Colgando en el corte.


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(Bloomberg) — Stocks are little-changed as traders continue to fade equity rallies and as a report of further potential U.S. tariffs on China weighed further. Tech sector weighing,, Netflix lead Nasdaq 100 Index to session lows, wiping out earlier gains.

Britain’s Hammond unexpectedly announced plans to introduce a tax on the world’s biggest tech firms.

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The dollar gained, weighing on emerging markets. The Mexican peso fell to nearly 20 to the dollar after the incoming president canceled airport construction.

Sterling slid after the U.K. Chancellor of the Exchequer delivered the country’s budget.

Treasuries extended losses on IG issuance; a number of IG deals with long-end tranches are slated for pricing this afternoon in New York.

Silver led precious metals lower as exchange-traded funds cut their holdings.

In Europe, Italian debt extended gains after S&P Global Ratings affirmed on Friday while Angela Merkel said she will quit as head of her party after nearly two decades, though she intends to see out her term as head of state.

Key Headlines:

  • U.S. is said to plan more China tariffs if Trump-Xi meeting fails
  • Trump’s lawyer predicts ‘serious discussions’ with Mueller a day after elections
  • Dallas Fed manufacturing activity at 29.4 vs 28.1 in the prior month
  • Personal income stagnated last month for the third time this year


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(Bloomberg) — Wheat futures in Chicago reached a one-week high following speculation that U.S. exports may gain after Egypt’s state-run buyer purchased American grain in a tender. On Friday, Egypt’s GASC bought U.S. wheat for the first time in more than a year.

  • Dec. wheat futures rose as much as 1.9% to $5.15 a bushel on CBOT, the highest since Oct. 19

Latest News Brazil’s Monster Rally Due for Reality Check After Bolsonaro Win The boom in Brazilian markets that came along with Jair Bolsonaro’s rise to power is coming in for a reality check Stocks and the currency reversed earlier gains and declined Monday, a day after the far-right lawmaker was elected president with 55 percent of votes It could be a signal that traders are looking for more evidence that Bolsonaro will actually pursue the economic moves his campaign promised, and investors salivated over, even if some aren’t broadly popular with most Brazilians


Egypt Wheat Purchases  Are Running In Line With Last Year GASC has bought 3.81m tons for delivery in the season that started in July, putting its total imports 0.5% ahead of a year earlier Egypt Says Bank Talks  to Hedge Wheat Purchases May Be Prolonged Egypt is in discussions with banks including First Abu Dhabi Bank, National Bank of Kuwait and other Swiss lenders about hedging against increases in prices of wheat and other key commodities, Supply Minister Ali El-Mosilhy says in an interview Wheat’s Weather Worries  Drag On, But Grain Bears Are Coming Back Hedge fund net-short position reaches the most bearish since May


EU Soybean Imports  Rose 5.4% in Season Through Oct. 28 Soybean imports came to 4.13m tons since the season started July 1 vs 3.92m tons a year earlier U.S. Crop Exports:  120,000 Tons of Soybeans to Unknown Buyers The amount is for delivery by Aug. 31, USDA says China to Cut Minimum Protein  Levels in Animal Feed From Nov. 1 China will start implementing amended animal feed formulas from Nov. 1, according to a document dated Oct. 23 posted on the website of state-run China Feed Industry Association Ship

With U.S. Soybeans Changes Course From China to Vietnam A ship carrying U.S. soybeans changed destination from China to Vietnam on Saturday as exporters find new buyers for American supplies amid an escalating trade war Bulk carrier Audacity left Louis Dreyfus’ Pier 86 terminal in Seattle on Oct. 21 for Qingdao, China with 69,244 metric tons of soybeans, according to U.S. Department of Agriculture inspection data and vessel data compiled by Bloomberg U.S. Inspected 653k Tons of Corn for  Export , 1.305m of Soybeans In week ending Oct. 25, according to the USDA’s weekly inspections report

Soybeans: 1,305k tons vs 1,211k the previous wk, 2,532k a yr ago

Wheat: 393k tons vs 387k the previous wk, 319k a yr ago

Corn: 653k tons vs 1,024k the previous wk, 547k a yr ago

CROP  SURVEY : Corn Seen at 64% Harvested, Soybeans Seen at 70% Crop seen at 60% good/excellent, USDA to report first conditions est. of the mkt year Winter wheat seen at 82% planted vs 72% the previous week According to the avg est. of a Bloomberg Survey of 13 analysts polled before USDA data released

Crop Weather U.S.:  Parts of Midwest to Get ‘Significant’ Rain


Corn  for Dec. delivery -0.3% to $3.66 3/4 a bushel on CBOT Soybeans  for Jan. delivery -0.6% to $8.52 1/4 a bushel Soybean meal  for Dec. delivery +0.3% to $308.20 per 2,000 lbs Soybean oil  for Dec. delivery -1% to 27.89c/lb SRW  for Dec. delivery +0.4% to $5.07 1/4 a bushel HRW  for Dec. delivery +0.2% to $5.01 1/2 a bushel

U.S. OIL PRODUCTS: California Republicans Bank on Gas-Tax Repeal
(Bloomberg) — A California ballot measure to reverse $54 billion in revenue increases Democrats enacted in 2017 to fund road, bridge and transit repairs may be about more than potholes and taxes. MARKET NEWS:

