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Market Update

US tsys higher, yields ~3bps lower, 10Y 1.77% , above avg volume in TY futures (435k), tsy prices retracing part of post FOMC losses which saw the 10Y surge 10bps to 1.82%. Bunds paring losses, the OECD cut its outlook for global growth to 2.9% from 3.0%, the smallest rise since 2009 on US-China trade tensions, US GDP forecast for this year revised to 2.4% from 2.8%.  The NY Fed will conduct its third straight repo operation to maintain FF in 1.75-2% range, up to $75bln.  Yesterdays’ operation was oversubscribed with $81bln in bids for $75bln in securities. The USD-JPY cross currency basis swap widened 8bps to -30bps signalling increased demand for USD on the part of Japanese banks. GOCs underperforming tsys ~2bps, spreads holding steady after yesterday’s CPI, FOMC. Today sees the BOC auction $3bln in 2Y notes, reopening the 1.25% Nov 21s with the Nov21/2Y roll at -1.7/-1.9bps

News headlines

U.S. Futures, Dollar Dip as Europe Stocks Advance: Markets Wrap (Bloomberg) A split mood emerged across major markets on Thursday, with U.S. equity futures dropping and European stocks rising as investors processed a slew of fresh policy decisions following the Federal Reserve rate cut. The euro strengthened versus the dollar.

Futures lower after mixed signals from Fed (Reuters) Futures for Canada’s main stock index pointed to a lower opening on Thursday, tracking U.S. stock futures, after the U.S. Federal Reserve cut interest rates but set a higher bar for further reductions.

OECD warns of weakest global economic growth in a decade (BNN) Intensifying trade conflicts have sent global growth momentum tumbling toward lows last seen during the financial crisis, and governments are not doing enough to prevent long-term damage, the OECD said in its latest outlook.

Real crunch from Saudi Arabia’s oil outage has yet to be felt (Reuters) Saudi Arabia’s ability to avert a global oil supply crunch will only become clear in a few weeks, because for now its crude held in storage can fill the gap and mask the scale of damage to its facilities, traders and analysts say.

U.S., Chinese trade deputies face off in Washington amid deep differences (Reuters) U.S. and Chinese deputy trade negotiators were set to resume face-to-face talks on Thursday for the first time in nearly two months as the world’s two largest economies try to bridge deep policy differences and find a way out of a bitter and protracted trade war.

France and Germany united on strategy to fight global slowdown: French minister (Reuters) France and Germany are agreed on a joint strategy to respond to a global economic slowdown at a time of international trade tensions, French Finance Minister Bruno Le Maire said on Thursday.

Bank of England keeps rates steady, warns Brexit delay would hurt growth (Reuters) The Bank of England said Brexit uncertainty was causing slack to re-emerge in Britain’s economy and damaging productivity, and a failure to reach a transition deal by Oct. 31 could lead to further weakness.

Powell stresses solid U.S. outlook after Fed cuts rates again (BNN) Federal Reserve policy makers lowered their main interest rate for a second time this year and Chairman Jerome Powell said that “moderate” policy moves should be sufficient to sustain the U.S. expansion.

Market Overview: US 10yr note futures are up 0.109% at 129-17, S&P 500 futures are down -0.12% at 3005, Crude oil futures are up 2.01% at $59.28, Gold futures are down -0.38% at $1510.1, DXY is down -0.3% at 98.264, CAD/USD is down -0.13% at 0.7534.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.598%	2 Year	1.732%
5 Year	1.45%	5 Year	1.645%
10 Year	1.423%	10 Year	1.765%
30 Year	1.578%	30 Year	2.21%

US Economic Data

08:30 AM	Current Account Balance, 2Q  Survey: -$127.4b Actual: -$128.2  Prior: -$130.4b
	Philadelphia Fed Business Outlook, Sep  Survey: 10.5 Actual: 12.0  Prior: 16.8
	Initial Jobless Claims, Sep 14  Survey: 213k Actual: 208K  Prior: 204k Revised: 206k
	Continuing Claims, Sep 7  Survey: 1672k Actual:1661k  Prior: 1670k Revised: 1674k
09:45 AM	Bloomberg Consumer Comfort, Sep 15  Survey: —  Prior: 63.2
	Bloomberg Economic Expectations, Sep  Survey: —  Prior: 48.5
10:00 AM	Leading Index, Aug  Survey: -0.10%  Prior: 0.50%
	Existing Home Sales, Aug  Survey: 5.38m  Prior: 5.42m
	Existing Home Sales MoM, Aug  Survey: -0.70%  Prior: 2.50%

