Commentaires

Market Update US tsys trading modestly higher, 10Y 3.103 (-0.7bps), above avg volume in TY futures (460k). Relatively quiet on eco front with only Ind Prod/Cap Util and LT TICS flows at 16:00ET. Core EGBs lower led by UK gilts where yields 3-4bps higher, partial reversal of yest rally as PM May found support from her environmental secretary Michael Gove, amongst others. Equities weaker, S&P futures -20, GE in focus as CDS continues to move wider, while the US IG Corp Index widened to 122 yest the most since July, +7bps in the last two days.  Crude higher for a third day, 57.44(+1.7%), while Western Cda Select fell below $14 yest for the first time since Feb 2016 to a record low $13.46. The risk-off tone in equities & lower crude has spilled over to Cdn credit – subdebt & utilities 10-15 bps wider , lower rated BBBs and reits ~30bps wider. 

News headlines

Fed Rate Pause Possible in 2019 as Powell Highlights Headwinds (Bloomberg) Federal Reserve Chairman Jerome Powell has laid out a scenario for a pause in the central bank’s interest-rate hiking campaign sometime next year by highlighting potential headwinds to the U.S. economy. While generally upbeat about the outlook, Powell on Wednesday listed three possible challenges to growth in 2019: slowing demand abroad, fading fiscal stimulus at home and the lagged economic impact of the Fed’s past rate increases.

Trump and Xi Likely to Get Only Framework Trade Deal, Ross Says (Bloomberg) The U.S. still plans to raise tariffs on Chinese imports in January with President Donald Trump and China’s Xi Jinping likely at best to agree to a “framework” for further talks to resolve trade tensions at an upcoming meeting, Commerce Secretary Wilbur Ross said. The U.S. and China are now discussing the agenda for the two leaders’ meeting on the sidelines of the Nov. 30-Dec. 1 Group of 20 summit in Buenos Aires and what a realistic outcome could be. When asked about a report that China this week had presented a list of possible concessions ahead of the talks, Ross said in an interview Thursday that everything leading up to the meeting is just “preparatory.”

Draghi Sees Euro-Area Growth Lasting Even as Trade Risks Mount (Bloomberg) Mario Draghi expects the euro area to continue growing in coming years even amid risks from protectionism that need to be monitored “very carefully.” The European Central Bank president’s remarks in Frankfurt come after the region’s expansion slowed to 0.2 percent in the third quarter, the weakest pace in more than four years. The ECB will decide at its final policy meeting of the year on Dec. 13 whether to end its bond-buying program as planned, a key step toward slowly normalizing policy.

Stocks Decline as Trade War Simmers; Dollar Steady: Markets Wrap (Bloomberg) U.S. stock futures fell along with European equities after a mixed session in Asia as investors gauged whether China and America can de-escalate their trade dispute before the G-20 summit later this month. Treasuries and the dollar were steady, while oil held above $57 a barrel in New York. Futures on the S&P 500, Dow and Nasdaq declined after Nvidia Corp. gave a disappointing sales forecast and Commerce Secretary Wilbur Ross damped hopes of any imminent trade deal with China. The Stoxx Europe 600 Index headed for its first weekly drop in three, with Friday’s gains turning into losses as technology companies fell and AstraZeneca Plc’s drop weighed on the gauge after a cancer-drug setback. Asian shares were led lower by declines in Japan, even as those in China and Hong Kong climbed. Sterling advanced as investors grapple with the U.K.’s political turmoil.

BlackBerry to buy cybersecurity firm Cylance for $1.4 billion (Reuters) BlackBerry Ltd raised its bets on artificial intelligence and cybersecurity on Friday with the $1.4 billion purchase of California-based machine-learning specialists Cylance. The Canadian technology company, which dominated the smartphone market a decade ago, has shifted to selling software to manage mobile devices, as well as emerging areas like autonomous cars. Privately owned Cylance uses machine learning to preempt security breaches before they occur. Its applications seek to block malware or infiltration attempts rather than react after a breach.

Canadian regulator asks Bombardier to halt executive share sales plan (Reuters) The Canadian province of Quebec’s securities watchdog said on Thursday it asked Bombardier Inc (BBDb.TO) to halt stock trades under a plan set up to facilitate share sales by certain senior executives at the company. The Autorité des marchés financiers (AMF) said in a statement released after markets closed that it is “reviewing” transactions and “various announcements” related to Bombardier’s creation of an Automatic Securities Disposition Plan on Aug. 15. Automatic Securities Disposition Plans allow executives with insider knowledge to sell their stock based on pre-arranged instructions provided when they are not in possession of any material undisclosed information. Bombardier’s plan allowed for certain executives to sell their stock as part of their overall performance-based compensation.

