brussels -UK spox (Reuters) Talks between British and EU negotiators on Brexit will resume in Brussels after a lunch break, a UK spokesman said as last-ditch efforts dragged on to seal a divorce deal this week before Britain is due to leave the bloc on Oct. 31. (Reporting by Gabriela Baczynska)

Market Overview: US 10yr note futures are up 0.241% at 130-03, S&P 500 futures are down -0.17% at 2992.75, Crude oil futures are up 0.59% at $53.12, Gold futures are up 0.03% at $1483.9, DXY is up 0.07% at 98.359, CAD/USD is up 0.07% at 0.7571.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.681%	2 Year	1.592%
5 Year	1.571%	5 Year	1.559%
10 Year	1.545%	10 Year	1.734%
30 Year	1.655%	30 Year	2.214%

US Economic Data

07:00 AM	MBA Mortgage Applications, Oct 11  Survey: — Actual: 0.50% Prior: 5.20%
08:30 AM	Retail Sales Advance MoM, Sep  Survey: 0.30%  Prior: 0.40%
	Retail Sales Ex Auto MoM, Sep  Survey: 0.20%  Prior: 0.00%
	Retail Sales Ex Auto and Gas, Sep  Survey: 0.30%  Prior: 0.10%
10:00 AM	NAHB Housing Market Index, Oct  Survey: 68  Prior: 68
	Business Inventories, Aug  Survey: 0.20%  Prior: 0.40%
02:00 PM	U.S. Federal Reserve Releases Beige Book
04:00 PM	Net Long-term TIC Flows, Aug  Survey: —  Prior: $84.3b
	Total Net TIC Flows, Aug  Survey: —  Prior: $43.8b
10/16 – 10/18	Monthly Budget Statement, Sep  Survey: $83.0b  Prior: $119.1b

Canadian Economic Data

08:30 AM	Int’l Securities Transactions, Aug  Survey: —  Prior: -1.17b
	CPI NSA MoM, Sep  Survey: -0.20% Prior: -0.10%
	CPI YoY, Sep  Survey: 2.10% Prior: 1.90%
	Consumer Price Index, Sep  Survey: 136.6  Prior: 136.8

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, 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 higher on above avg volume (400k TY futures), 10Y 1.69% (-3.7bps). Equity futures higher, S&P +8, better results from JPM, J&J & BlackRock, thou Goldman Sachs missed Q3 est. German bunds higher, continuing from yest despite better than exp ZEW confidence. UK gilts outperforming, EU Barnie said Brexit deal still possible, GBP close to four-month highs, 10Y gilt futures supported by lingering uncertainty as meeting between Johnson and Northern Ireland leader Foster said to be ‘difficult’. GOCs opening the week higher, 10Y -4bps 1.48% after Friday’s 10bp selloff on another strong Cdn jobs no. Of note, long GOCs well bid in the selloff, 10s30s narrowest since last Nov. , 10s30s Can/US Box at July lows (i.e. GOC curve outflattening US)

News headlines

German investor sentiment falls less than expected in October (Reuters) The mood among German investors worsened less in October than analysts had expected, a survey showed on Tuesday, amid concern that Europe’s biggest economy might be headed for a recession

China Import Slump Casts Gloom Over World Buffeted by Trade War (Bloomberg) China is buying less from the rest of the world, pushing its trade surplus higher and dragging on global economic growth. Imports in the world’s second-largest economy dropped 8.5% in September for a ninth decline in the past 10 readings, while exports decreased 3.2% in dollar terms from a year earlier. That left a trade surplus of $39.65 billion for the month, with the total for the first nine months jumping 36% to $298 billion.

Sub-zero interest rates could be problematic in U.S.: Fed’s Bullard (Reuters) St. Louis Federal Reserve bank president James Bullard said on Tuesday that negative interest rates could be problematic in the United States. Central banks in the euro zone and Japan have cut interest rates below zero to boost inflation and economic growth, raising a debate about the ammunition other major central banks such as the U.S. Federal Reserve have to fight a slowdown.

China wants tariffs cut to enable $50 billion imports from U.S. (Bloomberg) China will struggle to buy $50 billion of U.S. farm goods annually unless the United States removes retaliatory tariffs on American products, Bloomberg reported on Tuesday. China would make the purchases only if U.S. President Donald Trump rolls back levies put in place since the trade war began, Bloomberg said bloom.bg/2OR9dvt, citing people familiar with the matter.

Boris Johnson’s Brexit Deal on Knife Edge (Bloomberg) U.K. Prime Minister Boris Johnson’s Brexit deal was hanging in the balance Tuesday, after the European Union Presidency said more time was needed before a summit of its leaders this week. Antti Rinne, premier of Finland — which currently has the rotating presidency of the EU — said negotiations may need to continue after the EU Council summit that starts Thursday.

The UK’s once star fund manager Neil Woodford was dealt another blow as his equity fund gets shut down (BI) The fall from grace for Neil Woodford, once known as the UK’s best-known stock picker, has climaxed on Tuesday with an announcement that he will cease control of the fund and it will be wound down. Link Fund Solutions (LFS), the fund’s authorized corporate director, announced the decision on Tuesday morning via its website, that it would be wind up the fund as soon as possible.

Chinese Inflation Surges as Pig Prices Fly High (WSJ) Surging pork prices pushed China’s consumer inflation to a near six-year high in September, complicating Beijing’s effort to stimulate growth but also giving it an incentive to buy more agricultural goods from the U.S. The consumer-price index rose 3% in September from a year earlier, according to data released by the National Bureau of Statistics on Tuesday, bumping up against Beijing’s inflation target of “around 3%” this year. The rise in consumer prices accelerated from August’s 2.8% expansion and topped a median forecast for 2.9% growth from economists polled by The Wall Street Journal.

