Comments

Market Update

US tsys slightly lower, 10Y 1.53%, giving up earlier gains as equity futures pare losses (S&P -8). ‘Risk off’ tone ahead of resumption of trade talks between the US & China, Chinese officials narrowing the scope of what issues they will negotiate according to BN. Core Euro bonds mixed , 10Y tsy/bund spread 1bp wider @ 212 despite weak German factory orders (-0.6% vs -0.3% exp). Last week’s massive US outperformance (10Y tsy -15bps vs -1bp for bunds) brought the 10Y spread to the narrowest in 18 months.  GOCs lower, 0.5-1bp wider vs tsys, data calendar picks up with Sep Housing Starts tomorrow and employment on Friday.  The BOC auctions $4.2bln in new 5Y bonds Wednesday –  March 1 2025s with the WI/5Y roll -0.1bps vs -2.9bps for the 5Y roll (Sep/Mar 24). Federal leaders debate tonite as well. Last week’s 10Y $1bln Enbridge issue definitely added to pressure on secondary spreads, bonds ended 170/168 vs 163.7 NI.

News headlines

U.S. Stock Futures Decline as Trade Roils Outlook: Markets Wrap (Bloomberg) Futures on U.S. equity indexes ticked lower while the yuan slipped on Monday on concern China may be increasingly reluctant to agree a broad trade deal with the Trump administration. European stocks gained and Treasuries fluctuated.

TSX futures edge lower on U.S.-China trade talk concerns (Reuters) Futures for Canada’s main stock index inched lower on Monday, pressured by worries over the outcome of the upcoming U.S.-China trade talks.

China narrows scope for trade deal with U.S. ahead of talks (BNN) Chinese officials are signaling they’re increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump, ahead of negotiations this week that have raised hopes of a potential truce.

Where the U.S.-Japan trade deal falls short of Trans-Pacific pact abandoned by Trump (Reuters) U.S. President Donald Trump has called his new trade deal with Japan a “phenomenal” victory for U.S. farmers.

Oil Edges Higher as Market Eyes Trade Talks Later This Week (Bloomberg) Oil pared its biggest weekly drop since July ahead of the resumption of U.S.-China trade talks later this week that may sway a cloudy demand outlook.

U.S. economists wrestle with how to help ‘left behind’ areas (Reuters) Boston Federal Reserve officials have a pretty good idea what helped the ailing industrial town of Lawrence, Massachusetts, start to make a turnaround, including a state takeover of the public school system and a focused effort to lift job options for working parents.

Low inflation? Nothing to worry about, Fed’s George says (Reuters) Kansas City Federal Reserve Bank President Esther George on Sunday rejected the notion that the U.S. central bank should cut interest rates to try to boost low inflation, which she said is largely a result of global forces that U.S. monetary policy can do little to counter.

German recession looms as industrial orders drop more than expected (Reuters) German industrial orders fell more than expected in August on weaker domestic demand, data showed on Monday, adding to signs that a manufacturing slump is pushing Europe’s largest economy into recession.

Market Overview: US 10yr note futures are down -0.107% at 131-25, S&P 500 futures are down -0.26% at 2943.25, Crude oil futures are up 1.23% at $53.46, Gold futures are down -0.51% at $1505.2, DXY is up 0.05% at 98.86, CAD/USD is down 0% at 0.7512.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.418%	2 Year	1.41%
5 Year	1.26%	5 Year	1.345%
10 Year	1.248%	10 Year	1.531%
30 Year	1.437%	30 Year	2.03%

US Economic Data

03:00 PM	Consumer Credit, Aug  Survey: $15.000b  Prior: $23.294b
10/07 – 10/11	Monthly Budget Statement, Sep  Survey: $93.0b  Prior: $119.1b

Canadian Economic Data

10:00 AM

Bloomberg Nanos Confidence, Oct 4 Survey: —  Prior: 57.8

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

Trading mixed, long end firmer/off early European highs, yld curves mildly flatter, US10Y 1/53% (unch), average volume in TY before non farm payrolls. Sep employment expected +146, vs Aug. +130k despite ongoing trade dispute with China that has impacted manufacturing and investment. Private and service sector jobs projected +130k following +96k in August. Service employment growth expected +25k (temp for the 2020 census). Background: Final Sep IHS Markit Services Business Activity Index registered a 50.9 reading, virtually unchanged from the 50.7 est, but the employment sub index signaled the first contraction since 2010. September ISM Non-Manufacturing Index -3.8pp to 52.6, indicating slower services expansion. Weakness in manufacturing expected to hold down Sep headline number. ISM Manufacturing fell to a 10-yr low  47.3 in Sep and the employment sub index -1.1pp to 47.4.

