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Market update

US sys moving lower after Fed Lockhart comments that it may be appropriate to start ‘new policy phase’ thou ‘hike pace might be somewhat slow’.. Tsy yields 2-3 bps higher across the curve, US 10Y 2.29 (+2bps) extending underperformance vs UK gilts, German bunds, the former ~3bps lower in the 10Y on dovsh comments from BOE Broadbent. Euro stocks lower, yet off earlier while US fut slightly higher. Fed minutes from Oct meeting at 2:00EST. GOCs lower, lagging tsys by ~1bp on the pullback. Provis tighter again this morn after closing 1-1.5bps tighter yest, Ont 46s 104/103.  Selling in CMBs overnite.  Yet cmbs 1bp tighter since yest aft, WI 25s traded up at 62 yest, pricing is this morning ~63bps.

News headlines

• Fed’s Lacker: Economic impact of terror attacks is transitory (CNBC) Richmond Fed President Jeffrey Lacker said Wednesday any economic impact of the Paris terror attacks would likely be transitory. He appeared on CNBC’s “Squawk Box” ahead of the afternoon release of the minutes from the Federal Open Market Committee’s October meeting.

• Goldman: The U.S. Economy Will Need More Than Just Consumers in 2016 (Bloomberg) In 2015, American consumers put the economy on their backs. Next year, however, the economy will need to be firing on more cylinders in order to keep eating into slack, according to Goldman Sachs.

• Bond investors freed to tackle interest rate risk (FT) If fund managers had theme songs, then a small but swelling part of the global bond investment industry would probably choose Queen’s “I Want to Break Free”.

• Hints get heavy for ECB’s hard task ahead (FT) The hints, known in the language of central bank watching as signals, have become heavy. The European Central Bank will do something in December to further stimulate the eurozone economy, by extending or enlarging its experiment in unconventional monetary policy.

• US bond dealers hold net negative positions (FT) Official figures reveal that bond dealers in the US are for the first time in aggregate holding net negative positions of company debt with a maturity longer than a year. Corporate bond inventories have been in decline for some time, with analysts pointing to the higher cost of capital as a constraint on banks’ balance sheets.

 Overnight markets

• Overview: IG24 5Y 77.946/78.696 (-0.880), US 10yr note futures are down -0.18% at 126-15, S&P 500 futures are up +0.37% at 2055.5, Crude oil futures are down -0.77% at 41.42$, Gold futures are down -0.23% at $1081.1, DXY is down -0.01% at 99.436.

 US Economic Data

• MBA mortgage applications came in this morning at 6.2% for the week ending November 13th, versus prior week -1.3% decrease.
• Housing starts came in at 1060K (-11.0% MoM) in October versus September 1191K (6.7% MoM).
• Building permits increase to 1150K (4.1% MoM) in October compared to previous month 1103K (-5.0% MoM).
• Fed minutes from October 27-28 FOMC meeting will be release at 14:00.

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 moving lower after higher core Oct CPI, US 10 curve flatter, US 10Y 2.28 (+1.4bps),tsy 10Y futures in narrow o/n range before CPI, Industrial Production. Euro stocks up a second day, France +2.5%, Greece +3.0% with Greek 10Y -18bps on news of creditor agreement. Core Euro bonds unch – bunds hit a two week high 157.53 before fading as stocks moved higher, 10Y gilt yields 3bps higher as core UK CPI came in above exp. GOCs lower, in line with tsys. Provis opening 0.5bps tighter, focus on CHT 10Y & 5Y FRN supply.

News headlines

• Europe bounces as Wall St extends rally (FT) European stocks are mirroring a bounce in Asia, shrugging off weakness in base metals as the dollar flirts with 12-year highs in anticipation of a US rate rise in December.

• Walmart profits dip despite US gains (FT) An improvement at its key US business was not enough to prevent a drop in quarterly profits at Walmart, the Arkansas-based retailer that turned itself into America’s largest.

• Something very strange is happening in the world of fixed income (FP) Something very strange is happening in the world of fixed income. Across developed markets, the conventional relationship between government debt — long considered the risk-free benchmark — and other assets has been turned upside-down.

• Investors Are Starting to Buy into Oil (WSJ) Investors remain downbeat on oil, but some are starting to buy the companies that pump it out of the ground. Since the beginning of October, Brent, the global oil benchmark, has fallen by 8% and few see it recovering much this or next year. But oil and gas stocks are up almost 8%, as measured by the S&P Global Oil Index.

