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Market update

US tsys trading slightly higher , TY futures traded in 3 tick range overnite on low volume before FOMC this aft – US 10Y 2.03 (-0.5bps), curve 1bp flatter led by longs. Euro stocks higher, USD weaker and Euro govt bonds in bull flattener on Riksbank QE (see below). Swedish 10Y 11bps lower @ 0.50%. Riksbank announced plans to expand QE by SEK65bln (CAD10.2bln), kept repo rate at -0.35% to counter appreciation of the Krona, even as GDP running at ~3.0%. US auctions $15bln in 2Y FRN & $35bln 5Y notes at 1:00PM with FOMC at 2:00. Yesterday’s tsy rally was led by the belly of the curve so expect some concession building into this aft 5Y auction. GOCs are unch, provis opening unch with focus on FOMC. Alberta 43/Ont43 rl unch @ 0.0/-0.3 – Alberta budget yest: govt expected to run a $6.1bln deficit this fy, get to surplus by 2019-20, capital plan $34bln from $29.5 in prev budget, projected borrowings to increase net $6bln over three years.

News headlines

• Sweden’s Riksbank Expands QE Program as ECB Stimulus Weighs (Bloomberg) The Riksbank expanded its bond-purchase plan for a fourth time since February as policy makers in Sweden struggle to keep pace with stimulus measures in the euro zone.

• Fed Seen as Unlikely to Raise Rates, as Pressures Mount From Both Sides (NYT) Federal Reserve officials, wrapping up a two-day policy meeting on Wednesday, are still thinking about raising the Fed’s benchmark interest rate in 2015, in part because they see strategic advantages in moving earlier than necessary.

• For Fed, a Rates Puzzle Looms (WSJ) Surging levels of cash in U.S. money markets threaten to undermine the Federal Reserve’s control over short-term interest rates, some market participants said, citing forces in an obscure corner of the markets that could complicate a move to tighten monetary policy.

• Canadian oil groups wary of Justin Trudeau’s administration (FT) Justin Trudeau’s rise to power has met with anxiety in Canada’s beleaguered oil patch, where the legacy of his father’s wildly unpopular energy policy still incites “riots at cocktail parties”.

• Lane Says Bank of Canada May Adjust Core CPI Measure in 2016 (Bloomberg) Canada’s central bank may adjust the way it measures “core” consumer prices when it renews an inflation-targeting agreement with the government next year.The Bank of Canada’s current benchmark of core prices that excludes eight volatile items such as fresh fruit is underperforming relative to other indexes under consideration for next year, deputy governor Tim Lane said Tuesday in Halifax, Nova Scotia. The current index, known as CPIX, has been the central bank’s main guide since 2001 on whether the total inflation rate will stay near the bank’s 2 percent target.

Overnight markets 

• Overview: IG24 5Y 74.001/74.684 (+0.078), US 10yr note futures are down -0.06% at 128-27, S&P 500 futures are up +0.10% at 2062.5, Crude oil futures are up +0.69% at 43.50$, Gold futures are up +0.71% at $1174.1, DXY is down -0.18% at 96.728.

US Economic Data

• MBA mortgage applications came in this morning at -3.5% for the week ending October 23th, versus prior week 11.8% increase.
• FOMC Rate Decision is schedule 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 trading higher, US 10Y 2.03 (-2.7bps) after weaker Sep Durable Goods (-1.2 vs -1.5, ex trans -0.4 vs 0.0). Tsys also supported by sharp gains in German 10Y bunds as bund fut hit new highs after ECB Nowotny comments on inflation. European equities lower by ~0.50% despite modest increase in China comp, commodities lower , crude below $44.00 on inventory build expected tomorrow. In Canada, GOCs are higher led by 10s again – another 2bps after yest 5 bps narrowing on strong CGB buying. Provis managed to hold bid tone in yest rally & with expec of supply building – Ont 25s trading up @ 94.5 yest aft, this morn 95/94.In corps CIBC reopening their 3Y dep notes @ ~111 over curve this morn, bid tone in bank paper continues – we are buyer of NVCC  TD 2.982 20 we can pay 258 for 2mm.

News headlines

• Congress and White House Reach Tentative Budget Deal (NYT) After five years of bitter clashes, Republican congressional leaders and President Obama on Monday night appeared to settle their last budget fight by reaching a tentative deal that would modestly increase spending over the next two years, cut some social programs, and raise the federal borrowing limit.