Canadian Economic Data

08:30 AM	ADP Canada Releases Aug. Payroll Estimates
	Teranet/National Bank HPI MoM, Aug  Survey: — Actual: 0.4%  Prior: 0.7%
	Teranet/National Bank HPI YoY, Aug  Survey: — Actual: 0.6%  Prior: 0.4%
	Teranet/National Bank HP Index, Aug  Survey: — Actual: 227.51  Prior: 226.57

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys higher, yields 2-3bps lower, 10Y 1.77% , avg volume in TY futures (305k). Trading subdued before FOMC rate decision at 2:00PM – 25bp cut expected, update on balance sheet and ‘dot plot’ forecast. The Fed will buy up to $75bln in tsys this morning (QE ‘lite’) to alleviate o/n funding concerns with overnite repo still elevated at 2.8%. Core Euro bonds higher – EU Juncker warned on risks of no-deal Brexit, while UK Aug CPI came in below exp (1.7% vs 1.9%).  GOCs continue to underperform tsys, another 3bps wider this morning, with flattening at the long end the most notable development on the GOC curve – 10s30s 16bps has plunged from 28bps Sep 4th- the 10s30s Can/US Box flattest since July (i.e. GOC curve out flattening US 10bps over the month). CPI on deck – 00.2% forecast after 0.5% rise in July.

News headlines

Bonds Rally, Stocks Struggle as Traders Await Fed: Markets Wrap (Bloomberg) Bonds rallied globally while stocks struggled for traction as investors marked time until the Federal Reserve concludes its policy meeting Wednesday, with officials expected to cut interest rates again and possibly move further to calm overnight-loan markets. The dollar rose.

Futures edge higher ahead of U.S. Fed decision (Reuters) Futures for Canada’s main stock index inched higher on Wednesday ahead of the U.S. Federal Reserve’s monetary policy decision.

Oil Stabilizes as Saudi Output Restoration Calms Market Fears (Bloomberg) Oil stabilized on signs Saudi Arabia is quickly restoring production following a debilitating weekend attack, after two tumultuous days in which it surged the most on record and then pared almost half of that gain.

From oil shocks to funding strains, Fed confronts new complexities (Reuters) The Federal Reserve will conclude its latest policy meeting on Wednesday buffeted by conflicting economic data, under steady pressure from the White House for steep interest rate cuts, and confronted as well with an unexpected jump in overnight borrowing costs that may require action on its own.

Explainer: The Fed has a repo problem. What’s that? (Reuters) As if the U.S. Federal Reserve didn’t already have enough on its plate heading into its meeting on interest rates this week, chaos deep inside the plumbing of the U.S. financial system has thrown policymakers an unexpected curveball.

U.S. lawmakers urge Trump administration to restore India’s trade privileges (Reuters) Forty-four members of the U.S. Congress have urged President Donald Trump’s trade representative to restore trade concessions to India, saying the withdrawal of the privilege had led to retaliatory tariffs from New Delhi which were hurting U.S. industry.

Britain hopes for trade deal with Australia within months of Brexit (Reuters) Britain’s Trade Minister Liz Truss said on Wednesday she expects to complete a wide-ranging trade deal with Australia within months of exiting the European Union.

U.S. mortgage applications flat as rates jump: MBA (Reuters) U.S. mortgage applications were little changed on the week even as home borrowing costs jumped in step with a surge in bond yields during a selloff in the global fixed-income market, the Mortgage Bankers Association said on Wednesday.

Market Overview: US 10yr note futures are up 0.205% at 129-18, S&P 500 futures are down -0.17% at 3002.75, Crude oil futures are down -0.69% at $58.93, Gold futures are down -0.24% at $1509.8, DXY is up 0.16% at 98.419, CAD/USD is up 0.04% at 0.7547.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.604%	2 Year	1.703%
5 Year	1.47%	5 Year	1.629%
10 Year	1.448%	10 Year	1.774%
30 Year	1.612%	30 Year	2.244%

US Economic Data

07:00 AM	MBA Mortgage Applications, Sep 13  Survey: — Actual: -0.10% Prior: 2.00%
08:30 AM	Housing Starts, Aug  Survey: 1250k  Prior: 1191k
	Housing Starts MoM, Aug  Survey: 5.00%  Prior: -4.00%
	Building Permits, Aug  Survey: 1300k  Prior: 1336k
	Building Permits MoM, Aug  Survey: -1.30%  Prior: 8.40%
02:00 PM	FOMC Rate Decision (Upper Bound), Sep 18 Survey: 2.00%  Prior: 2.25%
	FOMC Rate Decision (Lower Bound), Sep 18 Survey: 1.75%  Prior: 2.00%
	Interest Rate on Excess Reserves, Sep 19  Survey: 1.85%  Prior: 2.10%