  • U.S. Gasoline Flows From Europe Drop Again as Stocks High: Data
  • U.S. Refineries to Run ‘Max-Diesel’ in Next Few Years: Jefferies
  • Phillips 66 Wood River Crude Section, Coker Shut: Genscape
  • Genscape Says HollyFrontier Kansas FCC Back to Normal Operations
  • Marathon Carson Refinery to Flare Oct. 30-Nov. 2: AQMD
  • Petrobras Brazil Refineries Cut Runs to 5-Month Low in September
  • Gadfly: What History of Gas Stations Means for Electric Cars

PRICES: Atlantic Coast differentials vs Nymex as of 4:30pm ET

  • 83.5 CBOB +0.28c to Nymex +0.4c
  • 84 RBOB +0.45c to +0.3c
  • ULSD -0.13c to flat
  • Jet fuel -0.25c to -3.5c

Gulf Coast differentials vs Nymex as of 4:30pm ET

  • 85 CBOB -0.25c to -4.38c
  • 84 RBOB -0.38c to -3.63c
  • ULSD +0.35c to -5.4c
  • Jet fuel -0.13c to -8.75c

Oil Analytics refining margins (as of prior session)

  • East Coast Forcados cracking -13c to $7.94/bbl
  • Gulf Coast Maya coking -25c to $7.46/bbl

Nymex futures and cracks

  • Gasoline November futures +0.99c to $1.8249/gal.
  • Diesel November futures -1.87c to $2.2843/gal.
  • 3-2-1 front month crack spread +53c to $15.92/bbl

Gasoline Arbitrage

  • Front-month U.S.-Europe RBOB-Eurobob swap spread -0.35c to -2.7c/gal

Baltic Exchange freight

  • TC2 U.K./Continent-USAC (37k tons) -0.55 WS points to WS 114.17
  • TC14 USGC-U.K./Continent (38k tons) +2.19 WS points to WS 142.19

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U.S. Investment-Grade Issuance for October 29, 2018
(Bloomberg) — Five borrowers revived the U.S. investment-grade primary market on Monday, issuing $3.5 billion in eight tranches.

  • Charles Schwab headlined issuance with a $1.1b two-part deal. The bank reported third-quarter earnings earlier this month
  • Boeing is set to price a $700m two-tranche deal even as news emerged this morning that one of its 737 Max 8 jets crashed with 189 people on board. Despite this, the deal was executed fairly well as it tightened significantly through the pricing process
  • Today’s deals were defensive in nature
    • Four of the five were announced as ‘will not grow,’ a sign that issuers wanted to be transparent in order to win over cautious investors
    • All five names were rated A3/A- or higher by Moody’s/S&P, among the highest tiers of credit quality in investment-grade
    • Bond tenors were long on average. The shortest-dated bond was a 5Y, while the rest of today’s tranches had either 10Y or 30Y maturities
  • Last week, three of five sessions were blank, and just under $6b priced amid volatile macro markets. Estimates for this week call for $15-$20b
  • Today’s supply was relatively muted given the mostly constructive macro tone and moderate weekly projections — equities held in positive territory for most of the day and futures were positive this morning when the deals were announced

 ISSUANCE STATS Day   $3.500b WTD   $3.500b MTD  $79.175b YTD $975.059b *T DEALS

  • Charles Schwab Corp/The (SCHW) A2/A, $1.1b across 2 tranches
    • $500m Long 5Y at +67; +70a (+/- 3), +80-85
    • $600m Long 10Y at +97; +100a (+/- 3), +110 area
  • Boeing Co/The (BA) A2/A, $700m across 2 tranches
    • $350m 10Y at +67; +70a (+/- 3), +85 area
    • $350m 30Y at +92; +95a (+/- 3), +110 area
    • Announced as ‘will not grow’
  • Consumers Energy Co (CMS) Aa3/A, $850m across 2 tranches
    • $300m 10Y at +73; +75a (+/- 2), +90 area
    • $550m 30Y at +103; +105a (+/- 2), +115 area
    • Announced as ‘will not grow’
  • Aflac Inc (AFL) A3/A-
    • $550m 30Y at +145; IPT +155 area
    • Announced as ‘will not grow’
  • Southwestern Public Service Co (XEL) A3/A
    • $300m 30Y at +110; IPT +120-125 area
    • Announced as ‘will not grow’


Treasuries Bear Steepen Despite Late Gains as U.S. Stocks Slide

(Bloomberg) — Treasuries ended the session off their worst levels as U.S. stocks extended losses following a report that the U.S. may announce more tariffs by December if talks between U.S. President Donald Trump and China President Xi Jinping fail to ease the trade war.

  • Yields were higher by up to 1.5bp in long end of the curve, steepening 5s30s by 0.8bp after erasing early flattening move over U.S. session; 10-year yields cheapened by 0.4bp at around 3.08% shortly after settlement
  • S&P 500 Index was lower by ~0.7% ahead of the cash close, Nasdaq by around 1.8% after tech stocks were notably weak following U.K. announcement of a digital- services tax


  • Curve steepening move started in early U.S. session as dollar IG deals, including 30-year tranches, started to mount up

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-R.W.N II, yours in 322.


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