Commentaires

Market Update

US tsys trading weaker, ‘risk-on’ after Trump decision to delay tariffs on China , China move to reduce US auto tariffs, yields 4-5bps higher across the curve, 10Y 3.04% (+5bps). US equity futures surging after deal – S&P +41 (+1.4%), Nasdaq + 155 (+2.23%). Crude higher on production cuts from OPEC and Alberta, crude 52.90 (+4%) USDCAD down the most in two months -0.7% 1.3176.  US event calendar includes Oct Const spending & US Man ISM at 10:00ET, as well as various Fed speakers. In Canada, GOCs are lower , outperforming tsys by 1.5-2bps, 10Y 2.28%.

News headlines

Canada Joins Oil Cut Drive as Alberta Seeks to Ease Glut Crisis (Bloomberg) Canada’s largest oil producing province ordered an unprecedented output cut, an effort to ease a crisis in the nation’s energy industry and adding to global actions to combat a recent price crash. The plan announced Sunday will reduce production of raw crude and bitumen from Alberta by 325,000 barrels a day, or 8.7 percent, from January until excess oil in storage is drawn down. The reduction would then drop to 95,000 barrels a day until the end of next year at the latest. 

Trump and Xi’s Truce Risks Extending, Not Ending the Trade War (Bloomberg) President Donald Trump framed his weekend trade truce with China’s Xi Jinping as an “incredible deal,” yet the leaders’ Buenos Aires steak dinner risks extending rather than ending the trade war. The postponing of a planned U.S. tariff hike on Chinese goods for three months was greeted by analysts and business groups as a welcome détente, avoiding for now a worsening of relations between the world’s largest economies. Early trading in currency markets on Monday also suggested upbeat investors.

Le Maire Says Eurozone Budget Gaining Traction: Brussels Update (Bloomberg) Euro-area finance ministers gather in Brussels on Monday for their final meeting on buttressing the currency bloc before passing the baton to their leaders, who are expected to strike a deal later this month.

Stocks Rally, Bonds Dip on Trade Truce; Oil Gains: Markets Wrap (Bloomberg) Stocks jumped on Monday after the U.S. and China declared a truce in their trade war, while Treasuries and the dollar fell. Oil surged on optimism producers will cut output. Futures on the Dow, Nasdaq and S&P all pointed to a firmer open, as European and Asian shares advanced following agreement by the leaders of the two countries to hold off on new tariffs and intensify trade talks. Automakers were among the biggest winners in the Stoxx Europe 600 Index after President Donald Trump said in a late-night tweet that China agreed to “reduce and remove” tariffs on imported American-made cars. Ten-year Treasury yields rose back above 3 percent while the euro pared a gain after data showed manufacturing activity slowed.

Canada economic growth slows in third-quarter, December rate hike seen off cards (Reuters) Canada’s economic growth slowed in the third quarter on declines in motor vehicle purchases and housing investment, underpinning market expectations that the Bank of Canada will not hike interest rates next week. Statistics Canada said on Friday that annualized growth between July and September was 2.0 percent, down from 2.9 percent in the second quarter. The pace of growth matched expectations of analysts in a Reuters poll.

Qatar to leave OPEC and focus on gas as it takes swipe at Riyadh (Reuters) Qatar said on Monday it was quitting OPEC from January to focus on its gas ambitions, taking a swipe at the group’s de facto leader Saudi Arabia and marring efforts to show unity before this week’s meeting of exporters to tackle an oil price slide.

Time to relax mortgage regulations, Canada home builders urge (BNN) Canada’s home builders are urging the federal government to loosen mortgage-lending restrictions that have helped cool housing markets this year. Executives at Mattamy Homes Ltd., North America’s largest closely held home builder, said the rules have brought about the desired soft landing and aren’t needed as much now that interest rates are rising. The Canadian Home Builders’ Association said the rules are hitting millennials and struggling markets like Calgary particularly hard. The rules, put in place in January, require even those with a 20 per cent down payment, who don’t need mortgage insurance, to prove that they can make payments at 2 percentage points above the contracted rate. The so-called B-20 stress tests already existed for insured mortgages. By April, the average home price in Toronto had tumbled 12 per cent from the same month the prior year, though has since stabilized.

Overnight markets

Overview: US 10yr note futures are down -0.183% at 119-08, S&P 500 futures are up 1.49% at 2799.25, Crude oil futures are up 3.75% at $52.84, Gold futures are up 0.73% at $1234.9, DXY is down -0.2% at 97.082, CAD/USD is down -0.9% at 0.7591.

