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Market update

US tsys opening lower for the first time in four days after stronger Sep core CPI/ lower claims, US 10Y 2.025 (+5bps) curve with 2s & longs out performing. CPI came in as exp falling 0.2% overall yet the core rose 0.2% /1.9% y/y vs 0.1%/1.8% exp driven by 0.5% increase in furniture , 0.3% rise in OER & medical. Claims fell 7k to 255k the lowest since 1973 (BN). Core Euro bonds lagging the move in tsys, German 10Y bunds at 0.55 close to 0.50% low from  May/Sep. In corps, just 2 deals expected to price in the US so far today -$600M CSX & $500M Dollar General – yet AB InBev is said to be planning as much as a $55bln bond sale to finance part of the ~100+bln purchase of SABMIller. In Canada, GOCs are lower, curve steeper in directional move with higher 10Y yields, 10s/30s flatter thou 80.5 (-1.5bps) consistent with US.  Of note, despite the ~1.5bp narrowing in the 10Y roll over the past week(11.6/11.4),  the 26/10Y roll continues to cheapen (15.9/15.5)– highlighting the fact that June26s look cheap on the curve. Provis 0.5bps wider, Ont 46s trading down at 111.5 – Ont, Sask rumoured for today .

News headlines

• Goldman Sachs Posts Weaker Results (WSJ) Goldman Sachs Group Inc.’s quarterly profit tumbled as the big U.S. bank with the greatest dependence on Wall Street waded through choppy markets that damped clients’ appetite to trade.

• Goldman Earnings Miss as Bond Traders Suffer (WSJ) Goldman Sachs Group Inc.’s quarterly profit tumbled 36% as the big U.S. bank with the greatest dependence on Wall Street was trounced by volatile markets.

• Oil Bears Buck Market Sentiment (WSJ) Oil prices might have rebounded from multiyear lows but some market bears think the cost of a barrel could still almost halve from current levels by next summer.

• Fed splits fuel doubts on 2015 rate rise (FT) Market concerns are rising over divisions at the top of the Federal Reserve on when to lift interest rates, casting fresh uncertainty over the US central bank’s strategy for withdrawing its monetary stimulus.

• Surging Canadian Liberals ask for majority mandate in next week’s election (Reuters) Canadian Liberal leader Justin Trudeau, surging in opinion polls in the final stretch of the election campaign, asked voters on Wednesday to give him a majority government on Oct 19 – but insisted he would not get over-confident.

• Energy stocks will see red if anyone but Stephen Harper wins this election (FP) Like much of the country, energy stocks could turn red if Liberals win next week’s federal election. “A non-Conservative government would likely be negative for energy equities,” Toronto-based investment bank Canaccord Genuity said in a new report.

 Overnight markets 

• Overview: IG24 5Y 80.067/80.733 (-0.801), US 10yr note futures are down -0.28% at 129-06, S&P 500 futures are up +0.57% at 1995.25, Crude oil futures are down -0.96% at 46.19, Gold futures are up +0.77% at $1188.9, DXY is up +0.15% at 94.073.

US Economic Data

• Initial jobless claims came in at 255K  for the week ending October 10th, lower than expected (270K) and prior week (263K).
• Continuing claims decreased to 2158K from 2208K and lower than expected (2200K).
• Empire manufacturing increased to -11.36 in October from a reading of -14.67 in September. Analysts had expected the index to rise to -8.0.
• CPI decrease -0.2% MoM (+0.0% YoY) in September (-0.2% MoM and -0.1% YoY Expec) versus August -0.1% MoM (0.2% YoY).
• CPI core came in at 0.2% MoM (1.9% YoY) in September (0.1% MoM and 1.8% YoY Expec) compared to previous month 0.1% MoM (1.8% YoY).
• Philadelphia Fed is forecast at -2.0 in October above September level of -6.0.
• Monthly budget statement is forecast at $95.0B in September versus $105.8B in August.

Canadian Economic Data 

• Teranet/National bank housing price index for the month of September came in at 0.6% MoM and 5.6% YoY.
• Existing home sales for September will be release at 9:00.

 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  jumping after  soft core  retail sales & PPI , buy stops being triggered in Dec 10Y futs as well as German bunds on the weaker data. Tsys were already higher overnite on bull flattening rally in core European bonds led by gilts on weak stocks  and rise in UK jobless. Positive sentiment in the tsy market was at the highest level since March last week according to the latest JPM Treasury Client survey. WSJ article (see above)notes there is an increasing no. of Fed officials feeling that a rate rise this year is not appropriate given the state of the US economy – todays PPI/retail sales certainly validates a cautious stance on rate hikes. In Canada, GOCs are higher, curve 1bp flatter led by 10s. 5Y auction atnoon –  WI roll tighter today 13.7/13.6. Provis slightly wider (0.5bps) with lower Cda yields , rumours of 10Y Ontario  & possibly Sasky today.

News headlines

• Wells Fargo Posts Stronger (WSJ) Results Wells Fargo & Co. said its third-quarter profit and revenue rose more than expected, though the nation’s fourth-largest bank by assets continued to deal with a low interest-rate environment.

• Global shares, dollar slip as China inflation cools (Reuters) World shares fell for a second day running and the dollar dropped to its lowest in almost a month on Wednesdayfollowing new signs of a slowdown in China’s economy.

