Commentaires

Market Update

US tsys trading higher, yields ~1bp lower across the curve, 10Y 2.88%(-1bp), light volume in TY futures, US equity futures lower since early NA hrs, S&P -6.  Core EGBs lower led by  gilts with the 10Y gilt +4bps @ 1.28%  -volumes in bund & gilt futures ~50% of 10-day avg as year end approaches and  in front of FOMC decision Wed. Implied prob  of fed rate hike slightly lower since last week , still at 74% – thou the outlook for 2019 is less certain, the CITI US  Macro Surprise Index has fallen to the lowest levels since Sep., while the Fed’s 5Y forward inflation breakeven measure is down sharply just since October, below 2.0% for the first time in a year.  GOCs trading higher, in line with tsys – CPI highlight for the week on Wednesday.

News headlines

Stocks Struggle as Dollar Slips to Start Fed Week: Markets Wrap (Bloomberg) U.S. equity futures edged lower and stocks fell in Europe after a mixed session in Asia as markets looked to the Federal Reserve for hints on how a volatile year may end. Benchmark Treasury yields steadied at around 2.88 percent. Contracts on the Dow, S&P and Nasdaq all fluctuated before nudging down. Retailers led declines in the Stoxx Europe 600 Index as Asos Plc plunged after warning that its Christmas shopping season got off to a disastrous start. Treasuries held Friday’s gain and the yen was steady after a bout of risk aversion hammered global equities in recent sessions. The dollar fell after a strong week. Malaysia turned up the heat on Goldman Sachs Group Inc., filing criminal charges against the U.S. bank.

U.S. Student Loan Debt Sets Record, Doubling Since Recession (Bloomberg) U.S. student loan debt outstanding reached a record $1.465 trillion last month and one particular set of borrowers is having a hard time paying back their loans, according to a Bloomberg analysis of student loan securitization data. This debt is raising fiscal risks. « Over 90% of student loans are guaranteed by the U.S. Department of Education, meaning that if a recession causes a rise in youth unemployment and triggers mass defaults, this contingent liability could prove burdensome for the U.S. government budget, » said Paul Della Guardia, economist at the Institute of International Finance in emailed comments.

Trudeau Says Canada Wants Out of Saudi Vehicle Export Deal (Bloomberg) Canada was looking for a way out of a $13 billion deal to export armored vehicles to Saudi Arabia, Prime Minister Justin Trudeau said in a televised interview Sunday. “We are engaged with the export permits to try and see if there is a way of no longer exporting these vehicles to Saudi Arabia,” Trudeau told CTV on Sunday, without elaborating.

Google to Invest More Than $1 Billion to Establish NYC Campus (Bloomberg) Google will invest more than $1 billion to expand its New York City presence, the search giant said in a blog post Monday. The Alphabet Inc. division said it had reached lease agreements at 315 and 345 Hudson Street and signed a letter of intent at 550 Washington Street to make up the new 1.7 million square-foot campus, called Google Hudson Square.

Canada gets consular access to second man detained in China (Reuters) Canadian diplomats gained consular access on Sunday to the second of two men detained by China over the past week, Canada’s foreign ministry said in a statement that gave few details, as China said it was ensuring their rights were protected. John McCallum, Canada’s ambassador to Beijing, met Michael Spavor, the Canadian ministry said. Spavor and Michael Kovrig were both picked up after Canada arrested a senior Chinese executive on a U.S. extradition request.

Boeing increases value for Embraer’s commercial business to $5.26 billion (Reuters) Brazil’s Embraer (EMBR3.SA) said on Monday it had finalised the terms of a proposed deal to sell 80 percent of its commercial aviation business to Boeing, (BA.N) now valuing the division at $5.26 billion. As originally announced in July, the deal valued Embraer’s commercial division at $4.75 billion. Embraer now expects it will receive $3 billion from the deal, after accounting for closing costs. It is unclear whether any part of this difference relates to debt.

May attacks second Brexit referendum plan as a breach of trust (BNN) U.K. Prime Minister Theresa May will attack supporters of a second Brexit referendum on Monday as she explains to Parliament why European Union leaders rebuffed her attempt to make her divorce deal more attractive to lawmakers. May, who accused former Prime Minister Tony Blair of “undermining” her negotiations by pushing for a second vote, will say it would be a catastrophic breach of trust. David Lidington, May’s effective deputy, and Chief-of-Staff Gavin Barwell denied supporting another plebiscite on Sunday after newspaper reports that they’d had talks on the issue.

