Commentaires

Market Update

US tsys mixed, short end slightly lower, long end higher before payrolls, 10Y 2.90% (unch), close to the lows of August having rallied 10bps this week alone. Nov Payrolls expected at 198k with the unemployment rate unch at 3.7% and AHE 3.1%.  Equity futures lower, off the lows, S&P -8.5 while crude is up 1.2% as OPEC appears close to deal to cut prod, thou Iran has not agreed as yet.  Core EGBs have reversed lower, bunds fading since equities pared losses. GOC slightly higher before Cdn employment data, 10Y 2.06% – big move in Can/US driven by BOC , spreads 10-15bps tighter out to 10yrs, with long cdas lagging as the 10s30s curve has widened 6bps over the week.

News headlines

U.S. Stock Futures Buck Rebound in Europe and Asia: Markets Wrap (Bloomberg) European stocks rebounded from the worst day in more than two years and Asian shares posted modest gains as investors sought to end a bruising week on a more upbeat note. Signs of stress remained, however, as U.S. equity futures declined and Treasuries rose. The Stoxx Europe 600 Index, which on Thursday dropped the most since the U.K. voted to leave the EU in 2016, jumped as every sector rallied. S&P 500 futures came off their lows as the European session wore on, but remained in the red for a second day. Japanese equities outperformed as most Asian gauges nudged higher. Italian debt climbed as European bonds largely drifted. The dollar edged up and the pound was steady as U.K. Prime Minister Theresa May was said to be weighing a plan to postpone the vote on her Brexit deal.

Huawei Arrest Tests China-Canada Ties as Trudeau Weighs Risk (Bloomberg) The arrest of a Huawei executive on Canadian soil represents another setback to Justin Trudeau’s push for stronger ties with Beijing, which are already strained by differences over trade and investments. Canada arrested Huawei Technologies Co. Chief Financial Officer Wanzhou Meng on Saturday in Vancouver as she was switching flights in the Pacific coast city. The arrest was made at the request of U.S. authorities, who want to extradite her. The arrest comes amid a probe of suspected violations of Iran trade sanctions.

What Economists Are Saying Before the November U.S. Jobs Report (Bloomberg) U.S. employers probably kept up a robust pace of hiring in November that was closer to the 2018 trend rate after hurricanes distorted data for the prior two months. Nonfarm payrolls rose 198,000, according to the median of estimates in Bloomberg’s survey of economists before the Labor Department releases its monthly employment report Friday at 8:30 a.m. in Washington. While that’s well below the 250,000 increase in October, it’s close to the 210,000 average over the past 12 months.

U.K. Tells Supermarkets to Maximize Stockpiles Before Brexit (Bloomberg) Theresa May’s government has told supermarkets to keep as much stock as possible in warehouses around the country in case the U.K. crashes out of the European Union without a Brexit deal, a senior official said. The request is being made because in the worst-case scenario, a no-deal Brexit would cut the capacity of the country’s main EU trading route from the French port of Calais to Dover in southeast England to just 13 percent of the current level due to additional border checks, according to the person.

OPEC talks stall as Saudis refuse to exempt Iran from oil cut (Reuters) OPEC talks on oil production cuts reached deadlock on Friday as the group’s leader Saudi Arabia refused to grant sanctions-hit Iran exemptions from planned reductions, OPEC sources said. Saudi Energy Minister Khalid al-Falih, asked on Friday whether he was confident the day’s meetings would produce a deal, said: “No.”

Tobacco giant Altria enters pot business with $2.4B Cronos stake (BNN) Altria Group Inc., the maker of Marlboro cigarettes for the U.S. market, is pushing into the Canadian cannabis industry, marking the major tobacco company’s first foray into the nascent sector. Altria agreed to acquire 146.2 million newly issued shares for $16.25 each — a 16 per cent premium from yesterday’s close. That would give Altria a 45 per cent stake in the Canadian cannabis producer. Altria will also get warrants that will give the option to increase its stake to 55 per cent.

CPP’s biggest enhancements in more than a decade to begin rolling out in 2019 (BNN) The biggest change to the country’s pension plans in more than a decade will take place in the new year, but the effects will be felt differently depending on which generation you belong to. Beginning in early 2019, the Canada Pension Plan and Quebec Pension Plan will phase in enhanced benefits over the next seven years to provide more financial support for Canadians after they retire. However, while pension contributions will gradually increase for all employees and employers, the younger generations will see the lion’s share of enhanced benefits as the improvements slowly make their way through the system.