Heavy Canadian crude falls to record low amid production cuts (BNN) Heavy Western Canadian Select crude fell to a record low as several oil producers shut in production and some demand the Alberta government intervene to mandate across-the-board cuts. The oil-sands benchmark fell US$2.29 to US$13.46 a barrel Thursday, the lowest in Bloomberg data extending back to 2008. The price broke a previous record set in early 2016, when West Texas Intermediate crude futures were trading under US$30 a barrel amid a world-wide supply glut.

Ontario forecasts deficit of $14.5B, introduces low-income tax credit (BNN) Ontario’s Progressive Conservative government says it has cut the province’s deficit by $500 million, bringing the figure down to $14.5 billion in its first few months in office. The change is announced in the government’s Fall Economic Statement for 2018-2019, its first major fiscal update since winning the spring election. « The fiscal hole is deep, » Finance Minister Vic Fedeli said in presenting the document to the legislature on Thursday afternoon. « The road ahead is not an easy one and will require difficult decisions. Everyone across the province will be required to make sacrifices, without exception. »

Overnight markets

Overview: US 10yr note futures are up 0.105% at 118-30, S&P 500 futures are down -0.72% at 2714.75, Crude oil futures are up 1.65% at $57.39, Gold futures are up 0.21% at $1217.5, DXY is down -0.02% at 96.908, CAD/USD is up 0.04% at 0.7586.

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 trading firmer, paring earlier gains which saw tsy futures rise above yest afternoon highs, heavy volume in TY futures (688k),10Y 3.10% (-2.5bps) low since Oct 29th. Tsys gained momentum with sharp rally in UK gilts where yields are 7-10bps lower on the back of resignations of several cabinet members including Brexit secretary Raab. In Canada, GOCs are higher – outperforming tsys by up to 1.5bps in 10s, the 10Y below 2.40% a two-week low, the collapse in crude seemingly driving yields lower and GOC curve flatter led by 10s. Provis moving wider , Ont 28s 67.5/67, towards 70bp resistance from late May.

News headlines

PM May battles to save Brexit deal as ministers quit (Reuters) Prime Minister Theresa May battled on Thursday to save a draft divorce deal with the European Union after her Brexit secretary and other ministers quit in protest at an agreement they say will trap Britain in the bloc’s orbit for years.

U.S. jobless claims unexpectedly rise; several states estimated (Reuters) The number of Americans filing applications for jobless aid unexpectedly rose last week, but claims for three big states were estimated because of Monday’s Veterans Day holiday, which could have influenced the data.

China sends written response to U.S. trade reform demands – U.S. government sources (Reuters) China has delivered a written response to U.S. demands for wide-ranging trade reforms, three U.S. government sources said on Wednesday, a move that could trigger more formal negotiations to resolve a withering trade war between the world’s top economies.

Prominent managers loaded up on Apple before recent tumble (Reuters) Several prominent investors put fresh money to work in Apple (AAPL.O) during the third quarter even as they sold out of other high-flying tech companies, betting the iPhone maker’s stock would keep rising as strong growth overshadowed rising trade tensions between the United States and China.

Sterling, euro stocks scuttled as Brexit deal slams the rocks (Reuters) Sterling tumbled and the rest of Europe’s share markets groaned on Thursday after a long-awaited Brexit agreement was thrown into chaos as Britain’s chief negotiator for the deal quit just hours after it had been unveiled.

Ontario sharpens axe as it readies plan to cut mounting deficit (Bloomberg) Investors will be watching for hints as how Ontario plans to start tackling the world’s largest largest pile of sub-sovereign debt when the Canadian province gives a snapshot of its finances on Thursday. Finance Minister Victor Fedeli will unveil the new government’s economic and fiscal outlook in the provincial legislature starting at about 1:15 p.m. While not an official budget, the document will outline the government’s initial assessment of a province that’s growing moderately while steadily racking up debt.