News headlines

U.S. Stock Futures Slip, Bonds Steady Before Jobs: Markets Wrap (Bloomberg) U.S. equity futures declined and European stocks drifted as investors awaited jobs numbers for clues on whether the Federal Reserve will cut rates this month to bolster the world’s largest economy. Government bonds were mixed, with Treasuries little changed.

TSX futures edge lower ahead of U.S. jobs report (Reuters) Stock futures pointed to a lower opening for Canada’s main stock index on Friday ahead of a key U.S. payrolls report, which will shed light on the health of the world’s largest economy.

Oil Set for Biggest Weekly Drop Since July on Demand Pessimism (Bloomberg) Oil headed for its biggest weekly decline since the middle of July as a streak of disappointing economic data added to fears a global recession is coming.

‘Sahm Rule’ enters Fed lexicon as fast, real-time recession flag (Reuters) Astronomers get to name comets and biologists get to name species, but come up with something cool in economics and you might be memorialized with a law or a rule or a “curve.”

Bordeaux wine barons bemoan Trump tariffs (Reuters) A U.S. move to impose 25% duties on their wares has brought little cheer to the wine barons of Bordeaux, who fear a possible hit to their business at a time of other problems.

EU to keep U.S. islands on tax blacklist, drop UAE, Switzerland (Reuters) European Union finance ministers are set to remove the United Arab Emirates (UAE) and Switzerland next week from the bloc’s lists of countries deemed to be acting as tax havens, an EU document said.

PRECIOUS-Gold gains on global growth fears, eyes on U.S. jobs data (Reuters) Gold rose on Friday on growing fears of a global economic slowdown and rising expectations of more U.S. interest rate cuts, with investors now looking for cues from U.S. jobs data.

Dollar set for first weekly drop in a month before U.S. jobs data (Reuters) The dollar steadied on Friday but was on track to post its first weekly drop in a month before monthly U.S. jobs data as weak data this week raised concerns the U.S. economy was losing momentum and could potentially undercut the greenback’s rally.

Market Overview: US 10yr note futures are down 0% at 131-24, S&P 500 futures are down -0.34% at 2901.75, Crude oil futures are up 0.4% at $52.66, Gold futures are down -0.02% at $1513.5, DXY is down -0.07% at 98.796, CAD/USD is down -0.19% at 0.7512.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.417%	2 Year	1.388%
5 Year	1.252%	5 Year	1.345%
10 Year	1.244%	10 Year	1.529%
30 Year	1.433%	30 Year	2.027%

US Economic Data

08:30 AM	Change in Nonfarm Payrolls, Sep  Survey: 145k  Prior: 130k
	Change in Private Payrolls, Sep  Survey: 130k  Prior: 96k
	Change in Manufact. Payrolls, Sep  Survey: 3k  Prior: 3k
	Unemployment Rate, Sep  Survey: 3.70%  Prior: 3.70%
	Average Hourly Earnings MoM, Sep  Survey: 0.20%  Prior: 0.40%
	Average Hourly Earnings YoY, Sep  Survey: 3.20%  Prior: 3.20%
	Average Weekly Hours All Employees, Sep  Survey: 34.4  Prior: 34.4
	Labor Force Participation Rate, Sep  Survey: 63.20%  Prior: 63.20%
	Underemployment Rate, Sep  Survey: —  Prior: 7.20%
	Trade Balance, Aug  Survey: -$54.5b  Prior: -$54.0b

Canadian Economic Data

08:30 AM	Int’l Merchandise Trade, Aug  Survey: -1.20b  Prior: -1.12b
10:00 AM	Ivey Purchasing Managers Index SA, Sep  Survey: —  Prior: 60.6

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 (380k TY), 10Y 1.58% (-2bps), one month low.  US equity futures under pressure since Europe, erasing gains with S&P +2 vs +12 earlier.  Core Euro bonds also higher, gilt yields 2-3bps lower after a weak Sep Services PMI (below 50) and news the EU views Boris Johnson’s newest proposals as ‘problematic’ . In the US a number of Fed speakers due as well as ISM non-manufacturing, Factory Orders & Durable Goods. In Canada, GOCs higher in line with tsys the CAD slightly weaker after falling the most in six months yesterday on surprise build in crude inventories, the most since May.

