Commentaires

Market Update

US tsys weaker with equity futures higher (S&P +20, Nasdaq +67), US 10Y 2.88% (+2bps). Positive news on trade as China considering cutting tariffs on US made cars. Little reaction to stronger PPI data in the US –  with the core +0.3% vs 0.1% exp – the BLS noting that services prices were boosted by higher margins at fuel retailers.  Core Euro bonds also lower, Gilts underperforming as UK PM May set to meet EU Juncker to discuss possible changes to current Brexit deal. GOCs lower, in line with tsys, 10Y 2.07% (+1bp). Provis ended yest unch after widening at first, as equities rebounded in the after.

News headlines

Huawei Judge Debates Apt Bail for Chinese Billionaire’s Daughter (Bloomberg) A Canadian judge said Monday he wasn’t satisfied with a bail proposal from the lawyers for jailed Huawei Technologies Co. Chief Financial Officer Meng Wanzhou, who faces a U.S. extradition request. Justice William Ehrcke of the British Columbia Supreme Court voiced doubts that Meng’s husband, Liu Xiaozong, could act as her « surety » — that is, a type of guarantor or “community jailer » who would be responsible for ensuring she meets bail terms and who would lose a proposed C$15 million in cash and properties if she were to violate conditions.

Cohen Said Russian Vowed ‘Political Synergy’ for Trump in 2015 (Bloomberg) Michael Cohen spoke with a Russian national who repeatedly proposed a meeting between Donald Trump and Russian President Vladimir Putin in the early months of Trump’s presidential bid, and offered “political synergy” for the campaign, according to a filing by Special Counsel Robert Mueller’s office. Trump tweeted early Saturday that there had been “NO COLLUSION!”

China Moves on U.S. Car Tariff Cut Trump Tweeted About (Bloomberg) China is moving toward cutting its trade-war tariffs on imported U.S.-made cars, a step already brandished by President Donald Trump as a concession won during trade talks in Argentina. A proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China’s Cabinet to be reviewed in the coming days, according to people familiar with the matter. Shares of carmakers including BMW AG, Ford Motor Co. and Tesla Inc. rose on the news.

U.S. Futures, European Stocks Rally as Bonds Drop: Markets Wrap (Bloomberg) U.S. equity futures and European stocks rallied while Asian shares slipped as investors weighed the prospects for success in American-Chinese trade talks. The pound rebounded. Futures on the Dow Jones, S&P 500 and Nasdaq indexes all jumped, shrugging off losses in the Asian benchmark after China was said to move toward cutting tariffs on American-manufactured cars. Miners and carmakers advanced, helping the Stoxx Europe 600 Index extend gains. The pound rallied, trimming some of its tumble from a day earlier. The dollar weakened while Treasuries and European sovereign bonds fell.

Court rejects Nissan ex-chairman Ghosn’s appeal to end detention (Reuters) A Tokyo court on Tuesday rejected ousted Nissan Motor chairman Carlos Ghosn’s appeal to end his detention following his arrest last month on allegations of financial misconduct. Ghosn has been held in a Tokyo jail since he was arrested on Nov. 19 on suspicion of conspiring to understate his pay by about half of the actual 10 billion yen ($88 million) awarded over five years from 2010. He was officially charged on Monday.

Hyundai Motor’s two R&D vice chairmen offer to resign (Reuters) Hyundai Motor Group’s two vice chairmen in charge of research and development (R&D) have offered to resign, three people familiar with the matter told Reuters on Tuesday. R&D president Albert Biermann is likely to be named the new head of the division, two of them added, declining to be named as they are not authorized to speak to media. Hyundai is battling a plunge in sales, profits and its share price, and the reshuffle would be the latest since it promoted Euisun Chung in September to executive vice chairman, moving him closer to succeeding his octogenarian father as head of South Korea’s second-largest group.

Huawei fallout hits Canada Goose shares while China rival soars (BNN) Escalating tensions between China and Canada triggered by the arrest of Huawei Technologies Co.’s finance chief is having a dramatic impact on two of the world’s hottest apparel stocks. Canada Goose Holdings Inc. (), the trendy maker of premium parkas, has tumbled almost 20 per cent over the past four days. At the same time, Bosideng International Holdings Ltd., a Hong Kong-based downy apparel maker, has jumped nearly 13 per cent to a five-year high.

Overnight markets

Overview: US 10yr note futures are down -0.22% at 120-13, S&P 500 futures are up 0.86% at 2665.75, Crude oil futures are up 1.16% at $51.59, Gold futures are up 0.17% at $1251.5, DXY is down -0.23% at 96.998, CAD/USD is down -0.13% at 0.7474.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.036%	2 Year	2.752%
5 Year	2.037%	5 Year	2.746%
10 Year	2.087%	10 Year	2.886%
30 Year	2.237%	30 Year	3.145%

US Economic Data

6:00 AM	NFIB Small Business Optimism, Nov 104.8 est 107.0 (107.4 prior)
8:30 AM	PPI Final Demand MoM, Nov est 0.0% (0.6% prior)
	PPI Ex Food and Energy MoM, Nov est 0.1% (0.5% prior)
	PPI Ex Food, Energy, Trade MoM, Nov est 0.2% (0.2% prior)
	PPI Final Demand YoY, Nov est 2.5% (2.9% prior)
	PPI Ex Food and Energy YoY, Nov est 2.5% (2.6% prior)
	PPI Ex Food, Energy, Trade YoY, Nov (2.8% 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 slightly lower, US 10Y 2.86%, yield curve flatter, paring gains as equities rebound from losses – S&P futures +2.75 (were down 20 early). Core Euro bonds mixed – UK gilts higher, yields 3-5bps lower with  the GBP at 18 month lows ad it appears PM May will delay tomorrow’s crucial Brexit vote for fear of defeat. German bunds sold off at the open as equities moved higher, despite muted EGB issuance this week. Focus in the US on Wed CPI & Friday retail sales. In Canada, GOCs slightly higher, outperforming tsys by 1bp with GOC curve flatter after Friday’s huge Nov Payrolls which saw the largest one month gain on record at 94k vs 10k exp, with odds of a Jan hike rising to 17% from 8% prior to the report.