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, flatter with the 10Y 3.01% (-1.8bps), TY futures 5 ticks higher @ 119-15 on light volume (281k), current contract is Mar19. Highlights for the day include Chicago PMI, Fed Williams and any news from G20 meeting.  Core EGBs higher, Eurozone inflation came in below exp @ 1.0%y/y in Nov vs 1.1% exp. GOCs continuing to grind higher, 10Y 2.285%, low since Sep 10th. the 2s10s30s butterfly now at the richest levels since last Dec. Q3 GDP at 8:30, growth expected to have slowed to 2.0% from 2.9% in Q2. Loblaws priced 2 tranche deal yest – $400mln 5.5y @ 165 and $400mln 10Y @ 217.6, said to be ~4x oversubscribed and leading to some widening in the retail space.

News headlines

The Best Case Scenario: What the Trump-Xi Dinner Could Yield (Bloomberg) Whatever happens in Buenos Aires when President Donald Trump and China’s Xi Jinping dine on Saturday night, the trade wars are set to be with us well into 2019 and possibly beyond. There’s a good reason talk swirls about the world slipping into a new Cold War. Power politics are alive and well. And the issues between the world’s two largest economies are too complex and longstanding to be solved in a few hours. 

Euro-Area Inflation Eases as ECB Nears End of Bond Buying (Bloomberg) Euro-area inflation eased off a six-year high and core inflation slipped just as the European Central Bank gets ready to pare back monetary stimulus. The data add to signs that the 19-nation economy is facing a more protracted slowdown after growth halved in the third quarter. While analysts have questioned whether the weaker momentum could force a policy rethink, ECB President Mario Draghi and his peers have stuck to their plans to cap quantitative easing at 2.6 trillion euros ($3 trillion) at the end of the year.

Trump Defends Pursuit of Russia Business During 2016 Campaign (Bloomberg) President Donald Trump defended his company’s pursuit of business in Russia during his 2016 White House bid, saying that his dealings there were legal and that they ultimately ended without a project. In an early morning tweet from Argentina, where he’s taking part in the Group of 20 summit, Trump assailed the scrutiny of his business, calling it a “Witch Hunt.”

Stocks Decline Before G-20; Treasuries Edge Higher: Markets Wrap (Bloomberg) U.S. equity futures dropped with European stocks as investors count down to a meeting between the American and Chinese presidents that could decide the course of the trade war. Benchmark Treasury yields fell and the dollar gained. Carmakers and banks led a retreat in the Stoxx Europe 600 Index, while futures for all three major U.S. indexes slid amid lingering doubts over the prospects for a thaw in relations between Presidents Donald Trump and Xi Jinping. Shares gained in Tokyo, slipped in Seoul and fell in Sydney, with Shanghai and Hong Kong stocks rising even after data showed that China’s economy remains in a weak patch. WTI crude dropped below $51 a barrel, on track for the biggest monthly slump in a decade. The euro weakened after data showed inflation in the common-currency region easing.

Canada signs USMCA on sidelines of high-stakes G20 summit (BNN) After much anticipation, Canada signed the revamped NAFTA in Buenos Aires today on the sidelines of the high-profile G20 summit. Prime Minister Justin Trudeau joined U.S. President Donald Trump and outgoing Mexican President Enrique Pena Nieto at a hotel to formally sign the trade agreement. U.S. tariffs on steel and aluminum remain in place, but a Canadian official says an advantage to signing onto the agreement now is an auto side letter exempting Canada of potential tariffs on exports of up to 2.6 million vehicles — well above current levels. Today marks an important deadline for the trade pact.

Italian economy contracted in third quarter, complicating populists’ growth plans (BNN) Italy’s economy contracted in the third quarter, in a revision that will complicate the populist government’s growth plans. Statistics agency Istat’s final reading showed the economy shrank 0.1 per cent in the three months through September, after a preliminary reading on Oct. 30 showed no change. It was the first contraction since the second quarter of 2014. Istat said Friday that lower domestic demand and a fall in investments slowed the economy in the third quarter, while exports kept up their pace.

Trump’s threats to close the border add thousands to shipping costs (BNN) The traffic is moving again at San Ysidro, one of the busiest border crossings in the world. That doesn’t mean businesses here in Tijuana are resting easy. They’re plotting alternate routes and speeding up shipments from factories that produce everything from semiconductors to pacemakers to seat belts. After the U.S. shocked locals by closing San Ysidro for more than four hours on Sunday, President Donald Trump’s recent Twitter-threat about sealing off the entire border between Mexico and the U.S. didn’t seem so absurd anymore. 

Overnight markets

Overview: US 10yr note futures are up 0.131% at 119-15, S&P 500 futures are down -0.42% at 2732.75, Crude oil futures are down -1.44% at $50.71, Gold futures are down -0.3% at $1226.7, DXY is up 0.18% at 96.954, CAD/USD is up 0.12% at 0.752.