News headlines

U.S. Futures Erase Advance as Services Data Looms: Markets Wrap (Bloomberg) U.S. equity futures erased a gain on Thursday and European stocks edged lower as investors looked ahead to key data on the health of the world’s biggest economy. Shares fell across most of Asia, while government bonds advanced.

TSX futures slip as global growth concerns weigh on oil (Reuters) Futures for Canada’s main stock index edged lower on Thursday as oil prices slipped, pressured by concerns about global economic growth.

Oil Near Two-Month Low on Swelling U.S. Stockpiles, Demand Woes (Bloomberg) Oil held near the lowest level in almost two months as American crude inventories expanded the most since May and disappointing U.S. economic data added to pessimism over the demand outlook.

U.S. to slap tariffs on European planes, whiskey after WTO ruling (BNN) The price of Scotch, French wine, cheese and other European exports is about to go up in the U.S. after the Trump administration announced new tariffs on billions of dollars of EU products starting Oct. 18.

Yes whey! U.S. touts dairy product to Chinese hog farmers fighting swine fever (Reuters) When Beijing announced it was exempting 16 U.S. goods from retaliatory tariffs, Chinese firms hurried to call Proliant Dairy Ingredients in the heart of American farm country.

Fed still has ‘reasonable amount of independence’: Evans (Reuters) The U.S. Federal Reserve continues to enjoy “a reasonable amount of independence” and is focused on its mandate despite criticism of its policy moves by U.S. President Donald Trump, Chicago Federal Reserve Bank President Charles Evans said on Thursday.

India protectionist, but U.S. negotiating limited trade deal: Ross (Reuters) India is among the world’s most protectionist countries but the United States is trying to negotiate a limited trade deal with the South Asian nation to resolve their differences, U.S. Secretary of Commerce Wilbur Ross said on Thursday.

U.S. skies still bright for Main Street banks even as Wall Street frets (Reuters) The view from Wall Street may be all trade wars, tariffs and uncertainty these days, but ask a Main Street banker and things are pretty darn good.

Market Overview: US 10yr note futures are up 0.083% at 131-08, S&P 500 futures are up 0.06% at 2882.25, Crude oil futures are down -0.3% at $52.48, Gold futures are up 0.03% at $1508.3, DXY is down -0.01% at 99.012, CAD/USD is up 0.05% at 0.7499.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.472%	2 Year	1.468%
5 Year	1.305%	5 Year	1.417%
10 Year	1.284%	10 Year	1.579%
30 Year	1.468%	30 Year	2.064%

US Economic Data

07:30 AM	Challenger Job Cuts YoY, Sep  Survey: —  Actual: -24.80% Prior: 39.00%
08:30 AM	Initial Jobless Claims, Sep 28  Survey: 215k  Prior: 213k
	Continuing Claims, Sep 21 Survey: 1654k  Prior: 1650k
09:45 AM	Bloomberg Consumer Comfort, Sep 29  Survey: —  Prior: 61.7
	Markit US Services PMI, Sep F Survey: 50.9 Prior: 50.9
	Markit US Composite PMI, Sep F  Survey: —  Prior: 51.0
10:00 AM	ISM Non-Manufacturing Index, Sep  Survey: 55.0  Prior: 56.4
	Factory Orders, Aug  Survey: -0.20%  Prior: 1.40%
	Durable Goods Orders, Aug F  Survey: —  Prior: 0.20%
	Durables Ex Transportation, Aug F  Survey: —  Prior: 0.50%
	Cap Goods Orders Nondef Ex Air, Aug F  Survey: —  Prior: -0.20%
	Cap Goods Ship Nondef Ex Air, Aug F  Survey: —  Prior: 0.40%

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