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Market Update Tsys trading slightly lower, near top of overnite range on heavy volume in TY futures (900k) due to ongoing Dec/Mar rolling. Consumer confidence for Nov at 10:00, while the US auctions $40bln 5Y notes at 1:00PM. Core EGBs higher led by 10Y gilts reversing earlier losses on trade news as Trump is considering new tariffs on China. US stock futures are lower, S&P -12, European equities -0.50%. GOCs are higher, in line with tsys, 10Y 2.34%, quiet in terms of data until Friday Q3 GDP. Provis starting 0.5bps wider on expectations of supply.

News headlines

Trump signals he’ll boost China tariffs to 25% (BNN) President Donald Trump said he’ll likely push forward with plans to increase tariffs on $200 billion of Chinese goods, indicating he would also slap duties on all remaining imports from the Asian nation if negotiations with China’s leader Xi Jinping fail to produce a trade deal. Trump, in an interview with the Wall Street Journal published Monday, said he’s prepared to impose tariffs on a final batch of US$267 billion of Chinese shipments if he can’t make a deal with Xi when they meet at the Group of 20 meeting in Argentina, which starts Nov. 30. The rate could be either 10 per cent or 25 per cent, Trump said. 

Another Warning Sign That the U.S. Economy Will Slow Next Year (Bloomberg) Juiced by President Donald Trump’s tax cuts, business investment helped deliver a robust U.S. economy in the first half of 2018, but signs have multiplied that the growth driver is faltering. Companies face tariff-related uncertainty, cooling global demand and rising borrowing costs, while plunging oil prices are menacing the energy sector. Meanwhile, the U.S. and China are settling in for a protracted trade war, the boost from lower taxes is projected to fade next year and a politically divided Congress will probably shirk from additional stimulus.

Deep in the Data, China’s Bank Funding Squeeze Is Easing Off (Bloomberg) China’s beleaguered private companies may be on the cusp of better times, with signs emerging that a government push to boost bank lending is working. The private sector, which makes up about 80 percent of employment in the world’s second-biggest economy, has been struggling with a credit squeeze triggered by a campaign to shrink China’s shadow-banking industry. With corporate defaults hitting a record this year, policy makers acted to restart the credit flow, notably by verbally directing banks to provide more loans.

EU Is Said to Discuss Russia Sanctions After Ukraine Naval Clash (Bloomberg) European Union governments are discussing sanctions on Russia in the wake of its latest confrontation with Ukraine, though no action is likely until the facts are fully established, a German official said. The balancing act is a sign of Europe’s constraints in getting tough with President Vladimir Putin after imposing a series of sanctions, championed by German Chancellor Angela Merkel, to punish Russia’s annexation of Crimea and meddling in Ukraine. Merkel called for de-escalation in a phone call with Putin late Monday, according to the chancellery in Berlin.

Stocks Drop as Trade Talk Weighs; Copper Declines: Markets Wrap (Bloomberg) U.S. stock futures and European shares fell on Tuesday while gains in Asian equities were limited after President Donald Trump said he’d likely increase tariffs again on Chinese imports, just days before meeting with his counterpart Xi Jinping. Commodities retreated, led by copper. Contracts on the Dow, S&P and Nasdaq all pointed to a drop at the opening, while Treasuries and the dollar held steady before the Federal Reserve’s top two officials speak in the coming two days. Equity benchmarks rose in Japan, but were steady in Hong Kong and China, in the wake of signals from Trump that he’s prepared to enact higher tariffs. While China’s foreign ministry urged the U.S. to work toward a positive outcome for the meeting planned at the Group of 20 summit this week, Apple’s shares fell in premarket trading.

Scotiabank to exit nine countries in Caribbean shake-up (Reuters) Bank of Nova Scotia (BNS.TO) on Tuesday reported fourth-quarter earnings which were marginally below expectations and said it planned to exit nine countries in the Caribbean as part of a shake-up of that business. The bank, which has operated in the Caribbean since 1889, said that it would refocus its business in the region by selling its insurance operations in Jamaica and Trinidad & Tobago to Sagicor Financial Corporation, with whom it will partner to sell insurance products in those countries.

Air Canada says TD, CIBC and Visa to continue as Aeroplan partners (BNN) Air Canada has signed a definitive agreement to buy the Aeroplan loyalty program from Aimia Inc. for $450 million in cash, adding that it has committed to TD Bank, CIBC and Visa as loyalty card partners. Under the deal, Air Canada will also assume $1.9 billion of Aeroplan miles liability. The definitive agreement with Aimia follows an announcement in August of a tentative sale.

Overnight markets

Overview: US 10yr note futures are up 0.079% at 119-08, S&P 500 futures are down -0.41% at 2659, Crude oil futures are down -0.35% at $51.45, Gold futures are up 0.1% at $1229.9, DXY is up 0.04% at 97.116, CAD/USD is up 0.01% at 0.7545.

