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Market update

US tsys trading lower, curve flatter, US 10Y 2.347 (+1.8bps). Core Euro bonds mixed, German bunds higher on report from Reuters saying a consensus is building at the ECB to cut the deposit rate further. Euro stocks ~0.25% lower, USD lower, crude flat and gold slightly higher. Focus is on retail sales  and consumer sentiment on Friday in holiday shortened week. US auctions  $24bln in 3Y notes today, $24bln 10Y notes on Thurs & $10bln 30Y bonds Friday. The Latest CFTC COT report dated Nov 3rd showed spec shorts adding to shorts in 5Y notes thru Ultra longs – 10Y shorts rose to the highest since May 8th. GOCs opening lower, curve steeper led by 10s. Provis unch after closing tighter Fri post empl, Ont 46 103/102, Ont 45/25 9.5/9.2, Qc/Ont 25 5.7/5.2 (unch).

News headlines

• China Exports Slump as Global Demand Shrinks (WSJ) China’s exports fell in October for the fourth consecutive month, as a once-powerful engine of the country’s growth continued to sputter in the face of weak global demand.

• Big Banks Could Be Forced to Raise Up to $1.19 Trillion in New Securities (WSJ) Global financial regulators published new rules to stop banks from becoming “too big to fail,” which could force the world’s largest lenders to raise as much as $1.19 trillion by 2022 in debt or other securities that can be written off when winding down failing banks.

• Takeover Loans Have Few Takers on Wall Street (WSJ) Wall Street banks are struggling to sell billions of dollars of loans they made to finance the corporate buyout boom, a sign that investor appetite for riskier debt remains muted despite a robust autumn rally in other financial markets.

• Banking Giants Learn Cost of Preventing Another Lehman Moment (Bloomberg) Banking behemoths led by HSBC Holdings Plc and JPMorgan Chase & Co. now know the cost they’ll have to shoulder so the global financial system doesn’t have another Lehman moment.

• Hedge Funds Raised Treasury Shorts by Most Since ’13 Before Jobs (Bloomberg) Hedge funds picked just the right time to boost bearish bets on Treasuries by the most since March 2013.Large speculators including hedge funds increased net short positions in 10-year notes by 128,601 contracts to 164,264 in the week ended Nov. 3, data from the Commodity Futures Trading Commission show.

• US is suffering a profits recession (FT) It is easy to forget that when market volatility first started to rise in late June, investors were reacting to concerns over rising interest rates and a pending Federal Reserve tightening.

• Toronto housing market at mounting risk of ‘sharp correction,’ OECD warns (G&M) The OECD has issued a long to-do list to Canada’s new government and the provinces: Cool down house prices, act as a group on climate change and cover essential drugs in public health plans.

Overnight markets

• Overview: IG24 5Y 75.723/76.460 (+0.524), US 10yr note futures are down -0.11% at 125-29, S&P 500 futures are up +0.27% at 2088.0, Crude oil futures are up +0.47% at 44.50$, Gold futures are up +0.20% at $1069.9, DXY is up +0.00% at 99.167.

US Economic Data

• Labor market conditions for October will be release at 10:00 and is forecasted at 0.9 after a 0.0 level in September.

Canadian Economic Data

• Housing starts came in at 198.1K in October versus September revised 231.3K.
• 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

Market update

US tsys trading slightly lower post ADP (182k vs 180k exp), Trade data (-40.8b vs -48b in Aug) & Tsy Qtrly refunding stmt ($64bln in 3,10& 30Y next wk, raising $3.6bln new cash).  US 10Y above 2.20% (2.215), with core Euro bonds lower on higher stocks with S&P close to record, Euro stocks at two month highs. Aussie 10Y yields another 6bps higher after Aussie retail sales, sharp gains in China stocks. GOCs slightly lower, curve ~1bp steeper. BOC auctions $3.2bln in reopened 5Y bonds at noon, the 0.75% March 2021 (total outstanding $6.5bln post auction). The Mar21/5Y roll 12.2/12.1 seems tight as the wider 5/10 curve has steepened ~7bps over the last month and 5s are basically flat on the curve vs 2s/10s since last auction. Provis ) 0.5bps wider, Qc 48s 108/107, Qc/Ont 45 6.3/5.8 (5.8 yest), Ont 46 102/101 . BC tighter again this morn, BC/Ont 25 rl -11/-11.5 from -10 @ issue on Monday.

News headlines

• Europe higher as Wall Street eyes fresh record (FT) Global stocks are hitting fresh two-month highs as Wall Street eyes a new record, Europe opens on the front foot, and after Asia traders welcomed a sizzling debut for Japan’s biggest privatisation in decades.

