Commentaires

Market Update US tsys higher, tsy curve 1bp flatter with the 10Y 3.21% (-2.8bps). Tsys higher with German bunds on risk-off tone with Euro equities weaker, Italy spds wider, crude oil continuing lower for a fourth day, prices have been moving steadily lower for the last two weeks on rising US production & inventories.  Oct PPI expected to have risen 0.2% after a similar rise the previous month, with core prices decelerating to 2.5% y/y from 2.5%. GOCs higher in line with tsys – 10s consolidating in a 3bp range ~2.51% over the past week.

News headlines

Fed Holds Rates Unchanged Ahead of Expected December Hike (Bloomberg) The Federal Reserve left interest rates unchanged and stayed on course to hike in December despite recent jitters in financial markets and a critical president. The U.S. central bank said “economic activity has been rising at a strong rate” and job gains “have been strong,” acknowledging a drop in the unemployment rate, while repeating its outlook for “further gradual” rate increases in its statement Thursday following a two-day meeting in Washington.

Mueller’s New Boss Has Broad Powers to Throttle Trump Probe (Bloomberg) President Donald Trump’s new acting attorney general, Matthew Whitaker, now has almost unlimited authority over the Russia investigation led by Robert Mueller. Democrats have warned that Whitaker, a Trump loyalist and vocal critic of the probe, may fire Mueller, but he has many other ways to hamper, or even freeze, the investigation. Many of these steps may be largely invisible to the public and even lawmakers.

Stocks Fall on Oil, China Concerns; Dollar Gains: Markets Wrap (Bloomberg) U.S. equity-index futures fell for a second day as crude oil’s slide into a bear market and concerns over the health of China’s economy weighed on global stocks. The dollar continued its advance after the Federal Reserve stayed on track for a December rate hike. Mining and energy shares led a drop in Europe’s main equity gauge as most industrial metals fell, while disappointing forecasts from Richemont and Thyssenkrup AG also weighed on the index. Futures on the Dow Jones, S&P 500 and Nasdaq slipped. Oil extended a run of declines, heading for the longest losing streak on record. In Asia, financial shares performed particularly poorly following news that Beijing plans to set quotas for banks to pump credit into private companies. Treasury yields edged lower.

U.S. judge halts construction of Keystone XL oil pipeline (Reuters) A federal judge in Montana halted construction of the Keystone XL oil pipeline on Thursday on the grounds that the U.S. government did not complete a full analysis of the environmental impact of the TransCanada Corp (TRP.TO) project. The ruling deals a major setback for TransCanada Corp and could possibly delay the construction of the $8 billion, 1,180 mile (1,900 km) pipeline. The ruling is a victory for environmentalists, tribal groups and ranchers who have spent more than a decade fighting against construction of the pipeline that will carry heavy crude to Steele City, Nebraska, from Canada’s oilsands in Alberta.

Canada Pension Plan achieves 0.6 percent net return in second quarter (Reuters) The Canada Pension Plan Investment Board (CPPIB), Canada’s biggest public pension fund, said on Friday it delivered net investment returns of 0.6 percent in the latest quarter, impacted by adverse exchange rate movements. The CPPIB, which manages Canada’s national pension fund and invests on behalf of 20 million Canadians, said it had net assets of C$368.3 billion at the end of September, compared with C$366.6 billion three months earlier.

Disney earnings buoyed by theme parks, box office (BNN) Walt Disney Co. () delivered fourth-quarter sales and earnings that beat analysts’ projections, fueled by the entertainment behemoth’s movies and theme parks. Films such as “Ant-Man and the Wasp” and “Incredibles 2” more than doubled movie profit for the Burbank, California-based company. The company’s theme parks, meanwhile, benefited from the busy summer travel season, attracting more free-spending guests.

