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Market update

US tsys trading higher, curve steeper, US 10Y 2.29 ( -2.1bps), bouncing after weaker PPI, retail sales – with Univ of Michigan sent expected at 10:00. Core Euro bonds higher, bund/gilt spd ~3bps wider on weaker Euro GDP. GOCs higher, underpinned by somewhat dovish comments from BOC deputy Wilkins noting that policy rates likely to remain low if BOC maintains 2% infl target. Provi spds 1bp wider, follow thru on late aft weakness Thursday & risk off this morn – Ont 46 106/105, QC 48 112.5/111.5 – still expect supply likely in longs given flat 10s/30s & tighter Ont 45/25 box.

News headlines

• Euro-Area Growth Misses Estimates as ECB Ponders More Stimulus (Bloomberg) Euro-area economic growth unexpectedly slowed in the third quarter, underscoring the vulnerability of the region’s recovery as the European Central Bank examines the need for fresh stimulus.

• Global oil inventory stands at record level (FT) Global oil inventories have risen to a record level just shy of 3bn barrels, the world’s leading energy agency said on Friday, even as the collapse in prices has boosted demand to a five-year high. “This massive cushion has inflated even as the global oil market adjusts to $50/bbl oil,” said the International Energy Agency (IEA) in its closely watched monthly oil market report.

• European shares hammered after commodity rout (Reuters) European shares were set for their biggest weekly fall since September on Friday after commodity prices tumbled to multi-year lows on worries over a glut in supply and slower global economic growth.

• Eurozone convertible deal snapped up (FT) International Consolidated Airlines Group sold €1bn of convertible bonds on Thursday, with one of the largest deals for 2015 attracting strong demand from investors who have been starved of such offerings this year.

Overnight markets

• Overview: IG24 5Y 79.852/80.568 (+0.617), US 10yr note futures are up +0.20% at 126-14+, S&P 500 futures are down -0.31% at 2034.25, Crude oil futures are down -0.43% at 41.57$, Gold futures are up +0.59% at $1087.4, DXY is down -0.08% at 98.592.

 US Economic Data

• Retail sales increased 0.1% MoM in October, below expectations (0.3%), after increasing 0.1% the previous month.
• Retail sales excluding automobiles increased 0.2% in October, compared to consensus of a 0.4% increase, and a revised -0.4% decrease in September.
• PPI came in at -0.4% MoM (-1.6% YoY) in October versus September -0.5% MoM (-1.1% YoY).
• PPI core decreased -0.3% MoM (+0.1% YoY) in October compared to previous month -0.3% MoM (0.8% YoY).
• Business inventories are forecast to increase 0.0% MoM in September, equal to previous month increase.
• University of Michigan confidence (P) is expected at 91.5 in November 1.5 point higher than previous month.

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 slightly lower after claims came in as exp, curve unch, US 10Y 2.333 (+0.4bps). Euro stocks extending o/n weakness on lower earnings from Rolls Royce which is off 21%. Core Euro bonds mixed with German bunds lower, gilts higher despite dovish comments from Draghi (See above). Several Fed speakers including Yellen as well as 30Y auction at 1:00PM. After recent long end steepening US 30Y looks attractive on the curve and vs Cda, with the 10/30 box at its flattest since mid July. GOCs are lower, curve steeper, 10Y above 1.70%. Expect provi supply QC & Ont with spreads unch, Ont 46 104.5/104, QC 48 110.5/109.5.

News headlines

• Mario Draghi hints at expanding QE to boost recovery (FT) Mario Draghi has dropped another hint that the European Central Bank is readying more measures to boost the eurozone’s recovery, saying there were signs a major measure of inflation would take longer to return to policymakers’ target.

• Draghi’s Two Words on Inflation Say He Knows Something We Don’t (Bloomberg) Europe’s central bankers used to dismiss core inflation, a measure of price gains that excludes food and energy, as a fixation of economists who don’t eat or drive.ut less so now. European Central Bank President Mario Draghi singled it out on Thursday, saying it’s “somewhat weakened.” Mark Carney last week said the gauge is important to watch as the Bank of England edges toward its first rate increase in more than eight years.

• Boom times for US corporate bond sales (FT) These are boom times for US debt capital markets and the bankers that are ushering in a wave of corporate debt ahead of an expected policy tightening by the Federal Reserve next month.