• Draghi: ECB willing and able to act in December (CNBC) The European Central Bank’s policymakers will review the degree of monetary stimulus they have deployed when they meet in December and remain willing and able to act if needed, ECB President Mario Draghi said on Tuesday.

• America has built the equivalent of 10 Keystone pipelines since 2010 — and nobody said anything (FP) While TransCanada Corp. has been cooling its heels on its Keystone XL proposal for the past six years, the oil pipeline business has been booming in the United States. Crude oil pipeline mileage rose 9.1 per cent last year alone to reach 66,649 miles, according to data from the Washington, D.C.-based Association of Oil Pipe Lines (AOPL)  set to be released soon.

• VW slumps as emissions scandal spreads to gasoline cars (G&M) Volkswagen AG said it found faulty emissions readings for the first time in gasoline-powered vehicles, widening a scandal that so far had centred on diesel engines. The shares fell the most in almost five weeks.

• High demand, limited supply pushes Vancouver house prices to new highs (G&M) Even by the city’s lofty standards, price surges in the red-hot Vancouver real estate market have crossed into jaw-dropping territory. The median price for single-family detached homes sold on Vancouver’s coveted west side reached $2.91-million last month. That’s up 15.9 per cent over the past year and represents a 42-per-cent jump from October, 2013.

Overnight markets

• Overview: IG24 5Y 70.795/71.481 (-0.460), US 10yr note futures are up +0.01% at 127-04, S&P 500 futures are up +0.27% at 2108.75, Crude oil futures are up +0.10% at 47.95$, Gold futures are up +0.34% at $1117.9, DXY is up +0.42% at 97.570.

US Economic Data

• MBA mortgage applications came in this morning at -0.8% for the week ending October 30th, versus prior week -3.5% decrease.
• ADP employment change came in at 182K in October compared to 190K in September (Expected 180K).
• Trade balance tightened to -$40.81B in September compared to previous month (-$48.02B).
• Markit US Services PMI for October (Final) is forecast at 54.5, 0.1 point higher than preliminary report.
• ISM non-manufacturing is forecast at 56.5 in October lower than September 56.9.

Canadian Economic Data

• Int’l merchandise trade worsened to -$2.53B in August from a revised deficit of -$0.82B in July and worse than expected (-$1.20B).

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 in narrow o/n range on very little overnite news, US 10Y 2.19 (+2bps) & curve steeper out to ten yrs. Core Euro bonds German 10Y bund slightly lower along with UK gilts before Draghi comments at 1:00 EST. Late Monday the US Treasury raised their borrowing needs for this qtr to $344bln from $270bln prelim est. RBA kept rates at 2.0% with odds of a rate cut were ~50%, Aussie yields ~6bps higher. GOCs are lower, outperforming tsys by ~1bp out the curve. Provis opening with bid tone, expect supply after solid BC 25 yest (-10 thru Onts, now -10.5 bid)

News headlines

• RBA holds rates at record-low 2 percent but adds easing bias (CNBC) The Reserve Bank of Australia held its key cash rate at 2 percent, saying that the prospects for an improvement in economic conditions had “firmed a little over recent months.”

• Treasury raises quarterly borrowing estimate to $344 billion (Marketwatch) The U.S. government expects to borrow $344 billion in the October-December quarter, an estimate that is $74 billion higher than previously projected in August, the Treasury Department said Monday.

• TransCanada seeks pause on pipeline decision (G&M) In what may be a last-ditch effort to salvage the Keystone XL pipeline from President Barack Obama’s anticipated rejection, TransCanada Corp. made an unprecedented request Monday – asking the U.S. government to suspend consideration of its bid to build an $8-billion (U.S.) pipeline to funnel Alberta oil sands crude across the United States to Gulf Coast refineries.

• Molson Coors and SABMiller in talks on joint venture stake sale (FT) Molson Coors, the US-Canadian brewer, is in advanced talks to buy SABMiller’s majority stake in their American joint venture, people familiar with the talks said, in a move seen as critical to helping Anheuser-Busch InBev secure its £68bn takeover of SAB.

Overnight markets

• Overview: IG24 5Y 72.516/73.216 (+0.262), US 10yr note futures are down -0.11% at 127-07+, S&P 500 futures are down -0.20% at 2091.25, Crude oil futures are up +1.26% at 46.72$, Gold futures are down -0.76% at $1127.3, DXY is up +0.40% at 97.316.

US Economic Data

• ISM New York (October) will be release at 9:45 (last report: 44.5).
• Factory orders are expected at -0.9% MoM in September fallowing -1.7% in August.
• IBD/TIPP economic optimism is forecast at 47.4 in November 0.1 point higher than October (47.3).
• Total vehicle sales are expected at 17.70M in October lower than September 18.07M.

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