Overnight markets

Overview: US 10yr note futures are down -0.078% at 120-10, S&P 500 futures are down -0.29% at 2683.25, Crude oil futures are up 1.34% at $52.18, Gold futures are up 0.18% at $1245.8, DXY is up 0.07% at 96.88, CAD/USD is up 0.01% at 0.7471.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	1.979%	2 Year	2.768%
5 Year	1.991%	5 Year	2.756%
10 Year	2.066%	10 Year	2.888%
30 Year	2.218%	30 Year	3.149%

US Economic Data

8:30 AM	Change in Nonfarm Payrolls, Nov est 198k (250k prior)
	Change in Private Payrolls, Nov est 198k (246k prior)
	Change in Manufact. Payrolls, Nov est 18k (32k prior)
	Unemployment Rate, Nov est 3.7% (3.7% prior)
	Average Hourly Earnings MoM, Nov est 0.3% (0.2% prior)
	Average Hourly Earnings YoY, Nov est 3.1% (3.1% prior)
10:00 AM	Wholesale Inventories MoM, Oct est 0.7% (0.7% prior)
	Wholesale Trade Sales MoM, Oct (0.2% prior)
	U. of Mich. Sentiment, Dec est 97.0 (97.5 prior)
	U. of Mich. Current Conditions, Dec (112.3 prior)
	U. of Mich. Expectations, Dec (88.1 prior)
	U. of Mich. 1 Yr Inflation, Dec (2.8% prior)
	U. of Mich. 5-10 Yr Inflation, Dec (2.6% prior)
15:00 PM	Consumer Credit, Oct est 15.000b (10.92b prior)

Canadian Economic Data

8:30 AM	Net Change in Employment, Nov est 10.0k (11.2k prior)
	Unemployment Rate, Nov est 5.8% (5.8% prior)
	Hourly Wage Rate Permanent Employees, Nov est 1.8% (1.9% prior)
	Full Time Employment Change, Nov (32k prior)
	Part Time Employment Change, Nov (-22.6k 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

US tsys higher, yields 2-3bps lower across the curve, on heavy volume in TY futures (645k), equity futures sharply lower : S&P -38 (-1.4%), Nasdaq -116 (-1.7%).  Risk off tone on renewed tensions between the US & China after Huwai’s CFO arrested in Vancouver. No reaction to weaker Nov ADP (179k vs 195k exp). Crude -3.5% below 51 – OPEC has yet to decide on size of production cut, proposed 1mln bbls/d not seen as adequate enough to stem oversupply in the mkt.  GOCs higher, outperforming tsys in the belly out to 10yrs 1.5-2bps, the 10Y below 2.10%, longs lagging since dovish BOC yest.

News headlines

Stocks Slump, Treasuries Gain as Sell-Off Resumes: Markets Wrap (Bloomberg) U.S. equity futures tumbled alongside stocks in Europe and Asia as concern resurfaced that trade tensions between the world’s two largest economies are far from resolved. Oil slid as OPEC ministers met in Vienna. Contracts on the Dow Jones Industrial Average sank more than 450 points, while S&P 500 futures signaled the underlying index will resume its slide after one of the biggest routs of the year. Trade tensions reignited after the arrest of the chief financial officer of tech giant Huawei Technologies Co. — dousing hope China and the U.S. would make immediate progress on a deal. The yuan dropped the most since October. The start of the futures session was marred by a sudden and unexpected plunge that sent a shock wave across equity markets.

China Says It’s Implementing Deals Done With U.S. on Trade (Bloomberg) China and the U.S. have reached agreement in the sectors of agriculture, autos, and energy, and China will immediately start implementing that consensus, a government spokesman said. « China will start from agricultural products, autos and energy to immediately implement specific items that China and the U.S. have agreed upon, » Ministry of Commerce Spokesman Gao Feng told reporters in Beijing. « In the next 90 days we will work in accordance with the clear timetable and road map to negotiate in areas where both sides have an interest and there are mutual benefits, such as intellectual property rights protection, technology cooperation, market access, and the trade balance. »

German Orders Rise for Third Month, Underpinning Recovery Hopes (Bloomberg) German factory orders unexpectedly rose for a third month, underpinning growth momentum after Europe’s largest economy contracted in the third quarter. Orders gained 0.3 percent in October from the previous month, compared with the median estimate in a Bloomberg survey for a 0.4 percent drop. It’s the longest streak of monthly increases in a year. Orders dropped 2.7 percent on the year.

‘Shocking’ Huawei Arrest Threatens to Upend Trump-Xi Trade Truce (Bloomberg) On the same day Donald Trump and Xi Jinping struck a trade war truce in Argentina, some 7,000 miles away Canadian authorities made an arrest that now threatens to make the U.S.-China conflict much worse. The U.S. is seeking the extradition of Wanzhou Meng, chief financial officer of Huawei Technologies Co., after convincing Canada to arrest her on Dec. 1. Canada confirmed she was in custody shortly after the Globe and Mail reported she had been arrested in connection with violating sanctions against Iran.

