Commentaires

Market Update US tsys trading higher, near highs of o/n range on strong volume in TY futures (760k),the 10Y 3.04% (-2bps), curve ~2bps flatter 2s10s. Equity futures in the red, poised to extend yesterday’s selloff – Nasdaq futures -1.6%. Light day for eco only Phili Fed non-man, Oct Housing Starts. Core Euro bonds mixed – UK gilts lower after Carney said risk of no-deal Brexit remains high. GOCs higher, in line with tsys on FTQ bid, 10Y 2.335% (-1.7bps).

News headlines

Carney Backs May’s Brexit Plan With Case for Longer Transition (Bloomberg) Mark Carney gave his seal of approval to the transition deal agreed by Prime Minister Theresa May with the European Union, and signaled that he would welcome even longer for the U.K to adjust. In his first public comments on the government’s draft agreement, the Bank of England governor united with other central bank officials to warn of the dangers of leaving the European Union without a smooth exit.

Laptops, Phones and Sweaters in Crosshairs for Tariffs (Bloomberg) So far in the trade war with China, President Donald Trump has avoided putting tariffs on many consumer goods like cellphones, laptops, storage devices, toys, and some clothes. That may be about to change, if talks with Xi Jinping planned for the end of the month don’t lead to a deal. If Trump follows through on his threat to impose import taxes on these goods, $44.5 billion dollars worth of phones could be hit, as would more than $12 billion dollars worth of toys.

Credit Set for Worst Year Since 2008 as Crashes Roil Market (Bloomberg) Credit markets are set for the worst year since the global financial crisis as investors abandon hope of a late-2018 rally. High-yield and investment-grade notes are headed for losses in both euros and dollars, the first time all four asset classes have posted negative total returns since 2008, based on Bloomberg Barclays indexes. It’s been a exceptionally volatile month, with headlines on companies including CMC di Ravenna SC and Nyrstar NV triggering the biggest weekly jump in euro high-yield spreads in almost seven years, while dollar investment-grade spreads are at a two-year high amid a sell-off triggered by General Electric Co.’s woes.

Stocks Track Tech Slump in U.S.; Treasuries Gain: Markets Wrap (Bloomberg) Stocks fell from London to Shanghai and U.S. equity futures signaled the global rout led by technology shares would deepen Tuesday, adding pessimism to markets already anxious over trade. Treasuries advanced and the dollar edged higher. Contracts on all major U.S. equity indexes pointed to declines at the open, with megacap tech shares leading the drop. The Stoxx Europe 600 Index fell a fifth day as its technology sector headed toward a bear market. Equities slid across Asia after U.S. software developers and chip makers dragged the S&P down Monday.

Target third-quarter comparable sales, earnings fall, shares drop 11 percent (Reuters) Target Corp (TGT.N) reported third-quarter earnings and comparable sales below estimates on Tuesday, at a time when a strong economy has boosted consumer spending at rival retailers, sending its shares down 11 percent in premarket trade. Sales at stores open at least a year rose 5.1 percent, short of analysts’ estimates of a 5.21 percent increase, according to IBES data from Refinitiv. Excluding items, Target earned $1.09 per share, below the average estimate of $1.12 per share.

Bitcoin extends slide below $4,500, new 2018 low (Reuters) Bitcoin tumbled as much as 10 percent on Tuesday to below $4,500 BTC=BTSP, bringing the world’s best-known cryptocurrency’s losses to 30 percent within a week as a selloff in digital currencies intensified across the board. Other cryptocurrencies also skidded sharply, with Ethereum’s ether losing 10 percent ETH=BTSP and Ripple’s XRP XRP=BTSP down 13 percent in a largely sentiment-driven slide.

Bombardier jumps 23% as Citi says Quebec probe ‘appears routine’ (BNN) Bombardier Inc. shares jumped the most in a year after a Citigroup analyst said Friday’s 20 per cent drop was excessive because a regulatory review of the company’s executive stock-sale plan “appears routine.” Bombardier’s Class B stock jumped 23.95 per cent to $2.07 in Toronto on Monday, the biggest increase since last November. Bonds also rose, snapping a six-day decline.

Overnight markets

Overview: US 10yr note futures are up 0.052% at 119-12, S&P 500 futures are down -1.1% at 2666.5, Crude oil futures are down -0.61% at $56.85, Gold futures are up 0.1% at $1226.5, DXY is up 0.2% at 96.381, CAD/USD is up 0.17% at 0.7579.