Martinrea misses expectations despite earning a record $36.4M in Q3 (BNN) Martinrea International Inc. () says it earned a record $36.4 million in the third quarter despite modest tariff effects and foreign exchange losses. The Toronto-based auto parts manufacturer says it earned 42 cents per share for the period ended Sept. 30. That’s unchanged from the prior year when its net income was $36.2 million. Excluding one-time items, adjusted profits rose for a 16th consecutive quarter, reaching $37.2 million or 43 cents per share, below analyst expectations but up from $36.3 million or 42 cents per share a year earlier.

Overnight markets

Overview: US 10yr note futures are up 0.133% at 117-30, S&P 500 futures are down -0.42% at 2797, Crude oil futures are down -1.52% at $59.75, Gold futures are down -0.63% at $1217.4, DXY is up 0.06% at 96.78, CAD/USD is up 0.32% at 0.7578.

US Economic Data

Canadian Economic Data

There is no Canadian economic data for today.

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 have steadied after Wednesday`s late slide, and ahead of the FOMC decision later today. The 10-Yr T-Note future is off 4.5/32 at 117-27, still trading within a tight range (117-25 low, 117-30 high). Cash curve is bull flattening, with short-end relatively unchanged. The 2-Yr yield is down 0.4bps at 2.9527%, 5-Yr is down 0.2bps at 3.0779%, 10-Yr is down 1.1bps at 3.2244%, and 30-Yr is down 1.3bps at 3.4286%. This comes against a backdrop of weaker equity futures (S&P Emini off 0.5%) and stronger dollar (DXY up 0.3%). No change expected at today’s FOMC decision, but dovish risks from the statement

News headlines

Bombardier Plans to Cut 5,000 Jobs, Sell Turboprop Aircraft Unit (Bloomberg) Bombardier Inc. plans to cut about 5,000 jobs while selling its turboprop unit and a training business as Chief Executive Officer Alain Bellemare extends a far-reaching turnaround drive at Canada’s biggest aerospace company. Net proceeds from the asset sales will be about $900 million, Bombardier said in a statement Thursday. The employment reduction, Bellemare’s third since taking the reins at the debt-laden company in 2015, will yield annual savings of about $250 million by 2021 while also prompting a charge of a comparable amount next year.

American Voters Just Sent a Surprising Message About the Trade War (Bloomberg) The trade war of 2018 was, in theory, supposed to hurt Republicans in states vulnerable to higher tariffs and Chinese retaliation. The results from Tuesday’s midterm elections suggest that didn’t really happen. President Donald Trump’s tariffs were a hot topic in farming regions and the Rust Belt — places with a lot to lose in the dispute with China, which countered with duties on iconic American exports from soybeans to lobsters. Yet several candidates who opposed Trump’s tariffs were defeated, while some who backed the duties won their races.

U.S. Mortgage Applications Hit Lowest Since 2014 as Rates Rise (Bloomberg) A gauge of U.S. mortgage applications fell last week to the lowest level in almost four years as borrowing costs hit the highest since 2010, adding to challenges for the housing market. The Mortgage Bankers Association’s market composite index fell 4 percent in the week ending Nov. 2 to 316.2, the lowest reading since December 2014, according to a report Wednesday from the Washington-based group. The survey’s contract rate on a 30-year fixed loan rose to 5.15 percent from 5.11 percent, while a gauge of applications to purchase homes dropped 5 percent to the lowest in about two years.

U.S. Stock Futures Slide as Treasuries Advance: Markets Wrap (Bloomberg) U.S. stocks looked set to put an end to a global rally that spread across Europe and Asia after the midterm elections. Benchmark Treasury yields retreated from the highest level since 2011. Futures on the S&P 500 retreated after a surge in the underlying index yesterday. Europe’s main equity gauge pared an earlier advance spurred by strong earnings and dividend outlooks from companies including AstraZeneca Plc and Siemens AG. It remained in the green, however, after an upbeat session in Asia. Japan’s Topix jumped 1.7 percent and shares in Hong Kong and South Korea also posted solid gains. Italian bond yields climbed after the European Union warned the nation’s budget deficit will move dangerously close to the economic bloc’s limit of 3 percent. The dollar edged higher.