Bank of Canada more cautious on pace of hikes, Canadian dollar hits 18-month low (Reuters) The Bank of Canada kept interest rates on hold on Wednesday as expected and suggested the pace of future hikes could be more gradual, pushing the Canadian dollar down to an 18-month low and slashing market expectations of another increase next month. The central bank, which has lifted rates five times since July 2017 as the economy strengthens and reaches capacity, repeated that more monetary tightening would be needed to help meet its 2.0 percent inflation target.

Trump urges against oil production cut ahead of OPEC meeting (BNN) President Donald Trump urged OPEC nations not to cut oil production ahead of a meeting of the cartel to consider a reduction in output. The Organization of the Petroleum Exporting Countries and its allies continued to haggle over the size of potential crude-production cuts in Vienna on Wednesday. Their summit begins Thursday. Most producers made clear they agree on the need for a cut in oil production.

Roots plunges as retailer pulls back on expansion plans after weak Q3 (BNN) Barely a year after a rocky initial public offering, Roots Corp. () is slamming the brakes on its expansion, sending shares of the purveyor of quintessential Canadiana tumbling. The company, known for its leather goods and casual wear imprinted with beavers and maple leafs, cut sales forecasts after reporting third-quarter financial results that fell “well-below” its own expectations. It also vowed to pare store openings in the U.S. next year and slow down its entry in new markets.

Overnight markets

Overview: US 10yr note futures are up 0.182% at 120-08, S&P 500 futures are down -1.38% at 2664.5, Crude oil futures are down -3.06% at $51.27, Gold futures are up 0.05% at $1243.2, DXY is down -0.11% at 96.967, CAD/USD is up 0.43% at 0.7455.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.037%	2 Year	2.768%
5 Year	2.047%	5 Year	2.765%
10 Year	2.094%	10 Year	2.897%
30 Year	2.246%	30 Year	3.153%

US Economic Data

7:30 AM	Challenger Job Cuts YoY, Nov 51.5% (153.6% prior)
8:15 AM	ADP Employment Change, Nov est 195k (227k prior)
8:30 AM	Trade Balance, Oct est -55.0b (-54.0b prior)
	Nonfarm Productivity, 3Q est 2.3% (2.2% prior)
	Unit Labor Costs, 3Q est 1.0% (1.2% prior)
	Initial Jobless Claims, Dec 1st est 225k (234k prior)
	Continuing Claims, Nov 24th est 1690k (1710k prior)
9:45 AM	Bloomberg Consumer Comfort, Dec 2nd (60.6 prior)
	Markit US Services PMI, Nov est 54.4 (54.4 prior)
	Markit US Composite PMI, Nov (54.4 prior)
10:00 AM	ISM Non-Manufacturing Index, Nov est 59.0 (60.3 prior)
	Factory Orders, Oct est -2.0% (0.7% prior)
	Factory Orders Ex Trans, Oct (0.4% prior)
	Durable Goods Orders, Oct est -2.4% (-4.4% prior)
	Durable Ex Transportation, Oct est 0.1% (0.1% prior)
	Cap Goods Orders Nondef Ex Air, Oct (0.0% prior)
	Cap Goods Ship Nondef Ex Air, Oct (0.3% prior)
12:00 AM	Household Change in Net Worth, 3Q (2191b prior)

Canadian Economic Data

8:30 AM	Int’l Merchandise Trade, Oct est -0.73b (0.42b prior)
10:00 AM	Ivey Purchasing Managers Index SA, Nov (61.8 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

Cdn govt bond yields slightly higher, with the US mkt closed for the day, GOCs taking their cue from weakness in core EGBs. Equity futures higher , S&P +16, while European stocks off the lows, the Euro Stoxx -0.70%. UK gilts sharply lower, yields 4-5bps higher, as no-deal Brexit premium fading after developments in UK Parliament yest give it more control over the Brexit process. BOC rate decision at 10:00, no change in rates exp. The statement is expected to acknowledge Q3 weakness   sluggish household spending and investment , odds of a Jan rate hike have come down to ~62% from 80%. Yesterday rally saw the 10Y yield fall to the lowest level since July @ 2.18%, with Can/US ~2bps tigher, 90bps thru in the long end the tightest since 2011.

News headlines

Falling Car Sales Are Latest Sign of Rate Hikes Hitting Canada (Bloomberg) Plunging automobile sales add to evidence that higher borrowing costs are beginning to eat into Canadian economic growth, possibly faster than the central bank expected. Light vehicle sales dropped 9.4 percent in November from a year earlier, the most since 2009, according to a report Monday by DesRosiers Automotive Consultants Inc. Outside the financial crisis, the decline was the biggest since 2004. Meanwhile, Bank of Canada data show growth in residential mortgages decelerated to 1.38 percent in September on an annualized three-month basis, the weakest pace since 1982.