• Crude falls, extending two-week slide on refined oil glut worry (Reuters) Crude prices fell again on Monday, staying under pressure after two straight weeks of losses, on worries that the oversupply in oil products would swell from unseasonably warm weather and the waning maintenance cycle for U.S. refineries.

• U.K. Economy Expands Less Than Forecast as Production Cools (Bloomberg) U.K. economic growth cooled as manufacturing contracted for a third quarter and construction shrank the most since 2012, a sign that Britain may be falling prey to global headwinds.

• Ford Profit Misses Estimates as Taxes Delay Payoff From F-150 (Bloomberg) Ford Motor Co. posted third-quarter profits that fell short of analysts’ estimates as higher taxes reduced the payoff from its aluminum-bodied F-Series pickups.

• BP cuts costs as it braces for prolonged low oil price (FT) BP has become the latest big energy group to set out even deeper cuts to spending over the coming years, aiming to slash billions of dollars by 2017 under a plan that assumes a sustained slump in oil prices.

Overnight markets

• Overview: IG24 5Y 73.964/74.679 (+0.698), US 10yr note futures are up +0.17% at 128-26, S&P 500 futures are down -0.27% at 2056.75, Crude oil futures are down -1.39% at 43.37$, Gold futures are down -0.03% at $1165.8, DXY is down -0.21% at 96.658.

US Economic Data

• Durable goods orders decreased in September by -1.2%, better than expectations of -1.5% MoM (-0.4% vs 0.0% Ex Trans.) versus revised August -3.0% MoM (-0.9% Ex Trans.).
• Nondefense capital goods ( New Orders)  diminished by -0.3% in September,  they were expected to increase 0.2% MoM (0.5% MoM vs 0.4% for Shipped) this is compared to -1.6% (NO) and -0.8% (S) for the previous month revised data.
• Case-Shiller house price index (20-City) is forecasted at 5.10% in August following a gain of 4.96% in July.
• Markit US Services PMI (Preliminary) is forecast at 55.5 for October, 0.4 point higher than previous month.
• Consumer confidence Index is expected at 103.0 in October compared to 103.0 for the previous month.
• Richmond Fed Manufacturing activity index is expected at -3 in October higher than September (-5).

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 sharply higher in NY trading, curve ~ 3 bps flatter as longs outperform along with flattening move seen in German bunds. US 10Y 2.06% (-3bps), 10Y tsy/bund spd 157 highest since August 4th. Bunds were lower on better than expected IFO (108.2 vs 107.8). Quiet start to the week as mkt awaits FOMC, BOJ, tsy supply and debt ceiling – FOMC not expected to hike rates but BOJ may add to record stimulus on Friday given slowing in domestic economy. GOCs  trading higher led by 10Y , spds ~1bp tighter vs tsys in the rally. Provis opening with offered tone on no trade, Ont 46 105.5/105, Ont 45/25 10/9.7.

News headlines

• European shares slip as easing expectations fade (Reuters) European shares fell in early trading on Monday as euphoria about the prospect of further central bank policy easing faded, with investors warning against over-confidence ahead of another week of interest rate decisions.

• S. Companies Warn of Slowing Economy (WSJ) Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending.

• Asset managers suffer as oil funds withdraw cash (FT) Global asset managers are facing a double hit to their fees, as sovereign wealth funds withdraw billions to support their oil-dependent economies — and switch to a cheaper in-house investment approach.

• Oil Speculators Make ’Easy’ Bearish Call at 85-Year Supply High (BOEreport.com) Hedge funds placed the most bets on falling oil prices since July as rising piles of crude dashed hopes of a near-term recovery. Money managers’ short position in West Texas Intermediate crude jumped by 18 percent in the week ended Oct. 20, the largest surge since July 21, according to data from the Commodity Futures Trading Commission. That pulled their net-long position down by more than 16,000 contracts of futures and options.

• Ifo German business confidence higher than seen (Marketwatch) The mood among German business managers deteriorated by less than expected in October, with firms in the automotive sector unfazed by the recent emission scandal at car maker Volkswagen AG.

Overnight markets

• Overview: IG24 5Y 72.994/73.710 (+0.153), US 10yr note futures are up +0.07% at 128-16+, S&P 500 futures are down -0.07% at 2064.5, Crude oil futures are flat at 44.60, Gold futures are up +0.29% at $1166.2, DXY is up +0.36% at 96.954.

US Economic Data

• New home sales are forecast at 550K (-0.4% MoM) in September versus August 552K (5.7% MoM).
• Dallas Fed is forecast at -6.5 in October higher than September -9.5.

Canadian Economic Data

• 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