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Market update

US tsys opening lower, US 10Y 2.27 (+2bps), well off the lows of the session as US stock futs turn lower. Euro stocks mixed – DAX lower on 3.8% decline in materials, FTSE up 0.58% on solid results from stress tests. German 10Y bunds lower above 0.505 on drop in Eurozone unemployment rate, curve 3bps steeper ahead of ECB meeting where the Eonia futures are pricing in ~13bps of easing at Thursday’s meeting. GOCs are mixed after disappointing Q3 GDP data – curve ~3bps steeper as Q3 GDP rose 2.3% but Sep GDP fell 0.5% vs 0.0% exp as mining fell 5.1% m/m ). Provis ~0.5bps tighter after widening ~1bp yest. Supply is topical with Dec 1st cpn money the focus, 20Y Toronto deal rumoured at Onts +37.

News headlines

• Global Stocks Edge Higher on Expected ECB Stimulus (WSJ) Global stocks edged higher on Tuesday as investors anticipated further stimulus from the European Central Bank later in the week.

• European Bonds Fall as Unemployment Rate Drops to Four-Year Low (Bloomberg) Government bonds from Germany to Italy dropped as a report showed the euro-area unemployment rate unexpectedly fell to the lowest level in nearly four years in October, damping demand for the relative safety of fixed-income assets.

• Companies Shy Away From Spending (WSJ) Business investment across the U.S. is fizzling out. Companies appear reluctant to step up spending on the basic building blocks of the economy, such as machines, computers and new buildings.

• Oil at $35 Would Trigger 26% Canada Home Price Drop, CMHC Says (Bloomberg) Oil at $35 a barrel for a period of five years would trigger a 26 percent collapse in Canadian home prices, according to stress tests run by Canada’s housing agency.

• Today may be as good as it gets for Canada’s economy (G&M) Savour this morning’s GDP report from Statistics Canada because it may be as good as it gets. Economists expect the federal agency will report that gross domestic product expanded at an annual pace of 2 to 2.5 per cent in the third quarter, rebounding from the mild economic contraction of the first half of the year.

Overnight markets

• Overview: IG24 5Y 78.989/79.723 (-0.920), US 10yr note futures are down -0.06% at 126-11+, S&P 500 futures are up +0.35% at 2087.0, Crude oil futures are down -0.43% at 41.47$, Gold futures are up +0.59% at $1071.6, DXY is down -0.23% at 99.942.

US Economic Data

• Markit US Manufacturing PMI (Final) is forecast at 52.6 in November, equal to preliminary report.
• ISM Manufacturing is forecast at 50.5 in November versus October 50.1.
• Total vehicle sales are expected at 18.10M in November slightly lower than October 18.12M.

Canadian Economic Data

•  GDP MoM in September decreased -0.5% MoM (0.0% YoY) compared to 0.1% MoM (+0.9% YoY) in August.
• RBC Canadian Manufacturing PMI will be released at 9h30am.

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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market update

US tsys opening lower, curve flatter, US 10Y 2.235 (+1.4bps). Euro stocks at three month highs, Euro at lows since April, Core European bonds higher. German retail sales weaker than exp but CPI surprised to the upside. Event risk this week with Fed Yellen testimony on Wed, ECb Thursday and US payrolls Friday. GOCs are lower, spds unch vs tsys. Provis 0.5bps wider, Ont 46s 106/105, Ont 25 96/95, Qc 48 112/111. The BOC auctions $700mln in Dec 47 RRBs this wed with B/Es (44/45) @ 1.545, ~15 bps off the lows of August.

News headlines

• Euro mired under $1.06 as ECB action looms (FT) The euro is stuck under $1.06 and the region’s equities are mainly higher at the start of the week when the European Central Bank could take more action at its policy meeting on Thursday.

• Divergent Paths for U.S., European Central Banks (WSJ) Developments in the U.S. and Europe this week are set to widen the gap between the likely path of interest rates in the two regions and add to currency-market turbulence that has produced a 12% increase in the value of the dollar against the euro since the start of the year.