US Economic Data

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 tsy yields ~1-2.5 bps higher, equity futures higher (S&P fut +30), crude +1.8% 51.33. Risk on sentiment buoyed by narrowing in Italy/German bond spd, 10Y BTP -13bps @3.26%, FTSE MIB +2.5% on reports govt is studying lower deficit target after discussions with the EU. GOCs weaker, in line with tsys 10Y 2.36% – Cda/US spreads little changed after Friday’s CPI/retail sales data, with odds of a BOC rate hike at the January meeting hovering ~70%. Quiet on the data front until Friday with Q3 GDP expected to have risen 2.0%.

News headlines

Global Economy Heads Into Final Stretch With Diminished Momentum (Bloomberg) The global economy headed into the final stretch of 2018 in weakened shape, handing investors renewed reason to question how much central banks will be able to tighten monetary policy next year. Fresh data from the world’s third and fourth-largest economies on Monday added to the concern. A manufacturing gauge in Japan dropped to the lowest since early 2016, and business confidence in Germany fell for a third month.

U.K.’s Other Brexit Fight May Bar It From $1.7 Trillion WTO Deal (Bloomberg) U.K. businesses stand to lose access to a $1.7 trillion public procurement market if signatories to a World Trade Organization accord this week block Britain’s application for membership, which will lapse after it leaves the European Union in March. On Nov. 27, the U.K. will seek admission to the 46-nation Government Procurement Agreement in Geneva. Failure to rejoin the pact could prevent U.K. companies from bidding on government contracts in member nations, including the $837 billion U.S. market. Each member has the power to block admittance.

Ukraine Mulls Martial Law After Russia Flare-Up: Ukraine Update (Bloomberg) Ukraine’s parliament will vote on whether to impose martial law after Russia fired on its warships Sunday. Several sailors were wounded in the clash, which sparked the dramatic renewal of tensions between the ex-Soviet neighbors in the Kerch Strait, near Crimea, which President Vladimir Putin seized with his military four years ago. We’re following latest developments in real time. The time stamp is for Kiev.

Global Stocks Rebound With Oil; Italy Bonds Rally: Markets Wrap (Bloomberg) U.S. stock futures advanced alongside shares in Europe and Asia as investors looked more optimistically on the outlook for interest rates and trade in the wake of another miserable week in markets. Treasuries declined, while government bonds in Italy and Greece rallied. Banks and automakers led the Stoxx Europe 600 Index higher, with nearly all sectors in the green, after stocks rose in most of Asia except for China and Australia. The yen and dollar dipped as investors showed renewed appetite for risk. Italy’s bonds jumped as state officials began studying scenarios for a lower 2019 budget deficit target, while markets climbed in Greece after one of the nation’s banks revealed a plan to deal with troubled loans.

GM plans major announcement on global operations Monday (Reuters) General Motors Co (GM.N) is set to make a major announcement on Monday that will affect its global operations and threatens to shutdown a big vehicle assembly plant in the province of Ontario, a Canadian union said on Sunday. Unifor, which represents most unionized autoworkers in Canada, said it had been informed by GM that there would be no product allocated to the plant in Oshawa after December 2019, a development that would affect production at the plant. The union statement came after a Canadian TV news channel said GM was planning to close all operations at the plant in Oshawa, near Toronto.

Battered bitcoin miners may start shutting down (BNN) Bitcoin miners hit hard by the cryptocurrency’s crash may be throwing in the towel. The bitcoin network’s hash rate, one way of gauging the computing power dedicated to mining the digital currency, dropped about 24 per cent from an all-time high at the end of August through Nov. 24, according to Blockchain.com. While the decline may have partially resulted from miners switching to other cryptocurrencies, JPMorgan Chase & Co. says some in the industry are losing money after bitcoin’s price tumbled. “This suggests that prices have declined to a point where mining is becoming uneconomical for some,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a Nov. 23 report, in reference to the falling hash rate.

Bank of Canada expands balance sheet list to mortgage bonds (BNN) The Bank of Canada plans buy for the first time government-backed mortgage bonds in a bid to broaden the range of high-quality assets in its operations to manage its balance sheet. The move, which is part of a decision of including government-guaranteed debt issued by federal Crown corporations, will allow Ottawa-based central bank to offset continued growth in bank notes, the central bank said in an statement Friday. It will also give it flexibility to further reduce its participation in primary Canadian government bond auctions to help boost the tradeable float and support liquidity in the secondary market.

Overnight markets

Overview: US 10yr note futures are down -0.079% at 119-06, S&P 500 futures are up 1.14% at 2659.5, Crude oil futures are up 1.75% at $51.3, Gold futures are up 0.16% at $1225.1, DXY is down -0.11% at 96.805, CAD/USD is down -0.17% at 0.7567.