• Enbridge Inc cuts 500 staff, about 5% of workforce, amid collapse in oil prices (FP) Canada’s largest pipeline company Enbridge Inc. confirmed it laid off 500 people on Monday and will not be hiring for an additional 100 unfilled positions. The layoffs represent about five per cent of the company’s total workforce and are spread across Enbridge’s operations in Canada and the U.S.

Overnight markets

• Overview: IG24 5Y 77.946/78.696 (-0.880), US 10yr note futures are down -0.18% at 126-15, S&P 500 futures are up +0.37% at 2055.5, Crude oil futures are down -0.77% at 41.42$, Gold futures are down -0.23% at $1081.1, DXY is down -0.01% at 99.436.

US Economic Data

• CPI decrease 0.2% MoM (+0.2% YoY) in October (0.2% MoM and 0.1% YoY Expec) versus September -0.2% MoM (0.0% YoY).
• CPI core came in at 0.2% MoM (+1.9% YoY) in October (0.2% MoM and 1.9% YoY Expec) compared to previous month 0.2% MoM (1.9% YoY).
• Industrial production is expected at 0.1% MoM in October compared to September 1.7%.
• Capacity utilization is forecast at 77.5% in October, equal to previous month.
• Manufacturing production is expected at 0.2% MoM in October compared to -0.1% in September.
• NAHB housing market index is forecast at 64.0 in November equal to October.
• Net long-term TIC flows for September will be release at 16:00.

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 trading higher, flatter after weaker than exp NY Empire index. USD higher, crude higher, Euro stocks maintaining gains, after dropping initially in response to Paris attacks. Nikkei lower on Japan recession news. Core Euro bonds higher led by 10Y gilts (-3bps) while German bund yields are ~1bp lower. GOCs are higher, ~1bp tighter vs tsys, 10s/30s in steeping mode for 2nd day after reaching flattest level (68bps) on Fri.Provi spds are opening with a bid tone after widening out ~2bps Fri.

News headlines

• European bourses resilient after Paris attacks (FT) European equities are turning round from losses in a resilient reaction in the region to Friday’s terrorist attacks on Paris, while the euro is also holding off day-lows and oil prices are rising.

• Euro softens as investors look to ECB (FT) The Paris attacks weighed on investor sentiment towards the euro, with a weaker single currency reflecting worries about the terrorism threat on the outlook for Eurozone growth.

• Don’t Fight the Fed: It’s Lower for Longer for Bond Yields (WSJ) Bond investors aren’t fighting the Fed, but they aren’t panicking about higher interest rates, either. Futures-market bets on rising U.S. interest rates have reached a six-month high, reflecting expectations that the Federal Reserve will raise short-term rates next month for the first time since 2006.

• Why Japan Keeps Falling Into Recession (WSJ) Japan is once again in recession. The situation isn’t dire, but weak corporate investment is an important warning sign that investors should heed.

• Lenders tighten screws on Canadian energy companies as ‘vicious cycle’ of cost-cutting unravels (FP) Lenders tighten screws on Canadian energy companies as ‘vicious cycle’ of cost-cutting unravels.

• Mind the Gap as Currency Markets Shrivel for All But Biggest Few (Bloomberg) Even the world’s biggest financial market can’t escape the global liquidity drought. Currency traders accustomed to shifting billions of dollars around the globe are starting to suffer as dealers retrench.

Overnight markets

• Overview: IG24 5Y 82.240/82.990 (+0.899), US 10yr note futures are up +0.19% at 126-24+, S&P 500 futures are down -0.04% at 2017.75, Crude oil futures are up +0.15% at 40.80$, Gold futures are up +0.56% at $1087.0, DXY is up +0.05% at 99.047.

 US Economic Data

• Empire manufacturing increased to -10.74 in November from a reading of -11.36 in October. Analysts had expected the index to rise to -6.5.

Canadian Economic Data

• Int’l securities transactions for September came in at 3.35B, lower than previous month (5.78B).
• Manufacturing sales decreased -1.5% MoM in September compared to -0.6% for previous month.
• Existing home sales for September will be release at 9:00.
• Bloomberg Nanos Canadian Confidence Index will be released today at 10:00am.

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