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Market update

With the US closed, GOCs are higher & flatter, taking the lead from core Euro bonds which are seeing flatter curves for a fourth day led by 10Y gilts which are ~3bps lower @1.85% the lowest since Oct 28th. Bunds mixed with short end underperforming on surprising growth ion Eurozone M3 money supply & acceleration in lending to households according to ECB data for Oct.The Barclays Euro Agg index has a mild 0.04yr extension on Dc 1st, vs 0.13yr extension in the US tsy index. CBGs expected to take a breather after yesterday’s strong performance saw  10s at new narrows on the curve and the 10Y roll a full 1bp wider @11 even as the 5s/10s curve closed 2bps flatter. Provis flat for a third day, Ont 46s 105.5/104.5, Qc/Ont 25 roll 5.2/4.7 with economic updates from QC & Ont today.

News headlines

• Global Stocks Rise With European Shares Hitting a Three-Month High Global stocks mostly rose Thursday, with European shares hitting a three-month high amid hopes of further central bank stimulus.

• Saudi counters ‘lower for longer’ oil mantra. Saudi Arabia’s veteran oil minister made clear late last year that the kingdom would no longer prop up the oil market, saying it was tired of cutting output to guarantee $100 a barrel for high-cost rivals.

• Why there’s calm at flattening yield curve The US yield curve is flattening. Should markets be worried?The difference in yield between US 10-year and two-year sovereign bonds this week contracted to less than 130 basis points, its narrowest since February and only a dozen basis points shy of the tightest spread since the height of the financial crisis in early 2008.

• Debt load has many Canadians ‘living on the edge,’ with high housing prices largely to blame: report Canadians households have become so financially stretched and hooked on debt to get by that, in just the past year, more than a third of us have found ourselves covering expenses by running up credit lines or credit cards, or even selling off investments and hitting up family members for much-needed cash

Overnight markets

• Overview: US 10yr note futures are up +0.09% at 127-03, S&P 500 futures are up +0.36% at 2095.50, Crude oil futures are down -0.65% at 42.78$, Gold futures are up +0.07% at $107050, DXY is up +0.01 % at 99.801.

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

Market update

US tsys higher after mixed data – stronger claims & durable orders, weaker core PCE – curve ~3bps flatter US 10s 2.227 (-1.2 bps), longs below 3.0% (2.98, -2.3bps). US tsy curve 5/30 2bps flattest since August. Core Euro bonds outperforming on Reuters story (see above) on negative deposit rates & expanded bond buying. GOCs unch, curve flatter out to ten yrs, longs lagging – BOC auctions $1.4bln in reopened Dec 48s with the 48/45 roll @ 2.5ps. The long roll is ~1.5bps wider since last auction on May 20th as 45s have narrowed vs off the run longs (the 45/41 roll ~1.5bps flatter since May 20th. Provis opening unch, provi supply unlikely yet Alta, MP still rumoured.

News headlines

• ECB discusses two-tiered bank charges, broader bond buys – officials (Reuters) Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting, according to officials.

• BOJ minutes reveal output gap worry; Japan raises minimum wage (CNBC) Some members of the Bank of Japan’s (BOJ) policy board believe that an output gap was one reason the country was taking longer to meet inflation targets, minutes of the central bank’s latest meeting showed Wednesday.

• Falling Corporate Profits Blur U.S. Growth Outlook (WSJ) Profits at U.S. companies during the third quarter posted their largest annual decline since the recession, underscoring the competitive pressure from a strong dollar and weak global demand that could limit businesses’ ability to support stronger economic growth in the coming months.

• Copper’ plunges to US$2 for first time since 2009: ‘Things are quite horrible and about to get worse’ (FinancialPost) Copper goes by the nickname “Dr. Copper,” because the red metal is viewed as a barometer for the global economy. And unfortunately, it hasn’t been saying anything cheery of late.

• Dark clouds start to gather over Black Friday in the US (FT) The idea of shutting up shop on the biggest day of the American retail calendar — Black Friday — is considered by most stores to be utter madness.But that is exactly what REI, the privately held outdoor sports chain, will do on Friday, when it is giving its staff a paid day off, encouraging them to spend it outside.

• Deficits as far as the eye can see  (FinancialPost) As Yogi Berra observed, it’s tough to make predictions, especially about the future. But one of the most time-honoured traditions we can count on is that a new government will invariably discover to its amazement that the cupboard is bare, finances are in tatters and its ability to fulfill its promises are compromised.