Market Overview: US 10yr note futures are up 0.144% at 130-13, S&P 500 futures are up 0.3% at 2974.5, Crude oil futures are down -0.6% at $53.27, Gold futures are up 0.01% at $1497.7, DXY is up 0.07% at 98.52, CAD/USD is down -0.04% at 0.7559.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.625%	2 Year	1.553%
5 Year	1.486%	5 Year	1.513%
10 Year	1.469%	10 Year	1.689%
30 Year	1.607%	30 Year	2.169%

US Economic Data

12:00 AM

Monthly Budget Statement, Sep  Survey: $83.0b  Prior: $119.1b

Canadian Economic Data

09:00 AM	Existing Home Sales MoM, Sep  Survey: 2.00%  Prior: 1.40%
10:00 AM	Bloomberg Nanos Confidence, 40817  Survey: —  Prior: 5820.00%
10:15 AM	Bloomberg Oct. Canada Economic Survey,   Survey: 0.00%  )Actual: 0.00% Prior: 0.00%

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 following UK gilts lower on key Brexit developments, US 10Y 1.71% (+4bps), heavy volume for 2nd day above 560k TY contracts. UK gilt yields 5-8bps higher on positive news after EU rep Barnier had constructive meeting with UK Brexit secretary Barclay, GBP up another 1.4% after 2% rally yest to reach the highest since June. More optimism on trade , Trump/Liu meeting scheduled for this aft, comments yest from Trump about China being ‘nice in trade talks’. Crude +1.4% 54.25 after Iran tanker hit by missile with Saudi Arabia being blamed GOCs lower, yields 2-5bps higher led by the short end before Sep Labour Force data – 7.5K exp after Aug 81k with the unemployment rate unch at 5.7%

News headlines

Stocks Rally on Trade-Talk Optimism; Pound Surges: Markets Wrap (Bloomberg) Stocks rallied on Friday amid growing hopes that the U.S. and China can negotiate a trade truce as high-level talks progress into a second day. Treasuries fluctuated after Thursday’s slump while the pound surged on optimism for a Brexit deal.

TSX futures rise on higher oil prices (Reuters) Canada’s main index futures rose on Friday, as oil prices jumped on reports of missile attacks on an Iranian tanker in the Red Sea near Saudi Arabia.

Oil jumps above US$60 as Iran tanker attack reignites mideast risk (BNN) Oil jumped back above US$60 a barrel after reports of a missile strike on an Iranian tanker near the Saudi Arabian port city of Jeddah reignited fears over military escalation in the world’s most important crude-producing region.

Spend more if you want ECB to raise rates, Draghi tells governments (Reuters) Euro zone governments can help the European Central Bank raise interest rates sooner if they loosen their own purse strings to support the economy, ECB President Mario Draghi said on Friday.

Wall Street Week Ahead: Bruised U.S. banks expected to report third quarter earnings decline (Reuters) The biggest U.S. banks are expected to kick off the earnings season on a sour note next week due to falling interest rates, which may have pressured net interest margins enough to cause the sector’s first year-over-year earnings per share decline in three years.

Rising old used car prices help push poor Americans over the edge (Reuters) For America’s working poor, an often essential ingredient for getting and keeping a job – having a car – has rarely been more costly, and millions of people are finding it impossible to keep up with payments despite prolonged economic growth and low unemployment.

With U.S. tariffs looming, China drums up hope for a partial trade deal (Reuters) A Chinese state newspaper said on Friday that a “partial” trade deal would benefit China and the United States, and Washington should take the offer on the table, reflecting Beijing’s aim of cooling the row before more U.S. tariffs kick in.

Market Overview: US 10yr note futures are down -0.323% at 130-09, S&P 500 futures are up 0.99% at 2970, Crude oil futures are up 1.51% at $54.36, Gold futures are down -0.79% at $1489, DXY is down -0.38% at 98.327, CAD/USD is down -0.04% at 0.7527.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.584%	2 Year	1.579%
5 Year	1.445%	5 Year	1.528%
10 Year	1.441%	10 Year	1.703%
30 Year	1.612%	30 Year	2.19%

US Economic Data

08:30 AM	Import Price Index MoM, Sep  Survey: 0.00%  Prior: -0.50%
	Import Price Index ex Petroleum MoM, Sep  Survey: -0.10%  Prior: 0.00%
	Import Price Index YoY, Sep  Survey: -2.10%  Prior: -2.00%
	Export Price Index MoM, Sep  Survey: -0.10%  Prior: -0.60%
	Export Price Index YoY, Sep  Survey: —  Prior: -1.40%
10:00 AM	U. of Mich. Sentiment, Oct P  Survey: 92.0  Prior: 93.2

Canadian Economic Data

08:30 AM	Net Change in Employment, Sep  Survey: 7.5k  Prior: 81.1k
	Unemployment Rate, Sep  Survey: 5.70%  Prior: 5.70%
	Hourly Wage Rate Permanent Employees YoY, Sep  Survey: 3.80%  Prior: 3.80%
	Full Time Employment Change, Sep  Survey: 20.8  Prior: 23.8
	Part Time Employment Change, Sep  Survey: -7.7  Prior: 57.2
	Participation Rate, Sep  Survey: 65.7  Prior: 65.8

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, 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