Commentaires

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

Market Update

US tsys trading weaker, curve steeper, 10Y 2.89% (+1.3bps), avg volume in TY futures (343k), equity futures higher (S&P +22), European equities rising for a second day, Euro Stoxx +1.5%.  Core EGBS lower, bunds pressured in the last hr as BTPs rally on news Italian govt has agreed on new fiscal budget before meetings in Brussels today, while in the UK 10Y gilts ~3bps higher as PM May faces a non-confidence vote on Brexit, thou she is widely expected to survive. ECB meeting tomorrow – ECB expected to announce an end to asset purchases despite signs of weaker economy, Brexit upheaval… In  Canada, GOCs slightly lower in line with tsys, 10Y 2.09% – 4bps off Mondays 2.05% one-year low. Povis widening yest on supply – long Sask 2050 @ 96.5 (ont +4).

News headlines

Theresa May Faces Confidence Vote Today on Her Leadership (Bloomberg) Theresa May will face a vote of confidence in her leadership of the Conservative Party as the embattled U.K. prime minister warned the rebels who want her out that they will be putting Brexit at risk.

Huawei CFO Gains Bail in Canada as U.S. Seeks Extradition (Bloomberg) Huawei Technologies Co. Chief Financial Officer Meng Wanzhou was granted bail by a Canadian court, allowing the executive to stay in her Vancouver home as she awaits a possible extradition to the U.S. over fraud charges. Justice William Ehrcke of the British Columbia Supreme Court agreed to release Meng on the condition she post bail of C$10 million ($7.5 million), including at least C$7 million in cash, and submit five people who would act as “sureties” — guarantors to ensure she complies with the bail terms who would lose the cash or other assets they put up if she were to flee.

Trump Says He Would Intervene in Huawei Case to Get China Deal (Bloomberg) President Donald Trump said he would intervene in U.S. efforts to extradite Huawei Technologies Co. executive Meng Wanzhou if it helped him win a trade deal with China. “If I think it’s good for what will be certainly the largest trade deal ever made, which is a very important thing — what’s good for national security — I would certainly intervene, if I thought it was necessary,” Trump said Tuesday in an interview with Reuters.

Stocks Rally on Renewed Trade Hopes; Pound Climbs: Markets Wrap (Bloomberg) Stocks rallied globally as the outlook for U.S.-China trade took a positive turn. The pound strengthened as the British prime minister vowed to fight a challenge to her leadership. U.S. equity futures and European shares climbed following big gains in Asia after the chief financial officer of Huawei Technologies Co. was granted bail and President Donald Trump said he’d consider intervening in the case if it helps get a trade deal with China. In the U.K., markets took news that Theresa May will face a vote of confidence from the Conservative Party she leads in stride. Sterling gained as several ministers rushed to back her and she vowed to contest the vote “with everything I’ve got.”

Amazon aims at office workers with compact cashier-less food store (Reuters) Amazon.com Inc on Wednesday opened a compact version of its cashier-less Amazon Go food stores, broadening its footprint in the bricks-and-mortar world in a move to add shops in places such as office lobbies and hospitals. Located in one of the company’s Seattle offices, the eighth Amazon Go store is near the original and a quarter the size, at a mere 450 square feet. That is about the size of a New York City studio apartment. The new store is aimed at selling salads and snacks to office workers.

Ex-diplomat Kovrig who led Trudeau’s Hong Kong visit detained in China (BNN) China has detained a former Canadian diplomat in Beijing in apparent retaliation for the jailing of a top Chinese executive at the request of the United States, escalating a legal and diplomatic wrangle between the three countries. Relations were shaken by Canada’s arrest of Meng Wanzhou, chief financial officer of Chinese telecommunications giant Huawei and daughter of its founder. Canadian authorities detained Meng on Dec. 1 during a layover at the Vancouver airport. The U.S. accuses Huawei of violating American economic sanctions against Iran.

Modest home price growth expected for 2019: Re/Max, Royal LePage (BNN) Home prices across the country are expected to rise in 2019, but only at a moderate pace compared with recent years, according to two of Canada’s largest residential real estate brokerages. Royal LePage is anticipating the national median home price will increase by 1.2 per cent in 2019, with prices in Toronto and the surrounding areas expected to rise 1.3 per cent to $854,552. Home prices in Greater Vancouver are forecast to go up by just 0.6 per cent to $1.29 million, while home prices in Montreal and the nearby region are expected to see the largest rise out of Canada’s biggest cities, with home prices anticipated to jump three per cent to $421,306 in 2019.

Overnight markets

Overview: US 10yr note futures are down -0.052% at 120-12, S&P 500 futures are up 0.91% at 2665.25, Crude oil futures are up 1.8% at $52.58, Gold futures are up 0.21% at $1249.8, DXY is down -0.1% at 97.294, CAD/USD is down -0.17% at 0.7481.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.052%	2 Year	2.768%
5 Year	2.046%	5 Year	2.751%
10 Year	2.095%	10 Year	2.892%
30 Year	2.241%	30 Year	3.143%

US Economic Data

7:00 AM	MBA Mortgage Applications, Dec 7th 1.6% (2.0% prior)
8:30 AM	CPI MoM, Nov est 0.0% (0.3% prior)
	CPI Ex Food and Energy MoM, Nov est 0.2% (0.2% prior)
	CPI YoY, Nov est 2.2% (2.5% prior)
	CPI Ex Food and Energy YoY, Nov est 2.2% (2.1% prior)
	CPI Index NSA, Nov est 252.006 (252.885 prior)
	CPI Core Index SA, Nov est 259.412 (258.939 prior)
	Real Avg Weekly Earnings YoY, Nov (0.9% prior)
	Real Avg Hourly Earnings YoY, Nov (0.7% prior)
14:00 PM	Monthly Budget Statement, Nov est -199.0b (-100.5b prior)

Canadian Economic Data

8:30 AM	Teranet/National Bank HP Index, Nov (225.30 prior)
	Teranet/National Bank HPI MoM, Nov (-0.4% prior)
	Teranet/National Bank HPI YoY, Nov (2.8% prior)
	Capacity Utilization Rate, 3Q est 86.0% (85.5% 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