• Swiss 10-year yield hits new low of -0.41% (FT) How low can you go? No, really. This is getting bizarre. Switzerland’s 10-year yield has hit a new record low of minus 0.41 per cent, as anticipation further easing at the ECB’s Thursday meeting drags European bond yields even deeper into negative territory, writes Joel Lewin.

• There’s a Big Drop in U.S. Treasury Debt Supply Coming in 2016 (Bloomberg) Lost in the debate over the U.S. Treasury market’s resilience as the Federal Reserve starts to raise interest rates is one simple fact: supply is falling — and fast.Net issuance of U.S. notes and bonds will tumble 26 percent next year, according to estimates by primary dealers that are obligated to bid at Treasury debt auctions. The $433 billion of new supply would be the least since 2008.

• IMF Move Would Pressure China on Management of Yuan (WSJ) The International Monetary Fund is on the verge of labeling China’s yuan a reserve currency. Now Chinese officials will have to prove they can treat it like one.

 Overnight markets

• Overview: IG24 5Y 80.372/81.105 (-0.113), US 10yr note futures are down -0.11% at 126-11+, S&P 500 futures are up +0.17% at 2093.5, Crude oil futures are up +0.96% at 42.11$, Gold futures are up +0.32% at $1059.6, DXY is up +0.12% at 100.14.

 US Economic Data

• ISM Milwaukee is expected at 48.0 in November versus 46.6 in October.
• Chicago purchasing manager index is forecast at 54.0 in November lower than October 56.2.
• Pending home sales are forecast at 1.0% MoM (4.5% YoY) in October versus September -2.3% MoM (2.5% YoY).
• Dallas Fed is forecast at -10.0 in November higher than October -12.7.

Canadian Economic Data

• Canada 3Q current account balance came in at -$16.2B vs -$15.2B expected and -$16.6B for 2Q.

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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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

Market update

US tsys opening higher, curve 1bp flatter, US 10Y 2.203 (-3bps). US stock futures slightly lower, USD index higher, crude ~2.0% lower close to $42 support as China stocks fell 5.5% o/n amid brokerage investigation. US tsys lagging 10Y bunds ~6bps on the week, despite higher euro area sentiment (see above) & sizeable 0.13yr extension in the Barclays Tsy Index vs 0.03yrs for Europe.  GOCs are higher, spds ~1bp wider vs tsys, provis opening unch supply unlikely.

News headlines

• Euro-Area Confidence at Four-Year High as ECB Mulls Stimulus (Bloomberg) Euro-area economic confidence matched its highest level in more than four years as the European Central Bank prepares to make a decision on whether to increase stimulus.

• China shares fall most since midyear rout (FT) China’s main stock index suffered its worst day in three months on Friday as investigations into securities brokerages added to worries over the restart of initial public offerings next week.

• Fangs and Nifty Nine power US equities (FT) As Americans emerge from Thanksgiving they should be thankful for a small and select group of companies that have kept their stock market afloat.

• Big Banks Cut Back on Loans to Small Business (WSJ) The biggest banks in the U.S. are making far fewer loans to small businesses than they did a decade ago, ceding market share to alternative lenders that charge significantly higher rates.

• Bond ETF Sales Surge as U.S. Ranks Last in World Debt Markets (Bloomberg) Investors are selling U.S. government bond exchange-traded funds at the fastest pace in 14 months as the Federal Reserve prepares to raise interest rates, helping make Treasuries the worst-performing sovereign market.

Overnight markets

• Overview: US 10yr note futures are up +0.14% at 127-05, S&P 500 futures are up +0.02% at 2088.75, Crude oil futures are down -2.09% at 42.14$, Gold futures are down -1.57% at $1053, DXY is up +0.35% at 100.13.

US Economic Data

• There is no major economic data today.

Canadian Economic Data

• There is no major economic data 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, Pierre-Olivier Boulanger
Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

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