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

The week ahead should be rather quiet due to the Thanksgiving holiday market closure Thursday followed by an early close Friday. As far as Fed speaker engagements, looks like New York Federal Reserve President John Williams is the only one on tap with three separate events Monday. Williams will participate in moderated discussion and answer audience questions at 10h45. US Tsy yields continue to inch higher, led by the longer end. The 2-year benchmark yield trades at 2.820% up from 2.794% while the 10-year has edged up to 3.087% from a low of 3.054%. The curve is slightly steeper with the 2s10s spread widening to 26.4bps from a low of 25.1bps. There has been more movement in the 2s30s which has traded up 2bps. Inflation breakevens have been relatively stable with the 5-year trading at 1.881% and the 10-year at 2.029%. 

News headlines

Trudeau Seeks Redemption From Business Leaders in Budget Update (Bloomberg) Prime Minister Justin Trudeau gets one of his last chances this week to mend frosty ties with Canada’s business community as next year’s election nears. Trudeau’s finance chief, Bill Morneau, will unveil a fiscal update Wednesday in Ottawa that provides a shot at redemption after warnings about the country’s fading competitiveness. It will likely include incentives for capital investment but not an across-the-board reduction in corporate taxes.

EU Set to Tighten Rules on Foreign Investment to Fend Off China (Bloomberg) The European Union is hammering out the first bloc-wide rules to prevent foreign investments from threatening national security, as Chinese acquisitions foster political unease. Negotiators representing EU governments and the European Parliament may agree on draft legislation to screen foreign direct investments on Nov. 20, according to Franck Proust, a French member of the 28-nation assembly.

Corporate America’s Debt Boom Looks Like a Bust for the Economy (Bloomberg) Despite strong incentives in the Republican tax plan for American executives to expand, invest and ultimately boost the U.S. economy’s growth potential, a lot of the debt companies are issuing appears to be motivated by something else. Non-financial corporate debt stands at 45.6 percent of gross domestic product, near the highest in post-war record keeping. Despite that, non-residential investment — a broad category in the national accounts that includes everything from office buildings to software — has only been bouncing around the 13 percent of GDP range since 2012.

Stocks Mixed as Treasuries Decline, Dollar Steadies; Market Wrap (Bloomberg) U.S. equity futures fell while shares drifted in Europe and climbed in Asia as investors digested signs that America-China trade tensions are set to persist. Treasuries declined, the dollar steadied and gold fell. Telecommunications shares helped support the Stoxx Europe 600 Index, though the gauge was limited by a plunge in Renault SA following misconduct allegations against the carmaker’s leader. Equities posted modest increases in Tokyo, Hong Kong, Shanghai and Taiwan. European bonds mostly edged lower, with Italian securities erasing earlier gains made when Deputy Premier Luigi Di Maio said his government is ready for dialog with the European Commission over the country’s budget.

Nissan to fire Ghosn over financial misconduct allegations (Reuters) Nissan Motor Co Ltd (7201.T) said it planned to oust Chairman Carlos Ghosn after alleging he had used company money for personal use and committed other serious acts of misconduct. Japanese media reported that Ghosn, who is also chairman and chief executive of Nissan’s French partner Renault (RENA.PA) and one of the best known figures in the global car industry, had been arrested.

Canada’s Trudeau uses Trump card to attack main political rival (Reuters) Donald Trump is so unpopular in Canada that Prime Minister Justin Trudeau is using the specter of the U.S. president to attack his conservative rival ahead of a national election set for next year. Trudeau, whose ruling Liberals have a 12-seat majority in the 338-seat parliament, calls Conservative Party leader Andrew Scheer a climate change “ideologue” who stokes “fear and division” on immigration.

Bombardier drop caps worst week in 30 years as stock plan probed (BNN) Bombardier Inc. () plunged to its worst week in at least 30 years after regulators said they were reviewing the company’s executive stock-sale program in the wake of an earlier share rout. Quebec’s Autorite des Marches Financiers ordered the suspension of all such transactions until further notice. Bombardier said it would fully cooperate with the probe of the stock-disposition plan, which was adopted in August.

Trump optimistic about trade deal after receiving China response (BNN) President Donald Trump said he is optimistic about resolving the U.S. trade dispute with China after receiving a response from Beijing to his demands, ahead of a widely anticipated meeting with Chinese President Xi Jinping in Argentina later this month. Trump told reporters Friday that the Chinese response was largely complete but was missing four or five big things. “China wants to make a deal, they sent a list of things they are willing to do which is a large list and it is just not acceptable to me yet, but at some point I think that, we are doing extremely well with respect to China,” Trump said.

Overnight markets

Overview: US 10yr note futures are down -0.013% at 119-05, S&P 500 futures are down -0.35% at 2733.5, Crude oil futures are up 0.09% at $56.51, Gold futures are down -0.16% at $1221, DXY is down -0.01% at 96.456, CAD/USD is up 0.18% 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 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