Overnight markets

• Overview: US 10yr note futures are up +0.04% at 126-30, S&P 500 futures are up +0.16% at 2088, Crude oil futures are down -1.49% at 42.27$, Gold futures are down -0.31% at $1070, DXY is up +0.46 % at 99.971.

 US Economic Data

• Mortgage applications decreased by a seasonally adjusted 3.2% in the week ending November 20 to 419.9. That follows a gain of 6.2% to 433.9 in the preceding week
• Personal spending in October ticked 0.1% higher, compared to the estimated rise to 0.3% from Sep’s 0.1%.
• Personal income printed at 0.4% as estimated from Sep’s 0.1%.
• Core personal consumption expenditure (PCE) price index printed in line with the estimates and unchanged at 1.35 year-on-year.
• Core PCE MoM stalled, missing the estimate of 0.1% rise.
• Durable goods orders figure printed at 3.0%, compared to the estimated rise to 1.5% in October from Sep’s -1.2%
• FHFA house price index for September 2015 US rose 0.8% vs 0.4% exp m/m
• Initial claims for state unemployment benefits declined 12,000 to a seasonally adjusted 260,000 for the week ended Nov. 21
• 4wk moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, was unchanged at 271,000 last week.
• Continuing claims, came in at 2.207 million for the week ended November 14, the most recent week for which the government has data. This was up 34,000 from the previous week.
• New home sales likely picked up in October after a steep drop in September, a government report is expected to show. Economists expect a 6.8 percent increase to 500,000 homes in the U.S. Census Bureau’s report
• The University of Michigan’s final index on consumer sentiment for November is due at 10am

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

Market update

US tsys higher after Q3 GDP came in as exp (2.1%), curve sharply steeper as 2s outperform and prior to this aft $35bln 5Y note & $13bln 2Y FRN auctions. Since the last 5Y auction the 5/30 curve has narrowed ~6bps while 2s/5s is barely 2bps flatter so this aft auction may be opportunity to take off flatters before m/e, despite the relatively large 0.13Y extension in the Barclays universe. The 10Y note @ 2.22% is at the bottom end of the range vs ~2.37% after Sep payrolls. GOCs are unch, provis offered (+1bp) despite Ont/QC blackout, Alberta 5& 10 rumoured

News headlines

• German Business Confidence Rises in Sign of Robust Economy (Bloomberg) German business confidence unexpectedly rose in a sign that Europe’s largest economy is robust enough to weather risks including a global slowdown and Volkswagen AG’s emissions scandal.

• OPEC Seen Holding the Line as $40 Crude Looms Over Vienna (Bloomberg) It’ll take more than $40 crude to make OPEC change its mind, analysts said before the group’s Dec. 4 meeting in Vienna.

• Hedge funds’ oil shorts reach peak for the year (FT) Hedge funds’ bets against the oil price have risen to the highest level this year ahead of next week’s Opec meeting, in the expectation the cartel’s most powerful members will stick with their policy of keeping output high.

• Global debt defaults near milestone (FT) Global debt markets are on the cusp of an unwelcome development with the number of companies defaulting on their obligations set to reach the century mark, driven largely by struggling US shale gas providers.

• Liquidity deteriorates for US Treasuries (FT) Trading in the world’s biggest government bond market has become increasingly challenging as the large banks that support transactions focus on slimming down their balance sheets.

Overnight markets

• Overview: US 10yr note futures are up +0.04% at 126-27, S&P 500 futures are down -0.40% at 2076, Crude oil futures are up +3.04% at 43.01$, Gold futures are up +0.96% at $1076.80, DXY is down -0.17 % at 99.628.

 US Economic Data

• Gross domestic product — the sum of the nation’s economy — rose at a 2.1% annual clip from July through September, fresh government figures show. Initially GDP was reported to have risen by 1.5%.
• Consumer spending, the main engine of U.S. economic growth, rose 3% instead of 3.2%. Exports edged up 0.9%, less than the prior 1.9% estimate, while imports rose a somewhat stronger 2.1%. Business investment was mixed. Spending fell 7.1% on structures but rose 9.5% on equipment.
• Inflation as measured by the PCE index increased at a 1.3% annual clip.
• The S&P/Case-Shiller Home Price Index, covering the entire nation, rose 4.9% in the 12 months ended in September, stronger than a 4.6% increase in the same period ending in August.

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