US Economic Data

 Canadian Economic Data

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 trading higher, top of o/n range on above avg volume , 10Y 3.05% (-1.5bps). US stock futures are lower, Euro stocks mixed, while brent crude fell to the lowest level since 2017. GOCs outperforming tsys by 0.5-1bp despite Oct CPI rising to 2.4% y/y from 2.2% in Sep, even as the core rate was unch at 2.0%.

News headlines

Trump, Xi Signal Readiness for Trade Talks Ahead of G-20 Meeting (Bloomberg) U.S. President Donald Trump and Chinese leader Xi Jinping have indicated they’re both ready for a highly anticipated meeting at the Group of 20 summit in Argentina next week. The world’s biggest economies have been engaged in an escalating trade war that is starting to have a greater impact on financial markets and global growth. On Thursday, Trump told reporters that China wants to make a deal “very badly” after his administration placed tariffs on on about $200 billion worth of Chinese goods.

Oil Slumps Again to One-Year Low as Saudis Signal Record Output (Bloomberg) Oil slumped to the lowest in a year after Saudi Arabia signaled its output may have reached a record high and growing U.S. stockpiles stoked concerns over a potential supply glut. New York futures dropped 5.3 percent from their Wednesday settlement price in a trading session lengthened by the Thanksgiving holiday in the U.S., set for a seventh weekly decline. Traders are focused on the growing risks of a new glut of crude: Saudi Arabia’s oil minister said Thursday production from the world’s largest exporter climbed further this month after a surge in October, and U.S. stockpiles have risen for nine straight weeks.

Euro-Area Economy Puts Another Dent in ECB Hopes for Rebound (Bloomberg) The euro-area economy stumbled again this month, with a key indicator falling to the lowest in four years, denting expectations for an economic pickup after a summer slowdown. Adding to worries, the composite PMI from IHS Markit also showed that employment and orders growth slowed and companies’ expectations dropped. The euro, which plunged earlier after a weak reading in Germany, was down 0.3 percent against the dollar.

U.S. Stock Futures Drop; Copper Declines With Oil: Markets Wrap (Bloomberg) U.S. equity futures pointed to a weaker open and Asian benchmarks declined on Friday, while European stocks edged higher. Oil fell and headed for a seventh weekly loss on signs of oversupply, leading commodities lower. Contracts on the Dow, S&P and Nasdaq all pointed to markets reopening with a drop following the Thanksgiving holiday. Chinese Chinese equities led regional declines in Asia, with the technology sector weak on concern the U.S. is ratcheting up a campaign against Huawei Technologies Co. Meanwhile, banks and technology companies helped the Stoxx Europe 600 Index eke out a small advance. The dollar climbed and the euro reversed earlier gains as data showed Germany’s growth outlook weakened. The pound handed back much of Thursday’s gains after Spain said it may vote against the Brexit plan. Italian bonds led an advance in European debt markets.

Desperate to move crude, Alberta may buy trains alone if Canada balks (Reuters) Alberta is willing to buy trains itself to help clear a backlog of crude oil if Ottawa decides not to back the Canadian province’s proposal to split the costs of new rail cars, Premier Rachel Notley said on Thursday. Notley said Alberta had asked Prime Minister Justin Trudeau’s government to help pay for additional rail capacity to move an additional 120,000 to 140,000 barrels per day. Notley said Alberta had not received an answer from Ottawa.

Canada needs to do more to nurture its tech clusters, report says (BNN) Canada’s growing tech talent is drawing more investment to cities like Toronto and Montreal, but the country could lose momentum if it doesn’t do more to encourage industries to scale up, according to CBRE Ltd. The country lacks “tech clusters,” dense areas of activity that contain critical mass for companies and educational and research institutions, the Toronto-based brokerage said in a report Thursday. Tech clusters like those in San Francisco and Seattle have helped propel those cities to global success but Toronto is the only Canadian city competitive enough to rank among powerhouses in North America.

Trump says CIA didn’t conclude Saudi prince had role in Khashoggi murder (BNN) President Donald Trump disputed that U.S. intelligence officials have definitively concluded that Saudi’s crown prince ordered the murder of U.S.-based columnist Jamal Khashoggi, while continuing to tout the importance of maintaining economic ties with the Kingdom. A confidential Central Intelligence Agency report on Khashoggi’s death says Crown Prince Mohammed bin Salman “might have done it,” Trump said Thursday, referring to a demand that the journalist be killed. But the CIA “didn’t conclude” that the prince made the demand, the president told reporters during a press conference at his Mar-a-Lago resort in Florida. 

Overnight markets

Overview: US 10yr note futures are up 0.026% at 119-09, S&P 500 futures are down -0.37% at 2639.25, Crude oil futures are down -4.3% at $52.28, Gold futures are down -0.39% at $1223.2, DXY is up 0.09% at 96.796, CAD/USD is up 0.26% at 0.7561.

US Economic Data

Canadian Economic Data

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