Canadian Economic Data

08:30 AM	CPI NSA MoM, Aug  Survey: -0.20%  Prior: 0.50%
	CPI YoY, Aug  Survey: 1.90%  Prior: 2.00%
	Consumer Price Index, Aug  Survey: 136.7  Prior: 137.0

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Market Update

US tsys higher, yields 2-4bps lower, bull flattener led by the 10Y 1.81% (-4bps), above avg volume in TY futures (435k).  S&P futures slightly lower (-3.5), crude -1.5%.  Aug IP/Cap Utilization, FOMC decision tomorrow.  The latest survey by JP Morgan showed US Treasury shorts fell 10pts to the lowest since May.  GOCs higher, underperforming the rally in the US, 10Y 1.45% (-2.5bps). July Man Sales -1.3% vs -0.1% exp – auto sales down 4.7% m/m.

News headlines

S&P 500 Futures Slip With Europe Shares; Oil Drops: Markets Wrap (Bloomberg) U.S. index futures declined with European stocks while Treasuries continued higher as investors weighed the fallout from a drone attack on one of the world’s biggest oil facilities and the record surge in crude prices that followed.

Oil sheds gains, stocks dip as Fed comes into focus (Reuters) Oil shed some of its gains on Tuesday as the United States raised the possibility of releasing crude reserves, while stocks inched lower as investors waited for this week’s Federal Reserve meeting.

TSX futures down on lower crude prices (Reuters) Futures for Canada’s main stock index were lower on Tuesday after oil prices pulled back from previous session gains.

Oil market gripped by uncertainty over lost Saudi production (BNN) Oil markets are grappling with uncertainty over how long it will take Saudi Arabia to restore output after the devastating attacks that knocked out five per cent of global crude supply.

With Trump trade war a threat, Fed is set to cut rates again (BNN) For a second straight time, the Federal Reserve is set to cut interest rates this week to try to protect the economy from the consequences of a global slowdown and President Donald Trump’s trade war with China.

Trade talks seen as unlikely to mend U.S.-China divide (Reuters) U.S. and Chinese officials will restart trade talks at the end of this week, but any agreement the world’s largest economies carve out is expected to be a superficial fix.

U.S. value fund managers betting shift to value stocks won’t last (Reuters) The massive U.S. market rotation into value stocks over the last two weeks is finally giving value fund managers a reason to be hopeful after years of underperformance.

Size matters. Big U.S. farms get even bigger amid China trade war (Reuters) As the 2018 harvest approached, North Dakota farmer Mike Appert had a problem – too many soybeans and nowhere to put them. Selling was a bad option. Prices were near decade lows as U.S. President Donald Trump’s trade war with China weighed heavily on the market. Temporary storage would only buy him a little bit of time, particularly in an area where cold weather can damage crops stored in plastic bags.

FOREX-Geopolitical risks push dollar to recent highs; crown, Aussie sink (Reuters) The dollar firmed within sight of a recent two-year high on Tuesday on the back of ongoing geopolitical risks in the Middle East with investors looking forward to an interest rate cut by the U.S. central bank on Wednesday.

Market Overview: US 10yr note futures are up 0.194% at 129-10, S&P 500 futures are down -0.08% at 2999, Crude oil futures are down -1.35% at $62.05, Gold futures are up 0.01% at $1511.7, DXY is down -0.01% at 98.599, CAD/USD is up 0.13% at 0.7542.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.61%	2 Year	1.733%
5 Year	1.467%	5 Year	1.668%
10 Year	1.446%	10 Year	1.81%
30 Year	1.642%	30 Year	2.28%

US Economic Data

09:15 AM	Industrial Production MoM, Aug  Survey: 0.20%  Prior: -0.20%
	Capacity Utilization, Aug  Survey: 77.60%  Prior: 77.50%
10:00 AM	NAHB Housing Market Index, Sep  Survey: 66  Prior: 66
04:00 PM	Net Long-term TIC Flows, Jul  Survey: —  Prior: $99.1b
	Total Net TIC Flows, Jul  Survey: —  Prior: $1.7b

Canadian Economic Data

08:30 AM

Manufacturing Sales MoM, Jul  Survey: -0.10%  Prior: -1.20%

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, Émile Bordeleau

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilières Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230

Institutional Bond and Equity Desk
CTI Capital Valeurs Mobilieres Inc.

Tel : (514)-861-0240
Fax: (514)-861-3230