News headlines

China Says Canada Violated Bilateral Agreement in Huawei Arrest (Bloomberg) China accused Canada of violating a bilateral agreement by failing to speedily inform its consulate of the arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou, as tensions between the nations continue to escalate. “According to the China-Canada consular agreement, if a Chinese citizen is arrested by the Canadian government, the Canadian government should immediately notify the Chinese embassy,” Chinese Foreign Ministry spokesman Lu Kang told reporters in Beijing on Monday. “But the Canadian government didn’t do that.”

U.K. Economy Loses Steam as Battle Over Brexit Rages (Bloomberg) The U.K. economy lost momentum in the three months through October, a further sign of the toll being taken by Brexit uncertainty. Growth slowed to 0.4 percent from 0.6 percent in the third quarter, the Office for National Statistics said Monday. In October alone, growth was just 0.1 percent, with the economy being spared a third month of stagnation by a rebound in the dominant services industry.

ECB Heads for Crunch Time After Weeks of Holding Its Nerve (Bloomberg) European Central Bank officials have gone silent on monetary policy after weeks of holding their nerve in the face of waning confidence, slowing growth and mounting economic risks. The Governing Council is just days out from its Dec. 13 meeting, when it will probably call time on one of its major crisis tools. The buildup to the end of net asset purchases after spending 2.6 trillion euros ($3 trillion) has been anything but smooth, with multiple indicators falling and two of the euro area’s biggest economies – Germany and Italy – contracting.

Stocks Drop as Trade Concerns Fester; Pound Falls: Markets Wrap (Bloomberg) U.S. equity futures declined and European stocks followed Asian shares lower as traders fret over the outlook for global growth and a potential escalation of tensions between Washington and Beijing. The pound weakened as Theresa May was said to delay a crucial parliamentary vote on Brexit. Chemical companies led the retreat in the Stoxx Europe 600 Index as contracts on the Dow Jones, Nasdaq and S&P 500 indexes all languished in the red. The glum mood follows weak economic data out of China and news the country’s vice foreign minister summoned the U.S. ambassador to protest the arrest of Huawei Technologies Co.’s CFO. The euro strengthened on upbeat German trade data, while the dollar drifted. Treasuries and European sovereign bonds were mixed.

China urges Canada to free Huawei CFO or face consequences (Reuters) China warned Canada on Saturday that there would be severe consequences if it did not immediately release Huawei Technologies Co Ltd’s [HWT.UL] chief financial officer, calling the case “extremely nasty”. Meng Wanzhou, Huawei’s global chief financial officer, was arrested in Canada on Dec. 1 and faces extradition to the United States, which alleges that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions.

Shoppers Drug Mart granted licence to sell medical marijuana online (BNN) Shoppers Drug Mart has been granted a licence to sell medical marijuana online. Health Canada’s list of authorized cannabis sellers and producers has been updated to reflect that the pharmacy can sell dried and fresh cannabis, as well as plants, seeds and oil. A website has been set up by the company, which says that patients « with a valid medical document will soon be able to purchase a wide selection of medical cannabis products » from Shoppers. A spokeswoman for Shoppers’ parent company Loblaw Companies Ltd. says it’s too soon to say when people will be able to start making orders.

Consumer insolvencies climb 9% in Canada amid higher rates (BNN) Insolvencies filed by Canadian consumers jumped by the most in two years amid signs recent interest rate increases are filtering through to the economy. Insolvencies climbed to 11,641 in October, an increase of 9.2 per cent from a year earlier, according to a report from the Office of the Superintendent of Bankruptcy Canada. Insolvencies surged 16 per cent from September, and are 1.5 per cent higher than 2017 on a year-to-date basis. The Bank of Canada has raised borrowing costs five times since July 2017, and Governor Stephen Poloz reiterated Thursday rates will need to rise “into a neutral range” somewhere around 2.5 per cent to 3.5 per cent, from the current 1.75 per cent, as the economy operates near capacity. That view was reinforced by data Friday that show the country posted a record employment gain in November.

Overnight markets

Overview: US 10yr note futures are down -0.039% at 120-22, S&P 500 futures are up 0.01% at 2636.25, Crude oil futures are down -1.39% at $51.88, Gold futures are down -0.01% at $1252.5, DXY is up 0.14% at 96.649, CAD/USD is down -0.12% at 0.7515.

Cda Benchmarks	Yield	Tsy Benchmarks	Yield
2 Year	2.006%	2 Year	2.719%
5 Year	2.008%	5 Year	2.701%
10 Year	2.074%	10 Year	2.854%
30 Year	2.235%	30 Year	3.134%

US Economic Data

10:00 AM

JOLTS Job Opening, Oct est 7100 (7009 prior)

Canadian Economic Data

8:15 AM	Housing Starts, Nov est 198.0k (205.9k prior)
8:30 AM	Building Permits MoM, Oct est -0.3% (0.4% prior)
10:00 AM	Bloomberg Nanos Confidence, Dec 7th (53.6 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 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