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

US tsys higher, yields 1.5-4.5bps lower led by the 10Y @3.01% (-4.7bps), the lowest since Sep 17th. Crude rebounding after falling below $50, Russia to cut oil production along with OPEC, WTI @50.82 (+0.48). US equity futures lower, S&P -7, European stocks giving up most of earlier gains, Stoxx +0.20%.  UK gilts rallying, GBP lower after PM May warned the UK should be ready for no deal on Brexit. In Canada, GOCs are higher led by the 10Y trading below 2.30% for the first time since Sep 10th, longs lagging in a big way, 10s30s approaching 10bps the steepest since May, +5bps this week alone with yest long provi supply & RRB auction weighing on the long end. Provis opening up 0.5-1bps wider, Ont 28s 72/71.5, the Ont 48/28 box has come in ~2.5bps offsetting some of the widening in the GOC curve since Oct.

News headlines

ECB Singles Out Italy as Financial Stability Challenges Rise (Bloomberg) The European Central Bank singled out Italy as an example of how quickly investors lose confidence in a government if they’re confronted with policy uncertainty, as it said the risks to financial stability in the bloc have become “more challenging.” In its twice-yearly Financial Stability Review, the ECB said concerns relating to debt-sustainability and liquidity at investment funds have both risen since the previous report. Two other key risks — disorderly adjustments in financial markets, and the ability of banks to provide credit — were largely unchanged.

Powell Put Spurs Record $1 Billion Inflow to Emerging-Market ETF (Bloomberg) The second-largest exchange-traded fund for emerging-market equities received a record one-day inflow of more than $1 billion Wednesday, as investors pared back U.S. interest-rate bets for next year. The iShares Core MSCI EM ETF, ticker IEMG, saw its market capitalization climb back above the $50 billion mark for the first time since June, as dovish comments from Federal Reserve chair Jerome Powell revived global demand for riskier assets.

Trump Renews Auto Tariff Threat as Trade Czar Aims at China (Bloomberg) President Donald Trump raised the prospect of slapping a 25 percent tariff on imported cars and ordered a review of China’s retaliatory auto tariffs against the U.S. as his administration continued to scramble to respond to General Motors Co.’s announcement of plant closures this week.

Treasury Yields Touch 3% as U.S. Stock Futures Dip: Markets Wrap (Bloomberg) Benchmark Treasury yields briefly fell below 3 percent for the first time since September in the wake of the Fed’s dovish tilt, but a stock rally faded as U.S. equity futures dropped and gains in Europe were muted. The dollar fluctuated. The 10-year Treasury yield extended its decline after Fed Chairman Jerome Powell fueled speculation the central bank may pause interest rate increases next year, while the greenback drifted in a tight range following Wednesday’s drop. European bonds rose, including Italian notes despite demand for five-year debt at an auction falling to the lowest since June. The euro pared an earlier advance after a raft of weak economic data and the pound came under pressure as Prime Minister Theresa May raised the prospect of a “no deal” Brexit.

Canada’s Alberta province to buy rail cars to reduce oil glut (Reuters) Canada’s Alberta province is in talks to buy rail cars to transport 120,000 barrels per day of crude oil and expects a deal to be concluded within weeks, Premier Rachel Notley said on Wednesday, as the oil-rich province tries to move oil stuck in the region because of a lack of pipeline capacity.

Canada’s Toronto-Dominion Bank quarterly earnings up 20 percent (Reuters) Canada’s Toronto-Dominion Bank (TD.TO) reported on Thursday a 20 percent rise in fourth-quarter earnings, marginally ahead of analysts’ expectations, helped by strong growth at its U.S. retail business. TD said earnings per share, excluding one-off items, rose to C$1.63 in the quarter ended Oct. 31, compared with C$1.36 a year ago. Analysts had, on average, forecast earnings of C$1.62, according to IBES data from Refinitiv.

Oil drops below US$50 on concern OPEC won’t cut output decisively (BNN) Oil dropped below US$50 a barrel in New York for the first time in more than a year as traders fretted that OPEC won’t act decisively to clear a resurgent surplus in the global crude market. All eyes are on this weekend’s G20 summit in Argentina, where Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman are likely to discuss how to coordinate oil policy, but both leaders have reasons for caution. Shielded by a budget surplus and a weak ruble, Putin said yesterday current prices suit Russia fine. The crown prince, under pressure after the killing of Jamal Khashoggi, can’t afford to alienate President Donald Trump. 

Overnight markets

Overview: US 10yr note futures are up 0.183% at 119-20, S&P 500 futures are down -0.32% at 2732.75, Crude oil futures are up 1.19% at $50.89, Gold futures are up 0.18% at $1232, DXY is down -0.01% at 96.772, CAD/USD is down 0% at 0.7533.

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