China Swings Into Action on Trade as ‘Tariff Man’ Trump Ups Pressure (Bloomberg) China swung into action to start delivering on the trade commitments that led to its weekend truce with the U.S., even as uncertainty over what was agreed lingers. Beijing will start to quickly implement specific items where there’s consensus with the U.S. and will push forward on trade negotiations within the 90-day « timetable and road map, » the Ministry of Commerce said in a statement on Wednesday morning in China. 

Yield-Curve Inversion Is Just Another Cloud on the Fed’s Horizon (Bloomberg) America’s economy is kicking by almost every metric the Federal Reserve cares about, with strong growth, at-target inflation and super-low unemployment. Yet the world seems risky right now, and the threat of a yield-curve inversion is among the dangers central bankers are monitoring. “In terms of reading the tea leaves around financial markets, obviously it’s something we pay a lot of attention to,” New York Fed President John Williams said at a press conference Tuesday.

Trade Pledge Slows Stock Sell-Off; Pound Advances: Markets Wrap (Bloomberg) European and Asian stocks dropped on Wednesday following a rout on Wall Street, though declines were contained and U.S. equity futures rose after China pledged to start delivering on trade agreements reached with America. The pound stayed higher as the U.K. government published legal advice relating to its proposed Brexit deal. Global markets have been left reeling after Tuesday’s steep sell-off in New York, but nerves appear to be steadying after China’s Commerce Ministry said Beijing will start to quickly implement specific items where there’s consensus with the U.S. and will push forward on trade negotiations within the 90-day “timetable and road map.” While the Stoxx Europe 600 Index slumped as much as 1.2 percent, that was far less than the 3.2 percent plunge recorded by the S&P 500 a day earlier. Futures for America’s benchmark gauge advanced, though the U.S. market will be closed on Wednesday to mark the death of President George H. W. Bush.

Two key Canada-to-U.S. oil pipelines hit by disruptions (Reuters) Two major pipelines carrying oil from Canada to the United States were hit by weather-related disruptions on Tuesday, the latest hit to Canada’s oil industry just days after the Alberta government announced forced cuts in crude production. A number of lines on the Enbridge Inc (ENB.TO) Mainline system, which carries crude and other liquids, were hit by power outages in the Western Canadian province of Saskatchewan due to severe weather, the company said Tuesday.

China confident it can clinch U.S. trade pact, Trump demands ‘real deal’ (Reuters) China expressed confidence on Wednesday that it can reach a trade deal with the United States, despite fresh warnings from President Donald Trump that he would revert to more tariffs if the two sides cannot resolve their differences. The remarks by the Chinese Commerce Ministry follow a period of relative quiet from Beijing after Trump and Chinese leader Xi Jinping reached a temporary truce in their trade war at a meeting over dinner in Argentina on Saturday.

Toronto home prices stable in November amid sharp drop in listings (BNN) The inventory of homes available for purchase in the Greater Toronto Area fell sharply last month in a sign that competition among buyers could be heating up in the country’s largest housing market, according to the regional real estate board.  New listings of properties available for purchase in the GTA sank 26.1 per cent year-over-year in November, according to data released by the Toronto Real Estate Board on Wednesday. Meanwhile, total active listings fell 9.8 per cent to 16,420 units.

AGT Food agrees to go-private deal that values company at $436M (BNN) AGT Food and Ingredients Inc. () has agreed to be taken private by investors including CEO Murad Al-Katib in a deal that values the company at $436 million. The Regina-based company says it has elected to proceed with the $18-per-share transaction proposed last July upon the recommendation of a special committee of independent directors and a fairness opinion from TD Securities. 

Overnight markets

Overview: US 10yr note futures are up 0.353% at 120-01, S&P 500 futures are up 0.53% at 2716, Crude oil futures are down 0% at $53.25, Gold futures are down -0.25% at $1243.5, DXY is down -0.1% at 96.872, CAD/USD is up 0.07% at 0.7533.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.127%	2 Year	2.795%
5 Year	2.146%	5 Year	2.787%
10 Year	2.182%	10 Year	2.914%
30 Year	2.269%	30 Year	3.173%

US Economic Data

7:00 AM	MBA Mortgage Applications, Nov 30th 2.0% (5.5% prior)
14:00 AM	U.S. Federal Reserve Releases Beige Book

 Canadian Economic Data

10:00 AM

Bank of Canada Rate Decision, Dec 5th est 1.75% (1.75% 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