Risk of 2019 recession ‘higher than a lot of people think’: Rosenberg (BNN) High Canadian debt levels will make it more difficult for Canada to deal with a looming global recession in 2019, according to Gluskin Sheff + Associates chief economist and strategist David Rosenberg. “Nothing is inevitable, but the risks of recession for Canada for next year are higher than a lot of people think,” Rosenberg said in an interview with BNN Bloomberg’s Andrew McCreath. Canadians currently owe about $2.2.-trillion in total debt, up by nearly a trillion dollars in just the last decade, Rosenberg said. As interest rates rise, Rosenberg warned that higher debt servicing costs could shave as much as 75 basis points off Canadian 2019 GDP growth.

Overnight markets

Overview: US 10yr note futures are up 0.065% at 120-15, S&P 500 futures are down -0.28% at 2598.25, Crude oil futures are up 0.92% at $51.67, Gold futures are up 0.19% at $1243.8, DXY is down -0.25% at 97.202, CAD/USD is up 0.07% at 0.7467.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.014%	2 Year	2.725%
5 Year	2.028%	5 Year	2.72%
10 Year	2.087%	10 Year	2.88%
30 Year	2.263%	30 Year	3.137%

US Economic Data

8:30 AM	Empire Manufacturing, Dec est 20.0 (23.3 prior)
10:00 AM	NAHB Housing Market Index, Dec est 61 (60 prior)
16:00 US	Total Net TIC Flows, Oct (-29.1b prior)
	Net Long-term TIC Flows, Oct (30.8b prior)

Canadian Economic Data

8:30 AM	Int’l Securities Transactions, Oct (7.70b prior)
	Existing Home Sales MoM, Nov (-1.6% prior)
	Bloomberg Nanos Confidence, Dec 14th (53.8 prior)

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, Hugues Savard

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

Tsys higher overnite on moderate volume (375k TY), 10Y 2.885% (-3bps), equities lower in Europe and Asia after weak European PMIs as well as China retail sales.  Positive news on trade after China will temporarily remove a 25% tariff on US autos.  GOCs higher, in line with tsys after seeing underperformance across the curve yest, particularly in longs which are 6bps wider vs tsys wk/wk vs 1-2bps 2s-10s. Late yest Moody’s downgraded Ontario’s credit rating to Aa3 from Aa2, citing its fall economic stmt which forecast a $14.5bln deificit for FY 2019, more than double previous projections. Ontario spds opening 1bp wider this morn

News headlines

China to Cut Tax on U.S. Vehicles to Ease Trade Tensions (Bloomberg) China will remove the retaliatory duty on automobiles imported from the U.S. for three months in an effort to defuse trade tensions with the world’s biggest economy. The 25 percent tariff it imposed in a tit-for-tat measure will be scrapped starting Jan. 1, the finance ministry said Friday. Earlier this week, Bloomberg News reported that China was considering cutting the duties.

Trump Ordered Payments to Women Knowing It Was Wrong, Cohen Says (Bloomberg) President Donald Trump directed Michael Cohen to make hush payments to women alleging affairs with him out of concern about “how this would affect the election,” the attorney said in an interview with ABC News. The interview marked Cohen’s first since being sentenced to three years in prison after pleading guilty to breaking campaign-finance laws by arranging the payments, as well as lying to Congress and banks.

GOP Hurtles Toward Shutdown With No Plan to Avoid It (Bloomberg) House Republican leaders sent their members home for a six-day break Thursday without revealing any plan to avoid a looming government shutdown. In Paul Ryan’s waning days as House speaker, leaders are wavering about whether to try to pass a spending bill with the $5 billion President Donald Trump is demanding for his wall at the Mexican border. Senate Republicans also haven’t announced any plan to fund the government.

Global Stock Sell-Off Resumes as Growth Signs Flag: Markets Wrap (Bloomberg) U.S. equity futures and European stocks dropped, tracking a slump across Asia as worries over global growth brought a downbeat end to a rocky week. Treasuries and the dollar jumped. The Stoxx Europe 600 Index headed for a weekly loss, led lower by carmakers after regional sales slumped in November for the third month in a row. S&P 500 futures also pointed to a drop at the open, though both declines were tempered somewhat on news that China will temporarily remove a retaliatory duty on U.S.-imported automobiles. Earlier equities had slumped across Asia, with shares in Hong Kong and Japan leading the retreat after a slew of Chinese data reinforced concern about a slowdown in the world’s second-largest economy.