• AB InBev saves by lining up $75bn jumbo loan itself (FT) Thrift is not just for those in search of a bargain. Anheuser-Busch InBev has secured a record $75bn loan package to fund its $108bn acquisition of SABMiller, choosing unexpectedly to arrange the deal itself in a bid to save millions of dollars in fees, according to people familiar with the matter.

• Why Toronto-Dominion Bank could soon overtake Royal Bank of Canada (FP) Shares of both Toronto-Dominion Bank and Royal Bank of Canada are trading well below their five- and 10-year average price-to-earnings and price-to-book ratios. The reasons why are becoming clear — earnings growth is expected to slow, and there are some major risks lurking on the horizon.

• Paying to Get Dollars Is Most Expensive Since 2012 in Swaps (Bloomberg) A crunch is developing in international funding markets. The cost to convert local currency payments in the euro area, U.K. and Japan into dollars has jumped amid speculation the Federal Reserve will raise interest rates in December.

Overnight markets

• Overview: IG24 5Y 78.303/79.032(+1.392), US 10yr note futures are up +0.02% at 126-03, S&P 500 futures are down -0.27% at 2063.5, Crude oil futures are down -1.48% at 42.29$, Gold futures are down -0.24% at $1082.3, DXY is up +0.05% at 99.062.

US Economic Data

• Initial jobless claims came in at 276K  for the week ending November 7th, higher than expected (270K) and equal to prior week (276K).
• Continuing claims increased to 2174K from 2169K and was higher than expected (2155K).
• JOLTs job openings are forecast at 5400 in September compared to August 5370.
• Monthly budget statement is forecast at -$131.5B in October versus $91.06B in September.

Canadian Economic Data

• Teranet/National bank housing price index for the month of October came in at 0.1% MoM and 5.6% YoY.
• New housing price index increased 0.1% MoM (+1.3% YoY) in September compared to August 0.3% MoM (1.3% YoY).

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, yet well off earlier highs which saw the 10Y yield fall to 2.315, now 2.33 (-1bp) with the curve ~2bps steeper. Big new o/n was China inflation nos (see above) coming in below exp (CPI 1.3 vs 1.5). Core Euro bonds higher, with 10Y bund/tsy spd ~2.5bps wider as bunds outperform on buying in longs and remarks by ECB Liikannen that downside risks remain to EU growth & inflation. The US auctions $24bln 10Y notes at 1:00PM. GOCs are higher, curve 2s/10s 1.5bps steeper. Provis opening unch, could still see Ont/Qc supply even with shortened session. Genworth roadshow this week, Genworth MI Canada was affirmed by S&P at BBB+ back in Sept.

News headlines

• China’s Inflation Slows in October (WSJ) China’s consumer inflation dipped further last month due to lower food prices, adding to what economists say are signs of slack demand and slowing in the world’s second-largest economy.

• OPEC’s Oil Output Strategy Seen Potentially Backfiring (WSJ) OPEC’s unwillingness to limit its oil output could help usher in a sustained period of low prices and more pain for its members’ budgets, the International Energy Agency said Tuesday.

• Fed’s Rosengren strikes upbeat note on rise in interest rates (FT) The US economy has suffered little collateral damage from the turbulence in emerging economies and financial markets during the summer, leaving the way open for the Federal Reserve to consider lifting interest rates, a senior policymaker has said.

• Beyond Banking: under attack on all sides (FT) It is more than seven years since the height of the financial crisis, but the run of disastrous banking news during the past few weeks has revived bad memories. Profit warnings, mass job cuts, share price plunges and defensive capital raisings have abounded.

• CP Rail takeover of Norfolk would fulfill Harrison strategy (G&M) A takeover of Norfolk Southern Corp. by Canadian Pacific Railway Ltd. would give Hunter Harrison his dream: a railway that reaches three coasts.

Overnight markets

• Overview: IG24 5Y 77.123/77.839 (+0.524), US 10yr note futures are up +0.05% at 126-03, S&P 500 futures are down -0.22% at 2068.5, Crude oil futures are down -0.30% at 43.74$, Gold futures are up +0.02% at $1088.3, DXY is up +0.38% at 99.353.

US Economic Data

•  NFIB Small Business Optimism Index for October came in at 96.1 compared to the consensus of 96.4 and prior month (96.1).
• Import price index came in at -0.5% MoM (-10.50% YoY) in October versus September -0.6% MoM (-11.30% YoY).
• Wholesale Inventories are forecast at 0.1% MoM in September versus 0.1% MoM for previous month.
• Wholesale trade sales are expected at 0.1% MoM in September higher than August -1.0% MoM.

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