• Eurozone industrial production for August was far weaker than anyone expected (BI) Eurozone industrial production figures for August were just released, and they’re much weaker than analysts were expecting. An increase in output of about 1.8% was expected, but the actual figure came in at less than half that level, up by just 0.9%.
• Atop Fed, Doubt on Rate Timing Arises (WSJ) New doubts about the outlook for interest rates are emerging within senior ranks of the Federal Reserve.
• Canada’s days as an energy super-power are over and the oil crash is only one culprit (FP) Regardless of who wins the October 19 federal election, it’s increasingly clear that Canada’s days as a would-be energy super-power are over. Some of that has to do with oil’s price crash, but that was just the final straw, albeit a painful one.

• This unusual options trade signals that Wall Street is bracing for a black swan (Marketwatch) Blame it on a looming interest rate hike, sluggish global growth or conflict in the Middle East, but investors are girding for the worst!

 Overnight markets

• Overview: IG24 5Y 78.898/79.531 (-0.195), US 10yr note futures are up +0.36% at 129-10+, S&P 500 futures are down -0.05% at 1993.0, Crude oil futures are down -0.15% at 46.59, Gold futures are up +0.73% at $1173.9, DXY is down -0.54% at 94.244.

US Economic Data

• MBA mortgage applications came in this morning at -27.6% for the week ending October 9th, versus prior week 25.5% increase.
• Retail sales increased 0.1% MoM in September, below expectations (0.2%), after increasing 0.0% the previous month.
• Retail sales excluding automobiles decreased -0.3% in September, compared to consensus of a -0.1% loss, and a revised -0.1% decrease in August.
• PPI came in at -0.5% MoM (-1.1% YoY) in September versus August 0.0% MoM (-0.8% YoY).
• PPI core decreased -0.3% MoM (+0.8% YoY) in September compared to previous month 0.3% MoM (0.9% YoY).
• Business inventories are forecast to increase 0.1% MoM in August, equal to previous month increase.
• Fed will release beige book 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 opening lower, US 10Y 2.13 (+2.5bps) on higher stocks, commodities. Tsys mostly sideways in o/n session, declining in early NY trading with German 10Y bunds. ECB Draghi comments that Euro area howing ‘signs of resilience’  and that inflation set to rise on base effects also weighing on bunds.  GOCs lower , spds ~1bp tighter vs tsys after giving up 2 bps in yesterday’s pullback. Little reaction to slightly better than exp Sep employment (12.1k vs 10k) thou gain due to rise in part time as full time fell 62k. Provi spds opening 0.5bps tighter after late day buying on screens closed spds 1bp tighter – Ont 46s 110.5/109.5, Ont45/25 bx 9.8/9.4. QC 48s 116.5/115.5, QC/Ont 45 rl 6.3/6.2 – 0.3bps tighter on the week.

News headlines

• Global stocks eye biggest rally in four years on Fed relief (G&M) World stocks rose on Friday, putting them on course for their biggest weekly rise in four years after minutes of the Federal Reserve’s last policy meeting showed the U.S. central bank is in no rush to raise interest rates.

• Oil prices rally on Mideast tensions and slowing shale output (FT) International oil benchmark Brent crude oil is on course for its biggest weekly gain in six years, as rising geopolitical tensions and signs of slowing output have brought buyers back to the market.

• A Dell-EMC deal could choke the debt market (Fortune) Dell may be looking to do the right deal at the wrong time. The computer maker and private equity firm Silver Lake Partners are reportedly in advanced talks to buy EMC   in a leveraged buyout.

• Key Theme in Corporate Credit Risk Is That There Isn’t One: Ballard (Bloomberg) Corporate event risk has recently been on the rise, but the diversified and idiosyncratic nature of each case suggests that any future scares will remain difficult to foresee and even more difficult to pre-emptively hedge against, writes Bloomberg strategist Simon Ballard.

• Why the Ride up for Interest Rates Could Be Much Bumpier Than the Road Down (Bloomberg) Global interest rates have been in decline for the past 30 years, but a growing number of economists argue that this could soon be about to change.

• Canada’s unemployment rate rises to 7.1%, economy adds 12,000 jobs (G&M) The Canadian economy gained 12,000 jobs in September as more part-time work offset a drop in full-time employment, but the jobless rate rose as more Canadians looked for work.

 Overnight markets

• Overview: IG24 5Y 75.252/75.977 (-1.735), US 10yr note futures are down -0.16% at 128-08+, S&P 500 futures are up +0.22% at 2011.0, Crude oil futures are up +1.46% at 50.15, Gold futures are up +0.76% at $1153.0, DXY is down -0.53% at 94.809.

US Economic Data

• Import price index came in at -0.10% MoM (-10.70% YoY) in September versus August -1.60% MoM (-11.30% YoY).
• Wholesale Inventories are forecast at 0.0% MoM in August versus -0.1% MoM for previous month.
• Wholesale trade sales are expected at -0.4% MoM in August lower than July -0.3% MoM increase.

Canadian Economic Data

•  Net change in employment increased 12.1K in September compared to August 12.0K and the 10.0K forecasted.
• Unemployment rate came in at 7.1% in September 0.1% higher than August.
• BoC senior loan officer survey and Business outlook future for 3Q 2015 will be release at 10:30.

 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