Diversified retailer Canadian Tire’s profit rises 16.5 percent (Reuters) Diversified retailer Canadian Tire Corp Ltd (CTCa.TO) reported a 16.5 percent rise in quarterly profit on Thursday, helped by higher sales at its retail segment and the inclusion of newly acquired Helly Hansen’s operations to its earnings. Net income rose to C$231.3 million ($155.54 million), or C$3.15 per share, in the third quarter ended Sept. 30, from C$198.5 million, or C$2.59 per share, a year earlier. Revenue rose to C$3.63 billion from C$3.27 billion.

Car parts maker Magna tops profit estimates, lowers 2018 outlook (Reuters) Canadian auto parts maker Magna International Inc (MG.TO) topped estimates for quarterly profit on Thursday while trimming its 2018 total sales forecast on the back of a dip in its units that produce car frames and complete vehicles. The Aurora, Ontario-based company now expects light vehicle production – its main measure for output of a diverse range of parts and assembly work – to reach 17 million units in North America, down from a previous forecast of 17.2 million. The company also said it expects costs in its unit handling auto exteriors and structures to go up and total sales in fiscal 2018 to be between $40.3 and $41.4 billion compared to an earlier range of $40.3 to $42.5 billion.

Imperial CEO says $2.6B Aspen project needed amid crude price slump (BNN) Imperial Oil Ltd. has approved a final investment decision to proceed with its $2.6-billion Aspen oil sands project in Alberta. Construction will begin in the fourth quarter of this year. Imperial says Aspen will eventually produce 75,000 barrels of bitumen per day, with first output anticipated in 2022.

Cannabis stocks spike after U.S. Attorney General Sessions resigns (BNN) Cannabis stocks, already bolstered by wins in the midterm elections, got an added boost when anti-pot Attorney General Jeff Sessions announced his resignation Wednesday afternoon. Exchange-traded funds that track marijuana stocks, including the Horizons Marijuana Life Sciences Index ETF in Toronto and the U.S.-listed ETFMG Alternative Harvest ETF, jumped to fresh highs on the news, gaining as much as 9.1 per cent and 7.9 per cent, respectively.

Overnight markets

Overview: US 10yr note futures are down -0.066% at 117-29, S&P 500 futures are down -0.32% at 2807.5, Crude oil futures are down -0.02% at $61.66, Gold futures are down -0.2% at $1226.3, DXY is up 0.25% at 96.239, CAD/USD is down -0.07% at 0.7631.

US Economic Data

Canadian Economic Data

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 on heavy volume (over 1mln TY contracts), prices just off the highs after midterm results came in as expected – a split Congress. US 10Y 3.20% (-2.5bps). US tsy curve flatter 2s30s -5bps @46bps. USD index lower, US equity futures higher (S&P +16, Nasdaq+60), VIX -2.36 to 17.55 a three-week low as event risk subsides, Fed not expected to raise rates tomm & no press conf. In Canada, GOCs basically unch, 10Y 2.53%, yields grinding higher over the last two weeks. Two year auction at noon – $3.0bln new Feb 21s with the WI/2Y roll 1.9/1.8. All in 2Y yields are little changed from last auction Oct 10th ~2.35%. At ~1.9bps the WI/2Y roll looks attractive based on straight interpolation – the Sep21/2Y roll is ~3.2bps so a Feb 21 should be closer to 1 bp over 2s. Keep in mind Nov 20 issue has $12bln outstanding so the Feb 21s are likley to be reopened an additional 3 times in an environment of rising rates.

News headlines

Trump Constrained as Democrats Take Back Control of U.S. House (Bloomberg) Donald Trump, who spent the past two years wielding the powers of the presidency unbound by party or political convention, is now constrained. The Democratic takeover of the House of Representatives cripples his conservative agenda and opens the way for unfettered investigations into his scandal-plagued administration, his presidential campaign and his family’s business empire.