Warren Buffett’s Berkshire Hathaway takes new stake in JPMorgan (FinancialTimes) Warren Buffett’s Berkshire Hathaway has taken a nearly $4bn stake in JPMorgan Chase and pumped billions of dollars more into other US banks, as his sprawling investment group expanded its reach across American finance.

Uber posts $1 billion loss in quarter as growth in bookings slows (Reuters) Uber Technologies Inc said on Wednesday that growth in bookings for its ride-hailing and delivery services rose 6 percent in the latest quarter, the third quarter in a row that growth has remained in the single digits after double-digit growth for all of last year.

Levi Strauss Seeks to Raise Up to $800 Million in IPO (Bloobmerg) Levi Strauss & Co., the ubiquitous U.S. jeans maker, is looking to raise $600 million to $800 million in an initial public offering, CNBC reported, citing people with knowledge of the matter.

Overnight markets

Overview: US 10yr note futures are up 0.224% at 119-01, S&P 500 futures are down -0.47% at 2685.75, Crude oil futures are up 0.23% at $56.38, Gold futures are up 0.33% at $1214.1, DXY is up 0.43% at 97.219, CAD/USD is down -0.12% at 0.756.

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 opening higher, yields 1-2bps lower across the curve with the 10Y 3.16% (-2bps), tsy futures slightly lower, giving back gains equities look to open higher (S&P 12.75) after yesterday’s steep selloff (S&P -2%). Core European bonds mixed – UK gilts lower on increasing signs UK & EU are close to deal on Brexit, 10Y gilt 3bps higher vs 5.5bp lower ahead of the headline, GBP erasing yest losses. Crude down for a 2nd day after Trump’s tweet urging OPEC to increase supply. GOCs higher, underperforming tsys by 0.5bps in the short end, 10Y 2.48 (-2.5bps).

News headlines

China’s top trade negotiator Liu He heads to US in bid to kick start new talks on easing tensions. (YahooNews) China’s top economic negotiator is expected to visit the United States soon for talks with his American counterparts aimed at calming trade tensions between the two sides and paving the way for a meeting between the two countries’ presidents.

U.S. car-import probe said to advance as Trump plans trade meeting (Bloomberg) The White House is circulating a draft report by the U.S. Commerce Department over whether to impose tariffs on automobile imports to protect national security, three people familiar with the matter said.

Italy won’t budge on deficit, may offer concession on growth (Bloomberg) Italy’s government may offer the European Commission a minor concession when it resubmits its budget after an unprecedented rejection last month. The populist administration may admit its 2019 spending plans will have a smaller economic impact than previously projected, and cut its growth target to as low as 1.3 per cent from 1.5 per cent, Il Sole 24 Ore reported on Tuesday. La Stampa reported that Finance Minister Giovanni Tria wants to lower the 2019 GDP growth target even further to 1.2 per cent, which would be in line with the level forecast by the commission.

Oil Extends Record Losing Streak as Trump Blasts Saudi Plan (Bloomberg) Oil fell for a 12th day, its longest losing streak on record, after U.S. President Donald Trump criticized Saudi Arabia’s plan to cut output. West Texas Intermediate futures in New York sank as much as 2.6 per cent, extending a drop of more than 11 per cent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet, after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day. Meanwhile, the dollar rose to an 18-month high, hurting demand for commodities priced in the U.S. currency.

GE CEO admits regular investors have fled the stock since he cut the dividend to a penny (CNBC) GE CEO Larry Culp acknowledged Monday that his decision to slash the quarterly dividend to a penny sent regular investors scrambling. About one-third of GE shares are held by retail investors, a higher than average mix for a public company.

Sears should close for good, creditors say (CNN) A committee of unsecured creditors said in a court filing Friday that the company’s plans to stay in business during bankruptcy are « nothing more than wishful thinking  » and « an unjustified and foolhardy gamble with other people’s money. »

Amazon chooses New York, Northern Virginia for HQ2 (Bloomberg) Amazon.com Inc. () has selected New York City and Northern Virginia as the company’s second and third headquarters, the Wall Street Journal reported. An announcement could come as soon as Tuesday, the newspaper reported, citing unidentified people familiar with the plan. Other cities may get major sites from the company, the newspaper said.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 118-12, S&P 500 futures are up 0.41% at 2739, Crude oil futures are down -1.23% at $59.19, Gold futures are down -0.01% at $1203.4, DXY is down -0.27% at 97.277, CAD/USD is down -0.17% at 0.756.

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