Ahead of China anniversary, trade war fans calls for faster market reforms (Reuters) China’s trade war with the United States is spurring some Chinese entrepreneurs, government advisers and think-tanks to call for faster reforms in the world’s second-largest economy and the freeing of a private sector stifled by state controls. The calls for change have become louder as China approaches a key anniversary later this month, although there are no signs that the government is planning to shift any key policies.

Bombardier CEO blasts ‘incomprehensible’ Siemens contract win with Via Rail (BNN) Bombardier Inc.’s () top executive says he can’t figure out how Canada’s government-owned passenger train operator could pick a foreign rival without demanding a minimum amount of local production. “It’s incomprehensible,’’ Bombardier Chief Executive Officer Alain Bellemare told reporters Thursday in Montreal. “We work in many countries around the world, and all countries require significant local content. We see it in the U.S. It’s difficult to understand that here, we can’t find ways of protecting innovation, technology and jobs that are similar to all the other countries in the world.’’

Moody’s downgrades Ontario’s credit rating (BNN) Bond rating agency Moody’s has downgraded the province of Ontario’s credit rating. The agency announced the downgrade from Aa3 to Aa2 today, citing the province’s $14.5-billion deficit in 2018-2019 and projections that it will continue to post deficits in the coming years. Moody’s says the combination of increased debt and slow revenue growth will result in a faster than previously anticipated increase of the province’s debt burden.

Overnight markets

Overview: US 10yr note futures are up 0.195% at 120-15, S&P 500 futures are down -0.82% at 2627.75, Crude oil futures are down -0.44% at $52.35, Gold futures are down -0.46% at $1241.7, DXY is up 0.54% at 97.588, CAD/USD is up 0.17% at 0.7475.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.043%	2 Year	2.731%
5 Year	2.055%	5 Year	2.72%
10 Year	2.12%	10 Year	2.882%
30 Year	2.291%	30 Year	3.143%

US Economic Data

8:30 AM	Retail Sales Advance MoM, Nov est 0.1% (0.8% prior)
	Retail Sales Ex Auto MoM, Nov est 0.2% (0.7% prior)
	Retail Sales Ex Auto and Gas, Nov est 0.4% (0.3% prior)
9:15 AM	Industrial Production MoM, Nov est 0.3% (0.1% prior)
	Capacity Utilization, Nov est 78.6% (78.4% prior)
9:45 AM	Markit US Composite PMI, Dec (54.7 prior)
	Markit US Manufacturing PMI, Dec est 55.0 (55.3 prior)
	Markit US Services PMI, Dec est 54.6 (54.7 prior)
10:00 AM	Business Invetories, Oct est 0.6% (0.3% prior)

Canadian Economic Data

There is no Canadian economic data for 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, Hugues Savard

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 trading slightly higher, 10Y 2.90% (-1bp), curve 0.5bps flatter 2s10s, light volume in TY futures (256k).  The ECB left its deposit rate unch at 0.25% as exp, confirming it will end its bong buying program this month, after four years of QE, Draghi press conference at 8:30. US equity futures higher, S&P +6.5, having given up earlier gains after UK PM May won confidence vote yest aft.  GOCs higher, outperforming tsys in 10s by 0.5bps , 10Y 2.11% (-0.5bps).  No data until next Wed CPI. Provis widened 0.5-1bp syest with Alberta reopening its 2050 issue @ 101 (Ont+8). CMB 5Y pricing this morning  ~40.5bps

News headlines

North Korea Fixer for Dennis Rodman Probed by China Spy Agency (Bloomberg) A second Canadian national is being questioned by Chinese authorities, further heightening tensions between the two countries after the detention of a former diplomat in Beijing and the arrest of a Huawei Technologies Co. executive in Vancouver. Michael Spavor was placed under investigation Monday for “suspected activities harming state security,” Northeast News, a website run by the propaganda department in the northeastern Chinese province of Liaoning, said Thursday.

ECB Confirms It Will Stop Asset-Purchases, Hold Rates to Summer (Bloomberg) The European Central Bank decided to stop net asset purchases at the end of December, the Governing Council said in a statement. The ECB expects the interest rates to “remain at their present levels at least through the summer of 2019,” Bloomberg News reports.