Democrats’ Biggest Gain Is Subpoena Power to Question Trump Aides (Bloomberg) President Donald Trump will soon be on the receiving end of something he didn’t see much from a Republican-led Congress: orders, backed up by subpoenas, for officials to answer questions on controversial policies like the dispatch of thousands of troops to the U.S.-Mexico border. Now that Democrats have won control of the U.S. House of Representatives, they will be able to force administration officials to testify and provide documents. That will subject Trump’s decision-making — as well as his personal finances and potential conflicts of interest — to deeper public and private examination by key committees, as the national focus shifts to the 2020 presidential election.

Iran Sanctions May Not Cause Oil Shortage, Nigeria Minister Says (Bloomberg) U.S. sanctions on Iran won’t necessarily translate into a global shortage of oil, according to Nigerian Petroleum Minister Emmanuel Ibe Kachikwu. “Everybody assumes that once they put the sanctions on Iran, you’re going to lose that production,” Kachikwu said in Cape Town, appealing for patience until there’s more clarity on the impact of the penalties. Iran, OPEC’s third-largest producer, has seen exports slide almost 40 percent since April — the month before Washington announced the curbs.

Stocks Climb as Investors Cheer On U.S. Gridlock: Markets Wrap (Bloomberg) U.S. equity futures jumped, the dollar dropped and Treasuries climbed as investors seemed to cheer on an outlook for political gridlock in the wake of the American midterm elections. Risky assets were in favor after results showed Democrats winning control of the House of Representatives and Republicans holding on to the Senate. The outcome dims chances for any more tax cuts or other major fiscal initiatives from the administration that might have pushed yields higher. Overall, investors are betting that the election results won’t do much to disrupt an economy growing at a healthy 3 percent clip.

Kraft to sell Canada natural cheese business to Parmalat (Reuters) Kraft Heinz Co (KHC.O) has agreed to sell its Canadian natural cheese business to Parmalat SpA (PLT.MI) in a C$1.62 billion ($1.23 billion) deal that will help Kraft trim its debt and extend the North American footprint of Parmalat owner Lactalis. The deal comes a month after the new United States-Mexico-Canada Agreement (USMCA) was signed, under which Canada partially opened its protected domestic market to the United States. The cheese business being sold by Kraft, which includes brands like Cracker Barrel, P’tit Quebec and aMOOza, generated about C$560 million in net sales in 2017, Kraft and Parmalat said in statements on Tuesday.

Cohn sees no ‘instant cure’ on U.S.-China trade after midterms (BNN) Ex-White House economic adviser Gary Cohn said he didn’t expect Democratic election gains to speed the end of President Donald Trump’s China trade war, even as some in Beijing held out hope he might warm to talks. “I don’t think there’s an instant cure for the trade issue,” Cohn told Bloomberg’s New Economy Forum in Singapore as assembled business and political leaders digested the results Wednesday. “I wish that I could sit here and say, after the midterm elections, the White House and the administration understand they’ve gotta solve trade issues.” While the Democrats’ success in gaining control of the U.S. House of Representatives might frustrate Trump with investigations and make it harder for him to push through legislation, it might mean little for his trade policy. Trump can wield many of his preferred weapons, from tariffs to criminal probes, without congressional approval, and the opposition party has traditionally been more protectionist on trade.

Imperial Oil approves $2.6-billion oil sands project (BNN) Imperial Oil Ltd has approved a final investment decision to proceed with its $2.6-billion Aspen oil sands project in Alberta. Construction will begin in the fourth quarter of this year; Imperial says Aspen will eventually produce 75,000 barrels of bitumen per day, with first output anticipated in 2022. Imperial touted technology that will be used at the project, saying in a release an « advanced solvent-assisted, steam-assisted gravity drainage » system will slash emissions intensity and Aspen’s water usage by as much as 25 per cent. 

Overnight markets

Overview: US 10yr note futures are up 0.093% at 118-04, S&P 500 futures are up 0.59% at 2775.25, Crude oil futures are up 0.87% at $62.75, Gold futures are up 0.54% at $1232.9, DXY is down -0.56% at 95.779, CAD/USD is down -0.35% at 0.7647.

US Economic Data

Canadian Economic Data

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