Brexit Reversal More Likely After May’s Confidence Vote (Bloomberg)Prime Minister Theresa May enjoyed a Pyrrhic victory last night, surviving an attempt by her own party to oust her. While it remains unclear how this Greek tragedy will play out, Goldman Sachs is of the view that her win reduces the likelihood “of a disorderly Brexit and increases the probability of a reversal of Brexit itself.”

U.S. Futures, Europe Stocks Pare Gain; Bonds Rise: Markets Wrap (Bloomberg) U.S. equity futures and European shares surrendered early gains as investors weighed the latest developments in America-China trade relations. The euro edged up and bonds stayed higher as the ECB confirmed an end to its asset purchase program. Futures on the S&P 500 gave up most of an earlier advance made after news that Chinese importers have bought U.S. soybeans, while declines in energy and media shares led the Stoxx Europe 600 Index lower after a positive start. General Electric climbed in pre-market trading after an upgrade from JPMorgan. Hong Kong and Chinese stocks outperformed as equities across Asia bucked the trend and continued their rebound.

Canada warns U.S. not to politicize extradition cases (Reuters) Canadian Foreign Minister Chrystia Freeland on Wednesday warned the United States not to politicize extradition cases, a day after President Donald Trump said he could intervene in the affair of a Chinese executive detained in Canada at Washington’s request. Freeland also told reporters that a second Canadian citizen could be in trouble in China. Authorities in China are already holding former diplomat Michael Kovrig, who was detained on Monday.

Bombardier’s venture in China gets $453 million state rail contract (Reuters) Canadian plane and train maker Bombardier Inc’s Chinese joint venture said on Thursday it had won a $453 million contract to supply 168 high-speed train cars to state-owned China Railway Corp (CRC). The win for the Canadian company comes a day after it lost a C$989 million ($741 million) rail order in Canada when state-owned Via Rail picked Germany’s Siemens AG to supply new locomotives.

Alberta seeks proposals to build new refinery amid crude crisis (BNN) Alberta is looking for someone to build a new oil refinery, but Premier Rachel Notley says any deal needs to work for both industry and taxpayers. « The project must make sense for Alberta, » Notley said Tuesday. « It must have a return on investment for Albertans, and it must diversify the way we use the energy resources that we as Albertans all own. » Notley announced the province is looking for expressions of interest from companies to build a new refinery or expand an existing one. Such requests are the first step in the process, but would include specifics such as financing, technical feasibility, and timelines.

Total number of new mortgages slumped in Q2 (BNN) Rising interest rates and slower income and population growth helped temper demand for new mortgages in the second quarter, according to Canada Mortgage Housing Corp. The federal housing agency says fewer Canadians opened new mortgages in the three-month period ending June 30, even though the total number of active mortgages and the value of those mortgages rose during the same quarter compared with a year ago. In a report which analyzed mortgage and consumer credit trends from credit agency Equifax, CMHC found that there were 205,000 new mortgages in the second quarter of 2018, down 11.9 per cent compared with a year ago.

Overnight markets

Overview: US 10yr note futures are up 0.039% at 120-09, S&P 500 futures are up 0.13% at 2660, Crude oil futures are down -1.11% at $50.58, Gold futures are down -0.25% at $1246.9, DXY is down -0.03% at 97.019, CAD/USD is up 0.08% at 0.7484.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.059%	2 Year	2.768%
5 Year	2.058%	5 Year	2.756%
10 Year	2.11%	10 Year	2.901%
30 Year	2.275%	30 Year	3.146%

US Economic Data

8:30 AM	Import Price Index MoM, Nov est -1.0% (0.5% prior)
	Import Price Index ex Petroleum MoM, Nov est -0.1% (0.2% prior)
	Import Price Index YoY, Nov est 1.3% (3.5% prior)
	Export Price Index MoM, Nov est -0.3% (0.4% prior)
	Export Price Index YoY, Nov (3.1% prior)
	Initial Jobless Claims, Dec 8th est 226k (231k prior)
	Continuing Claims, Dec 1st est 1649k (1631k prior)
9:45 AM	Bloomberg Consumer Comfort, Dec 9th (60.3 prior)

Canadian Economic Data

8:30 AM	New Housing Price Index MoM, Oct est 0.0% (0.0% prior)
	New Housing Price Index YoY, Oct est 0.1% (0.2% prior)

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, Hugues Savard

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